The debate continues regarding Government regulation of the Internet. This week I though I would focus on the probable effects if the Internet becomes regulated.
Currently you have numerous Internet Service Providers (ISP's) that have been investing millions of dollars in both upgrading their networks and moving forward to provide consumers with the latest technology. Hardly a week goes by without hearing about some new innovation that is either in the development stages or is just getting ready to be released.
We had the IPhone frenzy and now the IPAD. Smartphones, laptops and netbooks are now everywhere. Everyone who has one of these devices wants to be connected to the internet. Demand has increased and that is why the ISP's are doing what they can to build out the broadband network. WIFI spots are popping up all over.
Currently the incentive for the ISP's to build out networks and provide consumers with the latest and greatest technology has been to increase the revenue for their company. So what happens if the Government steps in and now wants to regulate this? This no longer becomes a free market.
The probable effects of this regulation would be:
Less investment by the ISP's because the new regulation would reduce their revenue opportunities. If there is less investment then there will be job losses in the telecom and other related industries.
Regulation would also increase business risks for the ISP's. The new regulations that these companies would face will increase their costs to do business. These costs will then get passed on to the consumers.
The Government would like broadband usage to be universal and available to anyone who would like it. However with it being regulated the probable result will actually be reducing broadband growth.
I wonder if there is any parallel to this debate and debates about other limited spaces. I'm thinking about radio. There is only so much AM/FM space for different stations, and government has been involved in regulating its use since 1912. Perhaps the Internet and the current debates about ISPs would be analogous to your current case study.
ReplyDeleteIt's interesting to see how the free market idea is discussed when there is a limited amount of the product existing in said free market. In some ways, it seems almost inevitable that the government needs to regulate it. I am looking forward to your thoughts on how this debate unfolds.