Broadband is capital that is used by information service providers to produce an information service. It is the copper, fiber, cable, electronics, and software created, deployed, and used as capital inputs in the production of information services that end-users eventually consume. By extension the Internet is also an input in the production of information services. The cables, routers, and servers on the Internet connect over 67,000 global networks making it possible to create and sell information.
By information services, I refer to services that either generate, store, or provide end-user access to content. This would include broadband access operators such as Verizon or Comcast; router and server providers such as Cisco; back haul providers such as L-1; Internet search engines such as Yahoo or Google; and content providers such as Netflix or Hulu. They all use broadband capacity and the Internet as inputs for the production of information services.
End users or consumers buy information services for final consumption. They are not using fiber, cable, copper, software, or network electronics to create anything. They have no property claim or property interest in these components. Many end-users have no clue as to how these inputs are used much less could define them. All they know is that they point and click on a link to get their information on current events, gossip, or the recipe for making holiday season rum cakes.
Unfortunately the noise from net neutrality proponents, specifically those pushing Title II regulation of the subset of information services providers known as broadband operators, has obscured this view of broadband as a capital input. In addition claiming that broadband is a civil right or platform for promoting social justice is also misleading and clouds the discussion.
And the Federal Communications Commission is doing nothing to clear the air on the issue, choosing instead to fan the flames of ignorance surrounding what broadband truly is, a mere input in the production of a service.
The Commission and net neutrality/Title II proponents make this mistake easily because they fail to identify the appropriate market for analysis; the information market. We develop, deploy, and maintain our communications networks for that sole purpose, to facilitate information exchange. Because information is a prime component in our knowledge economy, public policy’s main focus should be on how best to promote the deployment of capital so that the exchange of information becomes easier and faster.
Net neutrality/Title II proponents may rebut this line of reasoning by saying that putting into code the principles of transparency of network management, non-discriminatory treatment of content traffic, and no blocking of access to websites of choice based on Title II is the best way to ensure information flows across 67,000 globally interconnected networks. I beg to differ.
Title II regulation does not address the basic market components of demand and supply for information. Demand for news, entertainment, and advice drives the supply of information. A priori, this demand never recedes. It continually increases. The economy, in particular the information markets, have created a way to supply increasing demand for information by funding the development and deployment of capital inputs that make accessing and delivering information easier and more efficient.
Title II’s focus is on price regulation and transparency of agreements between network operators. Title II’s language says nothing about the demand for information services. Title II does not say anything about encouraging the supply of information services nor does it speak to leveraging of capital inputs to supply services.
Title II’s primary objective is to ensure that in a monopoly market for voice telecommunications that the consumer of voice communications gets a fair and reasonable rate for her voice service and the Commission is aware of all network operators involved in delivering voice services.
Title II is not a public policy tool for the 21st century. It’s time for the Commission to diffuse the narrative that end users have the right to tell private parties how to leverage capital inputs used for providing a commercial service in a free market. Diffusing this narrative is easier if the Commission properly describes what broadband and the Internet really are and focus on the true market for analysis: the information markets.
Once the Commission realizes that this is the market that should be promoted and that the private sector has been doing a great job in building the networks necessary for information to flow, maybe then we’ll start moving in the right policy direction.