Can the net survive with no regulation?

WIRED:Politicians in many countries are lining up to control what has been a highly successful free-for-all, writes DANNY O'BRIEN

IT’S NOT a great time for anyone advocating a light hand on government regulation.

First there was the 2008 economic dive-bomb, for which most laid blame at the foot of lax supervision of the American credit market. Even more viscerally, the images in the last few weeks of BP’s harrowing of the Gulf of Mexico have silenced even the keenest advocate of “drill, baby, drill”.

But what about regulating the internet and its own multinationals? The internet came of age in the United States the mid-1990s, when both Democrats and Republicans were preaching the end of “big government”.

In 1998, the Internet Tax Freedom Act prohibited the US, state and local governments from taxing internet access. The US also placed a moratorium on sales taxes (VAT) for internet purchases, although these quickly evaporated as more tax income was needed.

Until recently, the American net didn’t even have a regulating body.

The closest any organisation came was the private company ICANN, which was given powers to allocate IP numbers and manage domain names by the US Commerce Department.

Now, though, the regulator has been making moves to take over the loose reins of internet regulation. America’s Federal Communications Commission (FCC) has been in charge of telephony, broadcast and cable television and has recently asserted its control over the internet.

Even for traditional libertarian netizens, this move was mostly seen as ostensibly for a good purpose.

The FCC declared itself in favour of net neutrality, a principle that would limit the amount of blocking and throttling internet service providers (ISP) could conduct on the traffic of other net users and set about laying down the rules that ISPs would have to follow.

The ISPs, of course, did not take this lying down and successfully challenged the FCC in court.

This week, members of the US Congress warned the FCC not to unilaterally expand its powers without congressional approval – approval it is unlikely to receive from politicians still cautious about “big government”.

This though is just the first shot across the bows of the net, with plenty of other countries and motives lining up to control what has been one of the more successful free-for-alls in recent years.

After weeks of complaining about Facebook’s behaviour in failing to warn or protect its users from its own shifting privacy policies, some want to do more than simply wag their fingers.

Noted US social networking commentator Danah Boyd has recently described Facebook as a “utility”, which must send shivers down the spines of investors in that particular start-up.

If the United States, traditionally one of the most lax enforcers of government privacy controls, won’t step up to bat against Facebook, might Europe?

Certain countries in Europe have been itching for a state-led fight with the growing hegemony of US internet giants for many years. France pushed heavily for a publicly funded competitor to Google as long ago as 2006.

According to the Financial Times, Facebook has already faced questions from Swiss and German regulators over allowing users to upload the pictures of other users, which may violate their local privacy laws.

Despite this discontent among the regulators and lawmakers, they still face an almost intractable problem of speed and timing. The internet continues its dizzyingly rapid technological change.

Just when the private companies that increasingly control it might seem to have stabilised, a disruptive upstart like Facebook appears and eclipses Microsoft, Yahoo! or any of the older giants. How can such a changing landscape be controlled by the frequently slow grinding of national legislatures?

America’s deliberately ponderous governmental system shows the worst-case scenario. Network neutrality has been on the agenda there for five years, and still seems no closer to even being considered by Congress.

To be effective at all, internet regulation in the EU would have to be Europe-wide, which would mean a synchronising of national interests at Brussels that seems extremely unlikely to occur at internet speeds.

France’s public anti-Google has faded away after eating millions of euro in state funding. In the meantime, Google continues to improve its search engine. Even as European politicians mutter about Facebook’s policies, it continues to gather facts about millions of Europeans, apparently with their permission.

There has been almost 15 years of popular net usage without a popular demand for net regulation. Will it last? My suspicion is that, just as in the Gulf of Mexico and the financial industry, it will take a disaster of some kind before politicians will be granted the power to move quickly and decisively to manage the net.

What would an internet disaster look like?

Perhaps Facebook will not only misuse its data, but lose control of it in some way, to hackers or corporate takeover. Perhaps Google will blunder, as it did recently when it accidentally collected terabytes of Wi-Fi traffic across much of Europe. Perhaps ISPs really will start winnowing data, as the net neutrality advocates predict.

Whatever it is, I have a bad feeling about the consequences. Disasters are not good places to decide good long-term policy and politicians have been waiting a very long time, with a very long list of rules they’d like to apply to the internet.

It’s too big to fail, too tempting not to control.