Ted Cruz is confused on net neutrality
President Obama this morning tried shaking off some midterms rust, by announcing that he would ask the Federal Communications Commission to reclassify the Internet as a utility:
Obama’s move comes as the FCC continues to devise its formal rules around net neutrality, and is designed to push the agency toward adopting provisions that preclude Internet traffic blocking, throttling and prioritization. In short, he wants all Internet content to flow at the same speed, without content providers being required to pay a toll for the privilege.
Not surprisingly, the news was greeted grimly by Internet service providers like Comcast (CMCSA) and Verizon (VZ), which argue that someone needs to pay for added infrastructure to handle data-hogs like Netflix (NFLX) — if it’s not the content providers, then it’s going to be the consumers. A worthy debate to have, with persuasive arguments on both sides.
But then there is Sen. Ted Cruz (R-TX), who sits on the Senate Committee on Commerce, Science, and Transportation. Here was his reaction to the news, via his official Twitter account:
Is Cruz arguing that Obama’s proposal, if adopted by the FCC, would slow down the entire Internet? If so, then it seems he is totally missing the point (i.e., speed for all, rather than speed for some).
Does he believe that ISPs will simply throw up their hands at the extra regulation, and stop maintaining the current broadband infrastructure? Or is it that ISPs will stop improving their delivery services, meaning that today’s speeds are tomorrow’s speeds ad infinitum? If so, it seems that Sen. Cruz has very little faith in America’s capitalist spirit, in which established companies improve for the sake of taking market-share from one another, and in which entrepreneurs try to create something that completely disrupts the status quo. Remember, it’s not as if ISPs are operating on the brink of unprofitability — Comcast and Verizon, for example, are projected to generate combined annual profits in excess of $25 billion.
Moreover, regulated utilities do sometimes receive approval to raise rates (just take a look at what’s happening to Massachusetts electricity prices this winter).
Again, there is a real debate to be had over net neutrality. But no matter where it winds up, Sen. Cruz should rest assured that the Internet won’t be slowed down.
Sign up for Dan’s daily newsletter on deals and deal-makers: GetTermSheet.com