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OXON HILL, Md.—Networking pioneer Bob Metcalfe warns that trying to impose network neutrality rules under Title II of the federal Communications Act is a bad idea because it will inevitably lead to taxation of Internet traffic.
I interviewed Metcalfe while we were between meetings at the Metro Ethernet Forum’s GEN14 Carrier Ethernet event on Nov. 17. He said that network neutrality advocates are playing a dangerous game by advocating the regulation of the Internet by the Federal Communications Commission under Title II as if it was part of the national wire line telephone system.
“They don’t remember when the FCC ran the Internet,” he told me as we enjoyed the hospitality of the folks at NetEvents who organized the GEN14 conference. Metcalfe, who with colleague David Boggs invented Ethernet when they worked at the legendary Xerox PARC campus, was referring to the days when the only way to reach ArpaNet, the Internet’s predecessor, was through dial-up modems using acoustic couplers.
Those modems and the means of reaching external networks were tightly controlled by the government, even to the point that at one time direct connections to the phone network were banned because they might be dangerous. Fortunately, things have changed. The quest for ever more governmental regulation has not.
During the opening keynote speech at the GEN14 event, Metcalfe made a number of references to the ongoing discussions at the FCC and across the country about net neutrality and how to implement it, if indeed it is a good idea at all. As far as Metcalfe is concerned, net neutrality, at least in regards to forcing the Internet into Title II of the Communications Act, is a very bad idea.
But Metcalfe said that large companies including Google, which has gone on record supporting the use of Title II as the path for Internet regulation and fairness, were wrong. “Google is playing with fire,” Metcalfe said.
“Google makes a lot of money from advertising on search and they get a lot of it for free. They went to Washington and want to get the FCC involved.” In reality, he said, “They’re inviting the government to get involved with the internet.”
What will ultimately happen, Metcalfe said is “The government will get involved with running Google. Why should companies that pay Google for advertising get a fast lane?”
But as far as Metcalfe is concerned bigger problems follow on from there. “I wonder if they realized that the government could tax the Internet with the universal service tax. That’s an average of seven bucks a month,” he said.
An examination of the Title II legislation indicates that Metcalfe may be right. Current legislation that blocks taxes on the Internet doesn’t apply to Title II services. Likewise, if the Internet becomes part of Title II, states and localities could apply the same taxes to the Internet that they currently apply to phone service.
Network Pioneer Metcalfe Warns Net Neutrality Will Bring Web Taxation
While there’s sure to be a hue and cry by some about taxing the Internet, the chances are that such an action would not be prevented by Congress. “The Republican Congress won’t raise taxes,” one senior telecommunications executive who asked to remain anonymous told me at the event, “but the Universal Service Fund is shrinking as land line use diminishes and one way or another the government wants that money.”
And depending on how the net neutrality debate finally shakes out, the idea of “fairness” could easily fall into the hole of unintended consequences that’s so well known around Washington.
Metcalfe suggests that providers could lose control over advertising, for example, if the FCC or another agency decided that giving certain advertisers prominent positions on Websites or search results violated net neutrality. Does that seem far-fetched?
Television broadcasters already see a form of such control in how and when they run some ads. In some cases they are even told what rates they can charge and even what products they’re allowed to run ads for as well as the times of day those ads can run.
For example, television broadcasters are required to sell ads to political candidates, regardless of their message and to give them the best advertising positions. They’re prohibited from running liquor ads at certain times of the day and they’re prohibited from selling ads to tobacco companies at all.
This sort of control, even if that’s all that happened, would transform the Internet in ways all but the most extreme fans of government regulation would find objectionable.
But given the obvious problems with the practices of a few Internet providers, isn’t some kind of control necessary? Metcalfe doesn’t think so. What he thinks is necessary is for real competition to exist on the Internet, something that’s fairly rare in the United States.
While many opponents of net neutrality claim that there’s already competition in the U.S., in most cases that’s simply not true. In most localities, consumers have only a single choice, or perhaps one choice of true broadband service and one choice for access using something antiquated like DSL service. Effectively, there’s only one choice of broadband networks available to most people in most areas.
This is a problem that puts Internet service providers in a monopolistic position in many areas. The answer, Metcalfe thinks, is to open up broadband Internet services to real competition so that users have an actual choice.
Then when consumers and businesses have a choice of providers and can switch whenever they wish, the existence of actual competition will force Internet providers to provide fair service at a fair price. But that of course, will also require the FCC to act.