Category Archives: Net Neutrality

Not Neutrality Part 4

Now that the daily news cycle has shifted its focus from the end of human civilization (net “neutrality” rollbacks) to the latest outrage du jour over yet another autisticly unfiltered remark from Donald Trump (“s*****le countries”) now would be the ideal moment for a small dose of “the truth hurts.”

“Net Neutrality” is yet another Orwellian up-is-down state propaganda that does the exact opposite of the plain meaning of the words (e.g. see Social Security, Affordable Care, Patriot Act, etc.). Were one to introduce a bill called “Shipping Neutrality” that required all shipping carriers use the same vehicles over the same routes and charge the same amount to everyone regardless of package size or distance, then perhaps it might dawn on the proponents of net neutrality just how absurd their position is. The absurdity swells further when one stops to ponder the fact that the explosive growth and innovation occurring on the net occurred in an unregulated environment. Then in 2015 the FCC changed the regulatory landscape and “net neutrality” was born. A mere 2 years later it is being undone yet somehow the internet as we know it is going to come crashing down around us. I’d like to take a moment of silence so we may ponder the dark days on the net that were 2014.

The internet has flourished not despite a lack of regulation but because of it. Innovators were not required to approach the crown on bended knee in order to be granted permission to innovate. To get a glimpse of government oversight of a rapidly innovating industry look no further than the FDA. A massive backlog of drug applications (innovations) at the FDA creates an unending queue of useful products languishing in limbo while development costs skyrocket during the endless wait. Innovation in a state run economy moves at the speed of a single elderly Wal-Mart greeter. Such a drip-wise pace might seem adequate, that is until you have experienced the waterfall of innovation that is produced in the unfettered and unregulated free market economy (e.g. the internet).

The proponents of net neutrality are oddly conservative in their tactics. For conservatives change is bad. It’s bad because it instills FUD (fear, uncertainty, doubt) in their heart. Those pushing the net neutrality agenda also play that fear card. They would have us believe our favorite websites will be slowed or blocked altogether if we don’t pay an endless litany of new fees. They see an á la carte internet (paying only for services you need) as tantamount to Sophie’s Choice. Please. Given the level of public outrage over even the thought of these ideas no ISP would be foolish enough to try such a thing. They would immediately lose their customers to ISP’s that did not engage in the hated practice.

But, and here’s the truth that hurts that nobody wants to face: it is their right to do whatever they wish. If they want to block websites, throttle speed, charge more or less for different services that is their right. If you own it you can do whatever you want with it. Just because modern society has become dependent on certain services (electricity, phone, internet, television, etc.) does not mean those things are basic human rights that must be supplied in an unaltered state at a fixed cost ad infinitum. For anyone to categorically state that another party must supply them with X at Y cost for Z duration and that if they don’t they’ll get their buddy Mr. Government to beat the living crap out of them until they do is the height of hypocrisy. It is hypocritical because you can be quite certain they would object if someone approached them with the same demand, that is, that they now must give their labor for others at some price and duration for which they have no say and that if they refuse to do so they will be thrown in a cage.

Neutrality delivered via the barrel of a gun goes by another name: tyranny. (for parts 1-3 see this page)

Not Neutrality, Part 3

Last week’s article on Net Neutrality focused primarily on what not to do. Net Neutrality shares an ideological pedigree with every other government backed “solution” intended to solve the problem fostered by government itself. The solution to the (mostly) unfounded fears of Net Neutrality advocates is more competition, not more government one-size-fits-all programs. The only way to get more competition is to reign in government’s ability to restrict it.

The overriding problem is structural. The world we live in is the result of decades of misguided policies and government induced market distortions. Like some perverse game of pick up sticks, this state backed structure retains its form no matter how many pieces are removed, impervious to all “reform.” The state has wrought a Gordian knot so intractable the only solution is to cut it.

