The Internet Distinction

(from Scott Bradner’s  column at NetworldWorld)

Eyes in their ankles: The congressional view of network neutrality

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Too many in Congress, and elsewhere, see that any attempt at ensuring network neutrality will, in the words of Sen. John McCain, R-Ariz., “stifle innovation, in turn slowing our economic turnaround and further depressing an already anemic job market.”

This type of reaction only makes sense if someone has absolutely no idea how the Internet works or what it is used for.

The only way such an objection makes sense is if you only look at the carriers and assume that they will be worse off if they cannot get a piece of the action for the business that is done over their networks.

So, the argument must go, let the carriers control everything and they will create jobs and expand the economy.

Let’s look at some actual data from the U.S. Census Department. Total U.S. commerce in 2008 (the latest year reported on) was about $22 trillion. Of this about $3.7 trillion was in the form of e-commerce, mostly over the Internet. Most of this (92%) was business-to-business. Doing business over the Internet depends on the Internet working and working fairly.

What about the carriers? The National Cable & Telecommunications Association reports that the total cable company customer revenue for 2008 was about $85 billion and the FCC reports that total U.S. telecommunications industry revenues for 2008 was $297 billion. Thus, total carrier (cable plus telephone) revenue was about $382 billion or about 10% of the value of the business done over the Internet. Commentators that focus on the well-being of the carriers are ignoring the vast majority of the value of the Internet. They want to penalize the 90% to benefit the 10%.

This is an inability to see the value riding over the ‘Net, which is the same thing as having your eyes in your ankles pointing down so they can only see strips of asphalt and miss the cars and trucks riding on the asphalt.

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