The Illusions of Net Neutrality

Since the early 2000s, a small but influential cohort of policy wonks and pundits has argued that the Federal Communications Commission should prohibit Internet service providers (ISPs) such as Verizon, AT&T and Comcast from charging differential rates for high-speed connections to digital content (or “edge”) companies such as Amazon, Netflix and Google.

Rallying around the banner of “Net neutrality,” these activists believe that ISPs should treat all content on the Internet equally, charging everyone the same amount of money for equally fast (or slow) access to all websites. If ISPs and content providers can negotiate performance standards, they presume, today’s lumbering incumbents could obtain an inequitable advantage over tomorrow’s insurgent upstarts: faster connections, better prices, maybe even preferential access. To prevent this from happening, they contend that the Internet ought to be a common carrier that is regulated in accordance with ostensibly time-honored norms — standards that shaped the regulation of the railroad, the telephone and the telegraph.

The ISPs contend, in response, that they have a right to charge what the market will bear. Verizon has even ventured the dubious argument that it has a First Amendment right to operate its business free from federal regulation.

On Tuesday, Judge David S. Tatel of the U.S. Court of Appeals for the D.C. Circuit struck down an FCC ruling that had previously blocked Verizon from experimenting with differential pricing. Net neutrality activists warn that Tatel’s ruling will slow innovation by preventing up-and-coming edge companies — the next Facebooks, Craigslists, and eBays — from reaching customers by giving an unfair edge to established sites. FCC critics, led by ISP giant Verizon, challenged this theory as fanciful, underscoring their commitment to preserving open access to the Internet, and adding that to expand broadband access ISPs need additional revenue, which could be generated through differential pricing....