Net Neutrality, Trial Balloons and Grains of Salt

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The high-level position on net neutrality and how the FCC will react to its court loss in the Comcast case were in the news again. FCC Chairman Julius Genachowski was reported by The Washington Post as being reluctant to reclassify broadband in a manner that puts it more fully under its control.

IT Business Edge blogger Lora Bentley astutely pointed out that unnamed sources should be taken with a grain of salt. A corollary is that parties in important and complex undertakings often use the media to float trial balloons. It is entirely possible-especially considering that in addition to being anonymous, the statement was preconditioned with the weak tea of "leaning toward" -- that Genachowski made the comments as a way to see how significant the pushback will be from the Democrats in Congress and from administration supporters on the left.


It also is important to remember that no issue in Washington occurs in a vacuum. All the players-the administration as a whole, the FCC, the Democrats in Congress, the Republicans in Congress (and their subgroups gearing up for the midterms) -- all have agendas and different priority lists.


Indeed, the way other events play out influences the priority list. For instance, the oil leak in the Gulf of Mexico is expected to re-energize the anti-drilling crowd, for obvious reasons. Could this mean that some of the other causes backed by liberals-net neutrality, for instance-could drop a notch on the totem pole? It sure does: Keep in mind that the administration prizes bipartisanism. If curtailing drilling becomes an easy and expedient political win, the administration might be more willing to give way to free marketers on net neutrality.


This all begs the bigger question of what impact the decision will have. Observers tend to see these things as binary: One path generates outcome A and the other path to outcome B. That isn't necessarily so, of course.


In early April, TechWorld reported on a study by The Brattle Group, which the story says is an organization opposed to net neutrality and, in the headline, suggests is funded by the telecom industry. Report author Coleman Bazelon says net neutrality would endanger 340,000 jobs in the broadband industry and 1.5 million jobs in the U.S. economy during the next 10 years. Broadband industry spending would shrink by $5 billion next year, the report claims.


Just as anonymous comments from inside the FCC can't be fairly assessed independently of their context, the established positions of outside analysts must be taken into account. In this case, an organization under the sway of the carriers is unlikely to give much credence to the market's ability to self-adjust.


Perhaps. But the passage of net neutrality would not dull the potential of the market. Even if Verizon, Comcast and AT&T curtailed investments, other providers-perhaps using wireless technology-would jump into the breach. Money always follows opportunity.


The need to see beyond simple outcomes cuts both ways: Net neutrality advocates who automatically assume that the carriers will squelch competition as a means to promote content they favor are just as likely to be overstating the case. The carriers' goal is to make money. If YouTube is more profitable than an analogous service from Comcast or Time Warner, these operators will support it.


Of course, there are all kinds of gray areas in each interpretation: Wireless is not as robust as wired, for instance, and Comcast or Time Warner could exercise unfair control before the next YouTube emerged. The takeaways, however, are to take what everyone says with grains of salt, to void oversimplicity and to refrain from overreacting to isolated pieces of news-especially when they are delivered anonymously.