The Ted Stevens-sponsored bill that threatened to end net neutrality has likely died a very quiet death as the 109th Congress ended its session. The next Congress, with a Democrat majority, will likely be more favorable to net neutrality.

For those who haven’t kept up with this issue, net neutrality is basically the regulation of telecoms so that they sell internet bandwidth at market prices for everyone. Ted Stevens’ bill would have allowed telecoms to charge prices much higher than market equilibrium to bandwidth users it wishes to single out.

There is very little choice as far as bandwidth suppliers go. Let’s say Wikipedia.org buys bandwidth from Comcast. Chances are there are no other companies it can buy bandwidth from, unless they change the location of their servers. With Ted Stevens bill, Comcast could single out Wikipedia and say “you’ve got to pay 50% more than the price we’re charging everyone else.” For big sites that have no other source of revenue offline, it would basically be extortion. They can either pay what Comcast charges them, or they can shut down their site.

The telecoms make massive amounts of revenue selling bandwidth at market prices. They also have regional monopolies, which means they could make even more money if they charged extra to companies they know have the money to pay for it. They’ve used a lot of their excess cash to pay lobbyists to influence strong politicians with a weakness for ill-gotten money.

Enter Ted Stevens.

Ted Stevens has never said “no” to anyone with enough cash. If lobbyists could find a way to funnel a few million bucks into his coffers, he’d back a bill to enslave every hybrid car driver in the country. His rationality for this particular bill was dumbfounding. He claimed net neutrality slows down the internet, and he couldn’t get an email from a staff member because the intertubes were clogged.

The fact is, although big internet companies do use a lot of bandwidth, they create higher demand and thus increase the market rate naturally. This creates an incentive for the telecoms to lay down more cables and increase bandwidth capacity. Do you see how that works? When the government regulates the industry and makes the monopolies play the economics game in a natural way, everyone wins, including the telecoms! Sure, they could probably make a few more bucks if they were allowed to behave like a monopoly a fix prices higher than the natural rate for select buyers, but they’d also destroy a large part of the internet. In the long run, they’d probably lose revenue because they killed off some of their biggest customers.

Of course, the alternative scenario would have the bigger internet companies banding together to create their own “information superhighway,” as they used to say in 1994. Google is worth over $100 billion, which means they’d have a lot of money to spend to build a new internet backbone. The telecoms would likely be hurt very badly by this kind of thing, so they’d probably spend a great deal of money to convince Ted Stevens to bail them out.

And he’d do it, for the reasons stated above.

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