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NYT: Economists balk at FCC's net neutrality plans

In the New York Times today, several economists took issue with the Federal Communications Commission's push for net neutrality rules that would mandate all Internet service providers treat any Web site or application equally.

In a guest op-ed, Georgetown economics professors John W. Mayo and Marius Schwartz; Stanford public policy professor Bruce Owen; and New York University business professor Robert Shapiro pointed to the European approach to network rules as a better approach:

“TRANSPARENCY is non-negotiable,” declared Europe’s new commissioner for digital issues, Neelie Kroes, in a speech last week laying out her thoughts on net neutrality. “In a complex system like the Internet, it must be crystal-clear what the practices of operators controlling the network mean for all users.”

Ms. Kroes’s comments reflect the decision made by the European Union in November to avoid any of the more extreme regulations that could stifle the innovation that has been the hallmark of the Internet. Instead, the union chose a more measured approach that emphasizes transparency.

This at odds with the Federal Communications Commission, which is currently considering versions of net neutrality regulation that would severely restrict firms’ business models and pricing flexibility. Before the commission embraces regulation, it should take another look at the European model and focus on a policy built on transparency.

The E.U. hasn't adopted net neutrality rules but has emphasized transparency and points to policies that promote competition. Big telecom providers are required to share fiber and copper lines to homes with smaller competitors in countries like the U.K.

The FCC said it agrees that transparency should be a key guideline in its net neutrality proposal. That is why it suggested what it calls a sixth principle on transparency that would require carriers to explain their network management practices. It has also proposed policies on competition such as data roaming and line sharing to small-business customers to this end.

"Transparency is a key cornerstone of the open Internet policies proposed by the FCC. A free and open Internet depends on consumers and innovators having the information they need to ensure accountability," said FCC spokeswoman Jen Howard.

By Cecilia Kang  |  April 21, 2010; 11:30 AM ET
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