Opinion

Neutral pipes Internet service providers should be less like Enron and more like Kinder Morgan.

A man walks into the Federal Communications Commission (FCC) headquarters on Monday. President Barack Obama called for the "strongest possible rules" to protect the open Internet. (Photographer: Andrew Harrer/Bloomberg) less A man walks into the Federal Communications Commission (FCC) headquarters on Monday. President Barack Obama called for the "strongest possible rules" to protect the open Internet. (Photographer: Andrew ... more Photo: Andrew Harrer Photo: Andrew Harrer Image 1 of / 1 Caption Close Neutral pipes 1 / 1 Back to Gallery

The net neutrality fight should be a confusing spectacle to Houston and our natural gas economy. After all, we already had this debate decades ago for our own energy networks - pipelines - and firmly decided upon content neutrality as a way to foster competition and reduce regulation in the natural gas markets. It is a lesson that Houston can teach Washington D.C.

Before deregulation of the natural gas industry, gas was moved through pipelines and sold to market as a single package. Buyers had to pay both the price of product and the price of transportation. The actual market value of natural gas could be hidden in a bundle of other costs. This bundle system also meant that pipeline companies could prioritize their own products over competitors. For example, if a pipeline company also owned a well, it could cut deals that gave advantages to its own gas sellers, further distorting the free market. Without fair competition between gas producers, the price of natural gas followed federal regulations more than market forces.

Under President George H.W. Bush, the Federal Energy Regulatory Commission completed a 15-year process of deregulating the gas market by ending this pipeline bundle. As part of the new rules, promulgated under Order 636, interstate pipelines basically had to follow a code of neutrality. This means that gas is sold a la carte, rather than as a package controlled by the pipeline. Furthermore, pipelines have to give all gas producers an equal chance to buy space on a pipe and can't discriminate among customers in their rates or scheduling.

Not all pipeline companies wanted these rules of open access and non-discrimination, but the free market benefits far outweighed the regulatory costs. With this model in place, as Kenneth B. Medlock III, a Baker Institute fellow, told the Chronicle editorial board, "the buying and selling of the commodity is able to achieve tremendous market efficiencies."

The underlying philosophy at play here - regulated, content-neutral carriers and a competitive commodity market - forms the foundation of our modern-day energy economy. It allows both lively trading of the products and prevents carriers from exerting monopoly powers. Wildcatters and traders play the rough and tumble game of fracking, buying and selling natural gas, and the duty of transporting the product is left to stable and neutral pipeline companies.

Since its formation, the Internet, too, has run on this successful model. From the largest online company to the smallest user, Internet service providers have treated everyone equally. However, ISPs have started to deviate from this policy of neutrality and the Federal Communication Commission has had difficulty enforcing it as a rule. After President Obama expressed his support for net neutraily, Texas' own U.S. Sen. Ted Cruz stood up in opposition, bizarrely comparing it to the Affordable Care Act. Cruz's poorly considered position essentially threatens to send the Internet back to the days of a bundled and distorted gas market.

We're already starting to see that happen. Comcast, the largest Internet service provider in the United States, recently bought NBCUniversal. Without net neutrality, there is little to prevent Comcast from bundling its own NBC shows with Internet service or prioritizing its own products over competitors. Imagine MSNBC.com, which is owned by Comcast, always loading faster than FoxNews.com. Comcast has even been caught slowing down Netflix in a ploy to extract additional payments from the online streaming company beyond what it charges other websites. Regulations forbid gas pipelines this sort of manipulation, and Internet pipelines should play by similar rules.

Houston knows that neutrality is good policy. A glass wall between product and carrier allows the free market to flourish. Internet service providers don't want to play by these free market rules, and Sen. Cruz would allow them to run a manipulative business model that looks less like Kinder Morgan and more like Enron's illegal California antics. Texas' junior senator should stop listening to telecom lobbyists in Washington D.C. and instead embrace the Houston model of content neutrality.