Net neutrality gets presidential nod

Yahoo Finance

President Obama shook up the debate over the future of the Internet this week, when he raised some net neutrality concerns in response to a question at the U.S. Africa Business forum this week. His comments put his position at odds with the Federal Communications Commission's proposal, which would open the door to allowing Internet providers to offer content companies so-called "fast-lane" access. 

"One of the issues around net neutrality is whether you are creating different rates or charges for different content providers," Obama said. "That’s the big controversy here. You have big, wealthy media companies who might be willing to pay more but then also charge more for more spectrum, more bandwidth on the Internet so they can stream movies faster or what have you. And I personally — the position of my administration, as well as I think a lot of companies here is you don’t want to start getting a differentiation in how accessible the Internet is to various users.  You want to leave it open so that the next Google (GOOG) or the next Facebook (FB) can succeed."

Robert Litan, a senior fellow at the Brookings Institution, calls the president's statement "quite significant, because the FCC technically is an independent agency, not directly under the thumb of president. But with the president weighing in on the one-lane/two-lane issue on the Internet, he's sending a very strong signal ... that they should come down against allowing two lanes on the Internet."

The FCC's net neutrality plan has received more than a million comments, while the FCC chair has tried to distance himself from the proposal in response to criticism from consumer advocates and startups.

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Litan expects, once the comment period on the FCC's proposal ends in mid-September, the commission will wait until after the election to make a final decision on the plan.

Litan argues that there are plenty of examples in the economy where people are willing to pay for extra service. He says the quasi-governmental postal service offers "three lanes" including regular, priority and express. He doesn't understand why a comparable model on the Internet would be the end of the world.

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On the issue of discouraging startups, he poses this question: "Is the entrepreneur in a garage working on a mobile app going to be deterred because Netflix (NFLX) is paying a lot more so it can deliver streaming on the Internet? I honestly don't think so."

Consumer advocates and tech companies who support net neutrality will continue to face off with telecoms and cable companies who want to be able to charge for different speeds.

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How could net neutrality impact the average American? Litan makes this prediction: "If you ban two lanes, over the long run you will discourage investment by Comcast (CMCSA), Verizon (VZ), the AT&T (T) in upgrading the entire Internet, so that over the long run we'll face capacity constraints on the Internet and the average citizen will suffer."

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