Against Net Neutrality

By | 2017-06-02T18:30:05+00:00 November 27, 2017|
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Net neutrality has a nice ring to it. Who doesn’t want an even playing field? But the internet evolved rapidly in a deregulated environment. And most of its trappings—a lack of censorship, equal access, tremendous diversity of viewpoint, an alternative means of accessing media, and deep stores of information—evolved before net neutrality was a legal mandate.

After numerous attempts at congressional action failed to result in new laws, the Federal Communications Commission in 2015 adopted net neutrality rules in under the leadership of Obama appointee Tom Wheeler. Now, under chairman Ajit Pai—a Trump appointee—net neutrality is at risk, as its legal underpinnings have come under greater scrutiny.

But should the end of “net neutrality” worry anyone?

Who Subsidizes Whom?
It’s worth thinking for a moment about how the internet works, and from where the FCC gets its authority. The internet, as we know, is a network. It is minimally regulated, and those regulations chiefly involve the routing of data packets and the addressing of websites. The internet involves a combination of public infrastructure as well as private architecture. The latter includes broadband cables that lead to neighborhoods, apartment complexes, and individual homes.

Internet service providers (ISPs) are a critical part of the system. They’re the ones who are paid monthly by customers for internet access and include companies like Comcast, Verizon, and AT&T. They provide the extensive and expensive “last mile” of architecture. This access is typically priced based on speed and often bundled with other offerings, such as landline telephone service, cable television, or, in the case of mobile phone providers, cellular phone service. Historically, ISPs offer something of a commodity product. And in many locales, particularly rural areas, ISP provision is not terribly competitive, growing as it does on the backbone of what were once government-protected monopolies in phone or cable television service.

As Netflix and other streaming applications have become more popular, more data-intensive use by customers taxed ISP networks that were designed for discrete and less-data-intensive website usage.

Net neutrality is particularity aimed at preventing any kind of discrimination among content, including “throttling” or price discrimination against data-hogs like Netflix. It would not allow, for example, a higher price to be charged for streaming movies versus a more modest use of data to check an email account. More important, it would not allow an ISP to privilege its own data streams; for example, if Amazon teamed with an ISP, they would not be allowed to do so in a bundled way that charged less for access by preferring Amazon’s own streaming movie and TV services. Such a joint venture couldn’t even do so in order to subsidize the extension of broadband access to rural areas currently without high-speed internet access.

Far from a sinister outlier, this kind of cross-subsidization is a familiar feature of economic life. We all know you’re not supposed to bring your own popcorn into a movie theater; the pricey concessions are part of how the theater makes a profit. In devices like Xbox or PlayStation, only compatible games work on the system. The platform provider is able to pay for its initial investment, in part, by the prospect of returns by these partially locked-in customers.

Improving Platforms
The prospect of channeling internet customer usage to favor a platform should not be worrisome, so long as there are a variety of choices on providers. These full platform modes of competition historically lead to competition at the platform level. The risk of monopoly abuse is countered because technology changes too quickly to allow any single platform to remain locked in for long.

Consider gaming systems. The move from Atari, Nintendo, and Play Station, and then to the Xbox and PS4 systems, have led to improved quality, lower prices, and wide choices for consumers. On the other hand, if Atari and its competitors were mandated to make their platforms accessible to all content providers at its height in the mid-1980s, the return on investment to create the competing platforms likely would never have occurred. But, hey, at least PacMan would be available for everybody on a “net neutral” basis.

That consequences of mandating access to ISPs as “common carriers” under Title II of the Communications Act is the chief reason conservatives should be wary of government-mandated “net neutrality.” Disruptive players are not typically neutral. They usually provide partial (and profitable) access in order to establish themselves. This model would be disallowed by “net neutrality.”

Remember the 1930s?
More ominously, numerous other regulations drafted in 1934, in the days of local telephone monopolies, could be applied to ISPs, such as limits on technology, price controls, and the like. Right now, the FCC’s “net neutrality” rules only are abstaining in this regard voluntarily, i.e., forbearance. But net neutrality rules would allow this regulatory overreach in principal.

By way of reminder, old-fashioned taxicabs are common carriers, but Uber started as a more limited access system. The unknown Uber of the future internet cannot come into existence under the net neutrality regime.

