The FCC’s new net neutrality rules won’t work. Unfortunately, there are no better alternatives in sight.

(The opinions below are those of the author. He formerly advocated network neutrality; a glimpse of what it might actually look like has prompted him to change his mind.)

Net neutrality is one of those issues that sharply divide the country. Those who take sides in the debate, do so passionately. To call it a “debate,” though, is misleading. In a debate, people listen to each other before responding. On network neutrality—as in health care, financial reform, and other key national issues—people just shout at each other. Making matters worse, the two sides not only hold conflicting opinions, but deal in conflicting facts.

You know the facts are up for grabs when both sides claim the same slogan: “Keep the Internet Free”! To some, this means keep the Internet free of regulation; to others, keep the Internet free of discrimination by the Verizons and Comcasts that connect us to the world.

One fact is inescapable: when the local Internet data load exceeds capacity, someone will decide whose traffic gets held back. It might be Comcast, making a business decision; if might be the FCC, controlling Comcast through regulation. If both keep their hands off—Keep the Internet Free!—the decision gets made anyway, by the kid down the street supplying bootleg hi-def movies through  his parents’ connection. We know when he’s home from school, because service for everybody else on the street drops to a crawl.

How should Internet service providers (ISPs) decide which content gets priority? Some say regulation only makes things worse, so we should turn the ISPs loose and let the market sort things out. Others retort that a profit-making ISP seeks only to make a profit; if interfering with content furthers that goal, content will suffer. We suspect the first crowd, by and large, are the same people who also oppose health care legislation and financial reform, preferring to trust insurance companies and banking institutions (and ISPs) over government regulators. The second group believes with equal fervor that those companies will happily wrong their customers in return for higher profits, so that only government control can assure fair treatment for all.

As to net neutrality, both sides are wrong.

Let’s start with a few of the supposed facts.

The pro-regulation forces justify their position with a long history of wrongful content discrimination by ISPs. First was the time back in 2007 when Comcast impeded BitTorrent content. That’s one. Then, a small phone company ISP may have blocked VoIP. We know it wrote the FCC a check to settle the claim, so let’s call that two. Third . . . well, the fact is, there is no third. The FCC mined reams of public comments to find a small handful of accusations, but no more smoking guns. Can this scant history justify a major and controversial regulatory effort?

But the small number of past abuses doesn’t matter! says the FCC. The broadband ISPs have both means and motive to discriminate! It’s just a matter of time!

Again, though, the facts get in the way. The broadband ISPs have had the same means and motive for the past five years. If they were as unscrupulous as the FCC seems to think, by now we should be awash in wrongdoing. But that is not happening. Maybe the FCC is right, and content discrimination is inevitable. Even so, we could wait a year or two, and see whether an actual problem arises, before setting out to solve it.

The anti-regulation folks are equally free with the facts. We don’t mean the Rush Limbaugh nonsense about net neutrality being an Obama plot to censor the Internet. We’ll take instead an often-heard assertion both sides seem to accept: the Internet has not been regulated until now, a state of affairs which fostered its explosive growth over the last twenty years.

Sorry, but that’s just wrong. While the Internet was developing from a tiny, hard-to-use network of nerds into the vast facility we know today, it was mostly under the thumb of the FCC. Otherwise, it might not have happened at all.

Once upon a time, in the dark days before Facebook and YouTube, there was no broadband. People accessed the Internet over a “modem” gizmo on the same phone lines they used to make voice calls. (Old-timers hearken back to the mating call of a modem seeking another of its kind.) Voice lines were (still are) subject to FCC regulation. Under a set of rules called Computer III, a large phone company that offered its own ISP service—all of them did—had to open its network to competing ISPs, giving the competition access to the same internal technical facilities that the phone company ISP used. The result was a breathtaking number of competing ISPs. Computer III was essential to this thriving marketplace. Without it, no other ISP could have matched the phone companies’ quality and cost, so the early Internet would have become the exclusive province of the Bells. The Internet might never have flourished as it did.

This bit of history overturns the canard that Internet regulation is a new idea. True, Computer III did not impose content neutrality in so many words, but it had the same effect. A customer unhappy with an ISP’s content offerings could quickly switch to a new ISP, at no added cost. Eager to keep the customers happy, ISPs left the content alone.

That was then. In 2002, the FCC declined to apply Computer III principles to cable modem broadband service, and in 2005, it withdrew Computer III from phone-company DSL broadband. Today Computer III applies only to dial-up. But few people use dial-up any more. Most Internet users subscribe to broadband. Without Computer III, this means signing up for the ISP run by the phone or cable company. That leaves most broadband users with one possible ISP, or two at most, possibly with long-term contracts and early termination fees.