At the ground floor of this structure are local municipalities that grant utility providers exclusive monopoly privileges in exchange for the fig leaf of “oversight”. If an outside Internet Service Provider (ISP) wishes to enter that market they have no choice but to negotiate either with the municipality itself or its pet public utility for access to “public” infrastructure such as utility poles or underground conduit. The fees charged for such access can double the cost of the entire project, turning an economically viable endeavor into one that is hopelessly unprofitable and results in the ISP throwing up their hands in disgust and walking away. This encourages either no service or monopoly service. Just as a sperm cell induces a protective response in the egg it fertilizes, so too does the first ISP in a region use the powers of its municipal host to keep out all would be competitors. For example, they may negotiate a contract that requires the municipality or public utility charge any future competitors much higher rates for access or a guarantee of exclusive access, thus effectively securing their monopoly position. In at least 20 states so far some ISPs have pushed for legislation that blocks municipalities from competing as ISPs themselves. Such legislation is typically cloaked in the rhetoric of “saving jobs” to pass the sniff test of public opinion. Not that “municipalizing” an industry is ever a good idea, but to the extent that it is possible for this to occur without the use of any taxes, subsidies or eminent domain, there is theoretically no ethical issue with such competition. Although I would seriously question whether such tax-free competition is possible, the easiest way to test that is to remove the power of taxation and eminent domain, not create a rat’s nest of exceptions and restrictions.

To ultimately solve these issues we need fewer, not more laws. We need fewer grants of monopoly privilege for both private and “public” interests. Municipalities should have no rights to grant charters or licenses to any business. This removes the whole notion of “public” utilities. With that antiquated framework swept away, we would witness competition between electric, gas, water, sewage, phone, and Internet providers solve an array of problems that are intractable under the current “public” system. For example, restrictions in Georgia on the generation of solar power, water rationing during drought, and poor and expensive phone service, are all easily solved in a competitive environment. For Internet access one solution could be totally free access but the consumer pays the content provider directly. Or a consumer pays their ISP but there exists an explicit contract where the ISP guarantees maximum speed to all content. Or a million other approaches that neither you nor I can predict. We must dispense with the “should” attitude of “it should work this way or that way.” “Should” implies the necessity of an enforcer to make that “should” a reality. “Could” is more appropriate. It acknowledges the uncertainty of anyone being prescient enough to know what is best. To paraphrase Yoda, “No should! Could or could not, there is no should.”

Competition permits the creative power of millions to come to bear on solving problems. They pursue it in hopes of “winning” the best-solution-lottery that will yield happy paying customers. Municipal monopolies maintain a legacy status quo system by restricting all allowed approaches to just one. If one is knowingly ingesting poison the solution is to not also simultaneously ingest an antidote; the solution is to stop ingesting the poison.

Not Neutrality, Part 2

The moniker “net neutrality” is perhaps one of the most masterful strokes of political propaganda, right up there with “ethnic cleansing” and “quantitative easing” when measured for overall obfuscation. When asked their opinion, many are hesitant to take a stand, as they retreat behind a wall of an honest lack of knowledge on the subject. For the most part this is due to a perceived requirement that one must possess a deep technical understanding of how the internet works in order to have an informed opinion. Unfortunately this plays right into the hands of its proponents; “it’s complicated, trust us, we know what is best”. In fact this complexity tactic comes directly from the pundit’s playbook; witness the recent condescending Jonathan Gruber revelations (“Lack of transparency is a huge political advantage.”) In fact, the essence of net neutrality is not at all complicated; it is just good ol’ fashioned crony capitalism in 21st century garb.

Putatively complicated subjects are often best understood through metaphor. In this case we cast the large content carriers (Netflix, Amazon, Apple, Google) as manufacturers. The manufacturers need to ship their product to distributors. The ISP’s (Comcast, AT&T, Verizon) are the shipping carriers. Currently it is entirely uncontroversial that shipping carriers charge more to ship large things quickly than they do to ship small things slowly. So if we rename “net neutrality” as “shipping neutrality” things come into focus. Under “shipping neutrality” the large manufacturers want the government to force the shipping carriers to charge everyone the exact same amount regardless of size, weight, or speed. In fact, they want the shippers to ship everything at “next day air” speeds but charge first class letter rates. Net neutrality is nothing more than two parties disagreeing over pricing for a service. The cronyism comes in to play when one side demands the government take their side and implement a price ceiling. Of course such naked rent seeking would never fly politically, so it is camouflaged under the guise of protecting freedom, equality and baby kittens. Who could be against baby kittens?

But, as with all types of economic protectionism (tariffs, subsidies and other price controls) it is the consumer that is ultimately harmed. To discern this harm we must extend the metaphor a bit further. If the shipping carriers could not recoup their costs from the shipper then they would have no choice but to collect it from the recipient (postage due surcharge). Nothing is free and someone must pay.

We should be striving to make the internet more, not less, like a package shipping network. For example, if our neighbor receives a large delivery and we receive a small one, we do not subsidize his shipment through a “monthly shipment access fee”. If we receive no shipments in a particular month, we pay nothing. With free competition we would likely see a similar situation with internet access develop: no monthly charges, pay for only the amount and speed you demand as you actually consume it.

