Dueling Fools Bear Rebuttal: Net Neutrality

Anders certainly paints a frightening picture in his opening argument, and it's one that many people share. I admit it, when I first explored the net neutrality issue, I initially found myself responding to the emotional component, too -- until I thought it through a little more. I'm simply an Internet fan, and I've always enjoyed studying successes like Google (Nasdaq: GOOG), Amazon.com (Nasdaq: AMZN), Yahoo! (Nasdaq: YHOO), and so forth, all of which are rallying for net neutrality.

However, as I mulled the information, my inner libertarian chafed at the rhetoric. I realized the irony in treating this issue as one of "freedom" when, in reality, it demands tight regulations in an area that has been traditionally free of regulation. The statements seem compelling, though, wrapped in the flag of freedom and claiming that they're for "the little guy."

Here's what's really at stake: Who's going to pay for the infrastructure? The Internet giants say they're protecting you, but aren't they really protecting their profits? (Not that they can be blamed for that standpoint, but let's put it in perspective.) The Internet has provided a remarkable lack of overhead for e-commerce companies in its virtual territories. eBay (Nasdaq: EBAY) is one of the most stunning examples with its historically high profit margins.

Here are some more thoughts:

• Telecom and cable companies have little incentive to anger users by providing unreliable access. Their Internet businesses rely on network effects. Meanwhile, there is competition to provide Internet access -- not just from cable companies, but also from electricity concerns (they're experimenting with broadband over power lines), Wi-Fi providers, satellite, and solutions nobody's even thought of yet. So much for monopolies.

• Want an example of a negative side effect? Some have brought up the idea that net neutrality regulation could hinder ISPs from "discriminating" against harmful content like spam, viruses, and so forth. Trust that there are many unforeseeable side effects of regulation that could crop up in the future.

• Avoiding overzealous regulation allows industries to price their products to allow them to fund research and development pipelines. Consider pharmaceutical companies. Drugs may be expensive, but finding cures and treatments for dreaded diseases requires cash. Likewise, Internet infrastructure will require cash to evolve, as it most surely will have to do.

There's no such thing as a free lunch. That's how the market works, and it's why our country boasts so much creativity, innovation, and choice. Anybody who has even fleeting knowledge of Adam Smith's theory of the invisible hand of the market knows the philosophy. So let's stop telling scary stories and bring rational thought to the net neutrality debate.

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Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.