Last week, we brought you a report from the floor of the massive NXTcomm trade show in Chicago, an event where FCC Commissioner Jonathan Adelstein took the stage and announced his support for "open access" in the new 700 MHz wireless auction. During the event, Adelstein talked more broadly about his view that government could have a legitimate role to play in setting targets and in helping to create truly competitive markets, but his conclusions were repeatedly (but politely) challenged onstage by his debate partner, John Kneuer, head of the National Telecommunications and Information Administration. Only days later, Kneuer got rattled and began shouting down questioners at another tech conference in San Francisco. Kneuer believes that network neutrality, open access rules, and similar ideas only have a place in "command and control" economies. Apparently FCC rulemakings are only good for dirty socialists and massive companies like Time Warner, AT&T, and Verizon.

The Register, which had a reporter at the event, has a nice writeup of Kneuer's reaction when pressed by network neutrality advocates. As he made clear in both Chicago and San Francisco, the Bush administration believes in free markets and absolutely minimal government regulation. Oddly, this leads them to support the telecom and cable companies, which are hardly competitive in any real sense of the word when it comes to US broadband. Instead, what we have is a duopoly between cable and DSL for the vast majority of US citizens.

That's one of the reasons that concerns about network neutrality have taken root. Network neutrality can be defined in several ways, several of which may in fact be bad for end users. But when companies start talking about "charging Internet firms to use our pipes" and letting "the market sort it all out," consumers and small business owners get nervous when they have limited ISPs to choose from. Will my webmail run more slowly if Google doesn't "pay up"? Will the flash videos on my small business web site load so slowly that people won't make use of them unless I cough up (a second time) for bandwidth? Will I have to pay for better speeds on every major US network? What about internationally? Will my own Internet access be free if you're now charging the websites on the other end of the network?

After the issue became a political hot potato in the last year, cable companies and telcos in the US have largely backed off from their wilder statements. Now, a UK analyst says that the "charge Web companies for faster access" idea could still become a reality. Ian Fogg of Jupiter Research warned that a "two-tier Internet" could be in everyone's future, as ISPs won't be able to resist the lure of all that potential cash for much longer.

In other comments posted on his blog, Fogg also notes what anyone with a wireless data plan has noticed: the wireless industry already has more restrictions than any other ISP and exerts plenty of control already about what sites work well over their networks. "Early indications are that the mobile Internet will not mean the whole Internet," he writes, "unless consumers and regulators fight for it." And the "regular" Internet could soon follow suit.

But regulators in the US have different visions about what their jobs should be. Adelstein has made it clear that he does not support heavy-handed regulation, and he went out of his way in Chicago to make the point that the FCC should only help to create a playing field on which companies can compete and consumers can benefit; prescribing technologies is not what the agency should be doing. Kneuer sees even this as problematic. In San Francisco, referring to the 700 MHz auction, he said that "if there is a pro-consumer benefit to open access and if consumers need and want that, the carrier that brings that to consumers will have a powerful need and advantage and bring competitive pressures on other access layer providers."

This isn't truly a free market, though, and it won't be anytime soon. Whoever wins the FCC auction will control their piece of the spectrum and will control it like a dictator. Other entrants simply cannot set up shop and start offering service, and to pretend that they can and that the market will therefore produce the best of all possible situations for consumers seems disingenuous. If the FCC awards the spectrum simply to the highest bidder, it could easily be snapped up by companies like AT&T, companies that might have more interest in protecting their cell phone and DSL business than in opening up an independent third high-speed pipe to the home. And what would the market do about that, exactly?

The same issue hovers over the network neutrality debate, where the main US ISPs don't compete in a market where they can be easily challenged by new entrants if they engage in anti-consumer behavior. Do we need regulation? Maybe not. Companies in the US at least currently seem to be on good behavior, knowing as they do that the attention of the FCC and of Congress is upon them. If we can achieve the positive effects of regulation without the unintended consequences that such rules can sometimes bring, then perhaps we're in a good enough position already.