Is the Internet more like a TV or more like a phone? That question might sound like the topic of a grade school writing prompt, but it’s actually at the heart of one of the most important policy debates of our time. 

Legally the debate over what is being called net neutrality centers around whether the Internet should be considered a medium akin to cable TV, an entertainment delivery system in which the owner has a First Amendment right to make choices over what content it carries, or if it’s more like the telephone, a communications medium whose providers are obliged to carry all communications, no questions asked.

This might sound arcane, but scholars at Emory University say there is a lot at stake depending upon the answer to this question. “This is a very important debate, largely due to the convergence that the technology today provides,” says Ramnath Chellappa, an associate professor of decision and information analysis at Emory University’s Goizueta Business School. 

Since most electronic communications – voice, television, and data – can be carried over the Internet, the rules governing the companies that can provide access to it are suddenly very important, Chellappa says, particularly since only a handful of cable and television companies are able to deliver this content. Chellappa and other  professors say that whether those companies remain merely passive providers of an information utility or promoters of  particular kinds of services and content could have huge economic and political implications not just for the cable and telephone companies but for the U.S. as a whole, maybe even the world.

A decade ago, most Americans first reached the Internet via their telephone line, through which they reached one of thousands of Internet service providers (ISP). The ISP took its customers’ packets of data and sent them along to another ISP, which transferred them down another telephone wire to another computer.  Nobody but the sender and the recipients knew or cared what those packets were.

Now more and more people access the Internet not through telephone lines but larger “pipes,” almost all of them specially adapted telephone lines or high-capacity television cable. For many Americans, the question of who provides Internet service is no longer a choice of dozens of ISPs but at most two – their cable company or their telephone company. 

Today, some broadband executives would like to change the rules of the game. They say that in order to recoup development costs and to provide more levels and varieties of service for their customers, they want more control over those packets.

At stake for broadband providers is the chance to provide more differentiated levels of service. They also want to be able to charge users for particular levels of service as well as for the services they use, and charge some content providers for the bandwidth they fill. In short, broadband providers would prefer a business model that looks a whole lot more like cable TV service.

Proponents say that the U.S. government should permit broadband providers to move forward, reasoning that consumers and society will be served best if the market is allowed to do its job. Critics counter that letting the dominant providers route different packets in different ways (and perhaps favor one application or medium over another) is a violation of the fundamental spirit of the Internet that could stifle innovation and have other unfortunate economic and political consequences, particularly if the providers come to have a near-monopoly power over the service.

The question is not just being debated among Internet policy wonks. Last year the Federal Communications Commission (FCC) took one step in the direction of the broadband providers’ position. The FCC decided to reclassify which set of rules the Internet fell under, changing it from the “common carrier” rules that govern telephone service to a second set of rules that govern cable companies – the first step on a path that would enable broadband providers to take more control of what they currently just send straight through to the consumer.

At Emory’s Goizueta Business School, scholars are divided over whether net neutrality should be preserved, or if the Internet has evolved into such a different entity that access providers should now be allowed to modify and allocate different service levels and extract special tariffs. 

On the one hand, Jagdish Sheth, a professor of marketing at Goizueta who has worked extensively in the telecommunications industry, argues that the system needs to change. A competitive industry can’t afford to subsidize any free riders, he says, and service tends to deteriorate over time in any system that does.

Other professors say that the fact that high-speed Internet access is now at best a duopoly makes the end of net neutrality a dangerous proposition, one which could lead to overcharging of consumers as well as to stifling of innovation. “What bothers me is that the decision should be made on societal service and not necessarily based on a willingness to pay or a ‘desperately seeking additional revenues’ basis,” observes Benn Konsynski, a chaired professor of decision and information analysis at Goizueta.

There are legitimate questions over who pays for services, Konsynski argues, but the Internet has a special character, and any substantial changes to the rules of access to it need to be considered very carefully. “This is a common good,” he maintains. “It’s a common good provided by society for the benefit of society and for the benefit of commerce in society.”

With such applications as VoIP (voice over Internet protocol) phone service and IPTV (internet protocol television) now emerging as important new businesses, Konsynski

predicts that commercial demands for special treatment and special "rents"

by some of the providers of some applications are likely to grow.

However, he adds, some critics warn that letting particular interests to end net neutrality could result eventually not just in better service for some applications but worse service for others, including less opportunity for a company that wants to try to launch a new kind of service.

The result could end up being not unlike what happened with cable television, he says, where some believe that the "basic" service diminished and the push on paid and premium services became the occupation of the providers.  Innovation and free market opportunities may suffer as channels defer to the premium revenue players. 

Such broad divisions of opinion on the issue are not unique to Emory. Even some of the Internet’s founding fathers are not in agreement over net neutrality. In a recent debate on net neutrality broadcast by C-Span, Vint Cerf, a vice president at Google and the co-author of an early 1970s paper that played a key role in the design of the Internet’s underlying architecture, argued that the FCC’s reclassification away from common carrier rules creates some serious risks to the Internet as we have known it.

Yet, countered David Farber, a college professor and the creator of the world’s first distributed computing network, it’s unclear whether these changes would be entirely bad for consumers. In any case, Farber said, he worries that legislation to prevent it could inadvertently stifle innovation, and maybe create more problems than it solves. Further, he added that the idea the network was ever completely fair is not quite accurate: for years companies, such as Akamai, have been providing major content providers with access to special routes in order to speed up their content delivery.

Among Emory scholars, concerns over the potential for monopolies top the concerns of net neutrality supporters. Of particular concern to Chellappa is the potential that if the current providers are allowed to leverage their power over the Internet, they could use that to eventually grow into a monopoly power. “Whether you take an ideological view or whether you take a more practical economic approach, you need to encourage a mechanism that will continue to see competition and not side with one side or the other,” he says.

Sheth is less concerned about this possibility, partly because he believes that a high-tension triangle will develop between broadband providers, content aggregators (such as Google) and content providers. These three will each be able to provide some kind of check on the behavior of the third. When it comes to the most basic economic question of the net neutrality debate – who will pay for the service? – Sheth believes that ultimately a mixed model will emerge, with the highest-margin service paying the freight.

For his part, Konsynski says that although there are merits on both sides of the debate, the issue of net neutrality must be resolved very carefully. Today, he says, the development of the Internet is now at a very delicate stage, akin to the period in 1995 when U.S. President Bill Clinton chose to prevent states from taxing on trade conducted via the Internet, which helped fuel its early-stage growth. “The Clinton administration, followed up by the Bush administration, kept a hands-off policy on taxation. Had the states been able to exercise Internet shopping taxation activities in the mid 90s, it would have crippled the Internet. Which state has the right to tax – origin, Internet provider, vendor HQ, vendor distribution center, even states involved in message transit?” he says.

Making a clumsy policy choice now, maintains Konsynski, could have the kind of dampening effect that the decision to permit state taxation in 1995 might have had – both in the U.S. and around the world, because many countries take their lead on Internet policy by watching what the U.S. does. “The rest of the world has more often than not followed the lead on the U.S. principles of Internet-working, with a few exceptions,” cautions Konsynski. “Trying to control and gate and create a differentiated service could be a very negative activity.”