“Regulation” of the Internet: Lessons from the Wall Street Meltdown?

By Aaron Weiss

You need only look at the cash now stuffed in your mattress, and sock drawer, and walls, to be reminded of the financial tsunami currently washing over the U.S., and perhaps world, economy. It is difficult to find two people in the same room to provide the same explanation for what is going on. But it appears that risky lending practices, inadequate safeguards, and lightly or unregulated financial institutions performing the roles that used to be reserved for their regulated counterparts (real banks) all play some part in Wall Street’s collapse.

Critics, especially on the left, repeatedly cite lack of regulation as central to our current economic woes. Liberals—the right argues—love regulation, and the industry-strangling consequences that come with it. Conservatives—the left bellows—loathe regulation, and prefer to let greed run unchecked. The conservative view has won out in recent years, if not decades.

Perhaps it is simplistic to paint all forms of government regulation over the private sector with the same brush, but let’s do it anyway. Regulation might best be described like antibiotics. It isn’t something you want to prescribe to every patient who walks through the door. Too many antibiotics can harm the individual and public health at large. But tossing the medicine in the trash is no solution either. Viruses will run rampant and people will die.

With major banks and investment firms
now falling like dominos, largely due to their

own unfettered practices, we are now seeing that the medicine has been under-prescribed. Hey now—maybe “regulation” isn’t such a dirty word after all.

There has been much talk in recent years about regulation and the Internet. Both sides of the political aisle have taken predictable stances on the issue. Considering the harsh lessons in banking, perhaps now is the time to consider questions of Internet regulation without resorting to blind partisanship in either direction (permission to snicker is hereby granted).

The Non-Free Market

To opponents of Internet regulation, any kind of government influence smacks of interference in the “free market.” Should government require broadband providers to meet minimum performance levels? Should government bar broadband providers from discriminating against different kinds of traffic? Should government require broadband providers to share with competitors access to their infrastructure?

The resounding “NO” from regulation opponents largely rests on the argument that the market should settle these things, not the state. Consumers, they say, will vote with their dollars and reward ISPs who provide the best product at the lowest price.

Indeed, competition is a wonderful thing. I happily take for granted choosing among 200 breakfast cereals at the supermarket. Rental