Net Neutrality issues

(Originally written as a comment at http://www.avc.com/a_vc/2009/10/net-neutrality.html)

I am interested to see where this goes in the US, as Koreans tend to benchmark the US when it comes to regulation. They demonize the US ("The age of wall-street capitalism is over!") when they don't like it, and praise they like it ("Hey, even the US did it.").

There may be other issues, but it comes down to two questions to me.
1. Should the ISPs be allowed to charge differently based on network usage?
2. Should the ISPs be allowed to block certain dada (or applications)?

I think the answer to #1 is easy. Yes. The freedom to pricing is probably the most important freedom after freedom to entry (that is, to start a businss that you like). When you cannot determine how much you want to charge for your product, you are not much different from a bureaucratic government service. Plus, price regulation will distort the resource allocation. For example, it will benefit heavy loaders, whether their contents are popular or not.

#2 is a bit more tricky. My sense is that when consumers don't have alternatives than the an ISP, the regulation of not allowing blockage may be justified. But when consumers have alternatives, it should be left as a businss decision. Theoretically, there could be different ISP business models purely based on such discrimination. One hypothetical model I can think of is a child-friendly ISP, of which value proposition could be "No more worries. We block porn contents." For parents who are not techy, this could be a very good solution.

If the competitive situation differs by regions, perhaps #2 decisions could be delegated to states or below? Just an opinion.