Not Neutrality
There certainly is a lot of talk, writing, and debate concerning “net neutrality.” Not much of that talk has addressed what we all enjoy, revenue.
Across industries, government intervention, rather interference, has stifled advancement, has raised consumer prices, and has then lead to years of trying to “undo” the government’s handiwork. As pertains to net neutrality, the government’s approach should be discouraged because of the damage that may occur to the channel.
Today’s access and backbone networks do not have the capacity to deliver what the consumers expect or what the consumers will demand going forward. Therefore, building out the Internet and broadband infrastructure requires billions of dollars. But if network operators can not recover their costs for increased bandwidth use, then the entire network will slow down. That will lead businesses to begging the government for funding to build out the networks. What a ludicrous and dangerous position.
Money typically goes to those projects that have the opportunity for return. So, if providers cannot show that they will have incremental revenue growth in return for capital expense build out, then why build out and why invest? Then if there is no investment, there is no buildout, and the Internet’s potential is quashed.
Alternatively, if network providers are permitted to recover costs and can thus obtain the required funding, then there will be further advancements. These advancements will allow for greater speed, improved services, and new offerings that we currently can not even comprehend. With the “new and improved” services comes the chance for the channel to sell more products and more tiered services. That becomes the point – the absence of net neutrality brings with it the opportunity for more revenue to the channel.
Advocates to net neutrality may counter this position by suggesting that providers may overcharge for the “right to use their pipes.” If we allow market forces to operate, and not government forces, then the market will keep fees in balance. Undoubtedly, the providers will want as much money as possible, yet they do not want to lose customers. That notion and the competitive nature of commerce will mandate an economic balance without the need for Congressional hearings, poorly drafted legislation (e.g. The Telecommunications Act) and endless litigation.
The chances for additional revenue streams, additional resources and additional advancements lie in the economic markets, not in the hands of misguided and ill-informed government officials. Unbridled market forces, as Adam Smith would profess, will do more to promote the social good in this important matter. Let the invisible hand work and let it put more opportunity for revenue into your pockets.
Philip Josephson is the founder of the Law Office of Philip Josephson, which focuses on providing general counsel and strategic planning services to business leaders and business owners. As outside counsel to a variety of companies, the law firm is uniquely able to add value at the increasingly crowded and confusing intersection of law, finance, strategy and operations. Josephson earned a bachelor of business administration degree in finance from the University of Miami, a juris doctorate from the University of Miami School of Law, and an master’s degree in business administration from Columbia Business School. He is a member of the Florida Bar, the Arizona Bar and the Federal Communications Bar. He also is a member of the 2009-10 PHONE+/Channel Partners Conference & Expo Advisory Board.
