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TheStreet Open House

The Internet Is Abundance No Law Can Change

Stocks in this article: TVZGOOGCSCOJNPR

NEW YORK ( TheStreet) -- Back in the early 1990s I handled a telecom beat for Newsbytes, a tech news service.

My subject was scarcity. The U.S. industry had been regulated for almost a century to spread capital thin, like butter over too much bread. In exchange for "universal service," telephony was a government-controlled monopoly.

The model was a great deal for tinpot dictators the world over. The "West" regulated telephony, they taxed it and police could tap into any line. So dictators did the same. It could cost several dollars per minute to call people in some parts of Africa. Few did.

When the old AT&T (T) or MCI, now part of Verizon (VZ), brought fiber lines across the ocean they negotiated deals with the local monopolies, controlled by the local dictators, assuring that the scarce resource would go first to the dictator's friends, and that tons of money would flow his friends' way, too. Control of the resource meant control of the economy and control of the people.

The Internet is based on abundance. Google (GOOG) is just one example. Without any government subsidy, without regulation, it now has more Internet capacity -- compute capacity, transmission capacity, storage capacity -- than either of its well-regulated rivals. We have run the experiment. We know what works.

The International Telecommunication Union, or ITU , was created in the era of scarcity and was bypassed by the Internet, which won a waiver from its regulations in 1988 on the promise of economic growth. That growth has been delivered, but control has been lost, so the dictators of the world are meeting in Dubai this week to negotiate a new treaty aimed at bringing that control back.

The Hill and Politico are treating this as a pissing match between the U.S. and Russia, but Techdirtsays China's support for Russia's proposals is much more dangerous. The real issue, Reuters notes, is taxation.

As CIO Magazine writes, there is no risk the European Union and U.S. will agree to accept ITU control. The world's dictators are waving the flag of national sovereignty, seeking cover to tax international data flows and permission to enforce local laws over the global Internet.

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