Changing ISPs is no longer the ready option is once was. This is a big problem for the argument that markets are an effective control on ISP behavior. Markets work only where they exist.

But wait, say the anti-regulation people. New competition is coming!

Maybe; but having our hopes repeatedly dashed over the years has made us skeptical. Remember city-wide free Wi-Fi? Broadband-over-power-line? Nationwide fiber-to-the-home? Each of these launched with great fanfare, but they all petered out. FIOS, by far the most successful of the bunch, will top out at passing just one in six of U.S. homes. This year the big hope is for broadband wireless via 4G. We want it to succeed, but we’re not holding our breath.

When the FCC eliminated broadband competition by dropping Computer III, it did so (it thought) for a good reason. The cable and phone companies insisted that requiring them to share their facilities would cut off the incentive to build more. The way to expand broadband, they said, is to leave the providers alone to do their job. The FCC bought the argument, and gave the providers exclusive use of what they build. As a result, the United States promptly surged ahead in global broadband deployment . . . well, no. The United States by some measures is around twentieth in the world, back in the pack between Estonia and Slovenia. The cable and phone companies tout their investment in broadband facilities, but in most cases the service they actually deliver is impressive only by third-world standards.

Some other countries treat broadband Internet like highways and airports—essential to the larger economy, and so justifying government investment. Here in the United States, we would call that a federal takeover. What we have instead, though, is deregulation without competition. This is the worst of all possible worlds: mediocre and expensive service, little or no customer choice, a threat of content discrimination, and no good solutions in sight.

Which brings us to the FCC’s net neutrality rules.

A good rule, first of all, must guide behavior. A person reading the rule should know what it requires.  NO TURN ON RED.  CLOSE COVER BEFORE STRIKING.  EMPLOYEES MUST WASH HANDS.

Here is a key net neutrality rule:

[A broadband ISP] shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service. Reasonable network management shall not constitute unreasonable discrimination.

Discrimination is permitted if “reasonable”; otherwise, not. Does anyone know what this means? To be sure, the word “reasonable” is well understood in some areas of the law; but not this one. The FCC offers some commentary and a few examples. But the vagueness of the rule still leaves a great deal of room for both ISP mischief and unrealistic end-user demands. No doubt this will bring many disputes before the FCC. That might not be a bad thing, if decisions came back quickly. Alas, speed is not among the FCC’s many excellent qualities. Allowing for internal appeals, we can hope for a two-year turnaround at best. That is forever, in Internet time. Whatever guidance might come from these decisions will arrive much too late, long after the problems that started them have evolved into entirely new species.

The obvious alternative to vague rules—more specific rules—does not work, either. Nobody wants the government meddling in the details of ISP internal operations. Nobody thinks they would be any good at it.

What, then, is the answer? Sadly, the FCC gave away its best shot when it abolished Computer III for broadband. That eliminated competition. Now the only options left are regulation or nothing. The prospect of regulation is unappealing, at least in its present form. And the prospect may not last long; as my colleague Christine Goepp explains, the new rules might not make it out of the courtroom.

In a parallel universe, one different from our own, the FCC could fix the problem. It would assert Title II telephone-type regulation over broadband ISPs—not all of Title II, which would indeed be oppressive, but just enough to re-impose a Computer III regime that requires ISPs to make capacity available to competitors. The ISPs would oppose this, to put it mildly. But they need not provide the capacity for free; the FCC could mandate charges that fairly compensate them for the competitors’ share of infrastructure costs, plus profit. The ISPs would likely oppose it anyway, because even a fair profit may not cover losses that result from competitors forcing their prices down and quality up. One might answer that the ISPs originally developed their monopoly facilities under protective regulation, as cable companies or phone companies, and perhaps have no inherent right to carry that monopoly over to a market that might otherwise be fully competitive. The ISPs would respond . . .

But the fine points don’t matter, because this is all science fiction anyway. In our universe, the one where government politicians get applause by condemning government, the Title II / Computer III option is about as likely as free universal health care.

Our best hope for an Internet with neither regulation nor discrimination is the emergence of actual broadband competition, whether 4G or something else. But it better happen soon. In one scenario, after the appeals court strikes down the new rules, the current broadband ISPs set up exclusive deals with major Internet content providers. The competition, when it eventually appears, would be unable to provide the content subscribers want most.

In the meantime, let’s enjoy what we have. But expect some delays. The kid down the street just started sending me the high-def True Grit.