Today with internet access we pay the same amount month after month regardless of the extent to which we utilize that service. Although some may pay a bit more for faster service, the fact remains that light users subsidize heavy users. Under net neutrality this subsidization ‘inequality’ would only become more extreme. Heavy Netflix users will cause ISP’s to increase access rates for all consumers because they are legally prohibited from collecting anything extra from Netflix or basing consumer’s charges on their usage patterns; all in the name of ‘fairness’ of course. Would it not be a better outcome if through competition ISP’s charged Netflix more to ensure priority for their content and Netflix in turned passed that cost onto their customers alone? Internet access for everyone else would get cheaper and faster as ISP’s plow that ‘Netflix’ profit into bigger and faster pipes.

An even worse outcome of net neutrality would be if ISP’s were prohibited from raising anyone’s rates. This would result in a fixed price but ever slowing speeds as the network became more congested. At which point the voters would cry out “to do something” and we would then see a new “internet delivery tax” collected by the government and doled out to ISP’s that promised to wag their tails and do their master’s bidding (such as identifying all users on their network, tracking “suspicious” behavior and shutting down websites deemed by the government to be “politically incorrect”.)

So net neutrality supporters, be careful what you wish for, you just might get the world Edward Snowden feared.

Not Neutrality

“Net neutrality” certainly sounds appealing, doesn’t it? Who could possibly be against “neutrality” given its ability to evoke an emotional tie to equality, fairness, impartiality and egalitarianism? Only someone who is sufficiently ethically consistent that they will aver the use of aggression in all situations, rather than merely when popular opinion provides a safe harbor for that stance. Neutrality is not neutral when imposed at the barrel of a gun. Proponents of net neutrality seek not neutrality, but rather protectionism. For example, applying the principle of net neutrality one could legitimately argue that the state should restrict the ability of some companies to spend more money on marketing or R&D than their competitors. If they were allowed the freedom to spend as desired this might promote a competitive disadvantage leading to a market no longer consisting of “neutral” players. Competition bad, neutrality good.

Net neutrality has been in the news this past week due to a not-so-secret-secret vote by the FCC concerning some proposed Internet traffic rules. Proponents of net neutrality want the FCC to reclassify the Internet as a Title II medium (telecommunication service) from its current Title I designation (information service). This would transform the Internet (in the US) for all practical purposes into a public utility. Now consider the reputation that public utilities have for innovation, choice, and service and the whole notion of net neutrality should make you shudder. Free or low cost phone service over the Internet? Well you can say goodbye to that if the FCC is ever allowed to micromanage the net. Be grateful Congress did not allow the FCC to regulate cable; had they done so we’d still be stuck with three channels and rabbit ears.

Net neutrality, like all appeals for regulation, is about fear i.e. fear of hypotheticals. It is a solution in search of a problem. Indeed anti-trust legislation is based upon a similar principal. It seeks to destroy that which has never existed (a market monopoly) before it can do that which it has never done (raise prices). If one proposes dragon slaying as a solution, chances are they will be motivated to uncover dragons where none exist. Net neutrality is likewise the latest in a long line of state sponsored dragon quests. Net neutrality proponents have an irrational fear that dragons (big companies) will take over the forest (dominate the Internet) and thereby incinerate the little guy. The problem with this of course is that these dragons don’t exist. The Internet has been very much non-neutral since day one and none of their fears have come to pass. Under this benign regulatory neglect we have witnessed not oligopolization but rather innovation, growth, competition and more, not less, access for the “little guy” (Twitter, YouTube, Facebook, etc). Their fears of the Internet turning into a virtual walled garden are not supported by 20 years of unregulated growth.

Companies like Netflix, Hulu or Apple pay big money to ensure the pipes carrying their content remain full. Why? Because we, the paying customers, demand it (anything to avoid the dreaded “buffering, buffering” message)! The network providers in turn use those big bucks to build out infrastructure to ensure content delivery occurs as promised. But if net neutrality proponents have their way, such premium payments would be disallowed, because everyone’s content must be treated “equally”. How again exactly does that help us, the customer?

If the public demands faster internet and prioritized content then the only means to achieve this is through the same process that has brought the internet to the state it is in today: an unregulated free market where individuals, not internet czars at the FCC, choose what services they want by voting with their dollars.