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We at the ÀÏ°ÄÃÅ¿ª½±½á¹û have a lot of respect for the Cato Institute and its principled and brave opposition to the expansion of the national security state and its powers. We do not always see eye to eye, however. Last week we released a report, Network Neutrality 101: Why The Government Must Act to Preserve The Free And Open Internet. Yesterday the estimable Julian Sanchez posted a civil but critical on Cato's blog that warrants a response.

Sanchez agrees with the ÀÏ°ÄÃÅ¿ª½±½á¹û that the open, end-to-end nature of the Internet is "important enough that if it were systematically threatened, there would be a decent case for regulatory intervention." So we don't disagree over the crucialness of preserving the open Internet — just whether there exist "systematic" threats to that openness. He argues that the Internet's open nature is "pretty resilient."

I'm not sure where he sees that resilience coming from, other than from the fact that net neutrality has by and large survived so far. As we argue in the report, that's the result of vigilance by a handful of loud public interest groups, combined with growing scrutiny by the Federal Communcations Commission (FCC), which has put considerable pressure on companies to play it straight. But that atmosphere cannot last forever — the FCC's leverage totally in April, and as soon as public vigilance falters, companies will quickly begin to exploit their control over network access. In the report we lay out some reasons the profit motive will almost certainly drive companies to do this. In addition, new technologies are making it easier and cheaper by the day for the broadband companies to mess with our communications in various ways. Things stay the same until they don't.

Sanchez concedes that broadband Internet is not very competitive, but the real policy question, he argues, "ought to be how to get enough competition in broadband markets that consumer choice" can protect against "pernicious" violations of neutrality.

Nobody disagrees that engendering genuine, lasting competition in broadband markets would be a good thing. The only problem is, it's not clear how that would happen. Broadband Internet appears to be a very utility-like market. That is, it has many or most of the characteristics of what economists call "natural monopolies": it is characterized by high capital or fixed costs (it costs a whole lot to build a network before you ever see a dime in revenue), and high barriers to entry (not anyone can up and decide to go into business selling broadband access). Like electricity, water, and telephone service, you are never going to have numerous parallel infrastructures providing a flourishing competitive marketplace and a wealth of different options to choose from. Of course, it is certainly possible that this economic analysis is wrong, or that new technologies will emerge that change these factors. But that isn't something that in our judgment we ought to bet the Internet on. Competition is not something we can be sure of, but the profit motive is.

Meanwhile, "common carrier" protections requiring neutral service are a centuries-old means of guarding the public interest from abuses by the owners of utility-like infrastructures. They do not represent some kind of drastic re-architecting of the Internet, as Sanchez suggests, but are merely a way of preserving the status quo.

In addition, as we point out in the report, even if true competition among broadband technologies emerges or could be created (through government policies, I assume that would mean), the need for open access would remain. Passenger trains were never freed from common carrier obligations just because people could also drive or fly to their destination — and in fact the highways and airlines are also subject to open-access rules. The law recognizes that even if alternative facilities are broadly available, in many specific situations only one is practical for a given customer. And it recognizes that an openness mandate is necessary because such a broad variety of far-flung markets, activities, and social functions depend upon these facilities, or receive crucial inputs from them.

So, the bottom line in our view is:

Financial incentive + technological ability + insufficient competition = a systemic threat.

A few final points:

• Sanchez also argues that some of our examples of abuse by telecoms are not on point. Here, Sanchez makes a fair point – namely, that some of the examples we cite are not violations of Internet network neutrality in the strictest sense. However, they do speak to the motives, intent, and trustworthiness of major telecommunications firms in treating the speech of their customers fairly – and thus merit concern. Sanchez to his credit does concede that there are other cases that "may or definitely do count as potentially troubling neutrality violations," and that some may justify regulatory action.
• Sanchez also wonders "why the ÀÏ°ÄÃÅ¿ª½±½á¹û is weighing in on this at all." I could wax poetic about the ÀÏ°ÄÃÅ¿ª½±½á¹û and Internet and free speech but I will simply note that 1) We have been engaged on this issue for at least a decade; 2) defense of free speech was the founding mission of the ÀÏ°ÄÃÅ¿ª½±½á¹û and has remained at the core of our organization; and 3) the Internet is, as a practical matter, where most people exercise their right to free expression today.

By the way, if you agree with the ÀÏ°ÄÃÅ¿ª½±½á¹û on net neutrality, you can telling him to reclassify broadband connectivity services in order to provide strong network neutrality protections, as we call for in our report.