True innovation will make net neutrality obsolete

One of the most comical features of the net-neutrality debate is that both sides say the other is trying to stifle innovation. Both are probably wrong: true innovation is a threat to both of them, and its speed probably depends on whose victory will have the most onerous consequences.
The word “innovation” was present in almost every response from Internet service providers to President Barack Obama’s proposal that the Federal Communications Commission treat the Web as a public utility. Here’s a typical comment, from David L. Cohen, executive vice president at Comcast:
The Internet has not just appeared by accident or gift – it has been built by companies like ours investing and building networks and infrastructure. The policy the White House is encouraging would jeopardize this engine for job creation and investment as well as the innovation cycle that the Internet has generated.
The other side in the debate counters that allowing Internet providers to charge content companies for “fast lanes” to consumers kills innovation by freezing out startups without the resources to pay for priority service. Some argue that even the talk of such a scenario is already hurting some young companies because investors get worried about their business models.
In other words, the combatants mean two different kinds of “innovation.” Providers are talking about their ability to upgrade networks so they can carry more traffic at faster speeds. Their opponents focus on new services for consumers that might require a lot of bandwidth but would be too costly. In both cases, the i-word is applicable, but it’s not the type of innovation that could change the face of the industry. Not the disruptive kind.
Innovation with a capital “I” is the kind a small European startup called Skype brought to telecommunications when it launched its Voice Over Internet Protocol service in 2003.
It is no longer a question of whether VOIP will wipe out traditional telephony, but a question of how quickly it will do so. People in the industry are already talking about the day, perhaps only five years away, when telephony will be a free service offered as part of a bundle of services as an incentive to buy other things such as broadband access or pay-TV services. VOIP, in short, is completely reshaping the telecoms landscape.
If the government leaves the Internet alone – letting broadband and content providers hatch whatever devilish plots they feel are in their interest – some startup, or a few of them, will inevitably come up with the next idea that will be far outside the current debate. It might involve advances in compression technology, making all talk of fast and slow lanes irrelevant because they could suddenly allow the existing infrastructure to carry more traffic, or breakthroughs in mesh networking, which might allow people to get broadband connections without using much of that infrastructure. Whatever the game-changing innovation might be, both sides in the current dispute would be forced to deal with it, pitching in with incremental innovations.
Add government intervention to the scheme of things, and all that does is give one side a temporary advantage. I think that would slow down the emergence of a disruptive technology because developing it wouldn’t be a priority for new entrants, but you don’t have to agree with me. The disruption is inevitable in any case. •


Leonid Bershidsky is a Berlin-based Bloomberg View columnist. He was the founding editor of Russia’s top business daily, Vedomosti, a joint project of Financial Times and the Wall Street Journal.

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