The old rules of common carriers typically involved a regulatory bargain. A limited number of cabs were permitted to operate—the limits vouchsafed by their pricey medallions—and in exchange, prices were set, and the providers were required to serve all comers on an equal basis. This limit on competition was more explicit in the case of expensive local networks with natural monopoly features, such as cable television, landline telephone, and the like.

But these natural monopolies, in spite of their monopoly protections, were often left behind by technological change. Landline use is down today due to the rise of cheap, mobile phone technology. Widespread high-speed internet access has cut into the typical “necessity” of cable television. And, as discussed above, the sharing economy has undermined the traditional market power of regulated industries like cabs, hotels, and others.

All of these disruptive technologies typically grew up not because of protective government regulation, but in spite of it. Indeed, and Uber is a perfect example, new services offered on a non-neutral basis often evolved to meet a need that was only partially and poorly met by a government regulated system.

Once upon a time, conservatives were wary of excessive regulation. They knew it meant increased government power, slowing down technological innovation, and an opportunity to substitute the goals of government regulators for the diverse desires of market participants. Attempts to corral technological growth in ways that place government regulators over ISPs are worrisome. We’ve seen other types of gatekeeping stifle technological change. One classic example is “catalytic converters,” where the technological solution was mandated by government regulators in the 1970s. Alternative, cheaper methods to accomplish the same goal have been unexplored during the interim. Similarly, in the age of “Ma Bell,” everything that hooked into the telephone network was controlled, including the telephone handsets themselves. Only when freed from regulation, did everything from answering machines to Mickey Mouse phones proliferate.

Dangers to Free Speech
The internet is empowering. But its empowering elements, not least anonymity and content neutrality, are far less endangered by the actions of ISPs than they are by the role of content aggregators like Facebook or Twitter and search engines like Google. Each of these important virtual gatekeepers has abandoned content neutrality to favor the distinct, socially liberal, but technocratic economic outlook of Silicon Valley.

In recent months, Twitter has silenced a significant number of conservative voices with their selective use of “verification” and outright bans of individuals. Facebook has gotten in bed with the Anti-Defamation League to root out “hate speech.” Web service hosts have kicked off controversial websites, almost always for right-wing views of one kind or another. And Google notoriously plays games with its search algorithm to channel viewer’s search results in a particular and ideologically-tinged direction. If these voices—some of whom are strong proponents of so-called net neutrality—continue in this direction, the prospect of neutral ISPs will matter little, as the virtual gatekeepers of the Internet will stifle free expression by leveraging their privileged, near-monopoly positions to do so.

The legacy internet—what Pai calls the “free internet”—would allow, for example, an ISP to charge Netflix or other heavy-users of web infrastructure greater access fees to reach their customers. These charges could subsidize the expansion of broadband to underserved areas. In addition, it would allow new, unseen ISPs, to offer subsidized services of their own.

Few would sign on for a highly restrictive ISP. But that doesn’t mean some might not be willing to pay less for a lower-speed offering when they currently don’t use streaming services. And fewer still would complain if that lower speed offering were bundled with limited, high-speed access to proprietary offerings made by an ISP. An overly restrictive ISP would likely face competition from alternatives, including pure wireless alternatives that can move into underserved areas with greater ease.

More internet investment and freer access to internet content is, on balance, a good thing. Like any technology, it can be used or abused. But in areas ranging from telephony to tractors, government mandates stifle innovation, favor connected companies, and allow the imposition of ideological goals. Net neutrality, far from making the internet freer, would make it more expensive, both in terms of cost and in the unknown “price” of future, ideologically driven government mandates.

About the Author:

Christopher Roach
Christopher Roach is an attorney in private practice based in Florida. He is a double graduate of the University of Chicago and has previously been published by The Federalist, Takimag, The Journal of Property Rights in Transition, the Washington Legal Foundation, the Marine Corps Gazette, and the Orlando Sentinel. The views presented are solely his own.
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24 Comments

  1. Frederic Bastiat November 27, 2017 at 7:20 pm

    Well said. There is much more at stake than the boogyman of tyrannical ISP’s. Having such power in the hands of the government is absolutely far more devastating than insensitive private ISP’s, who’d be subject to real competition with the absence of Net Neutrality. Net Neutrality actually returns power to the people.

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    • snowmanjack November 29, 2017 at 6:03 am

      What did you refer to when you said “well said”? The article? Because you are correct stating “Net Neutrality actually returns power to the people”, which I assume is a good thing. But somehow the article ends up stating it’s a bad thing without explaining it. I’m totally not getting the ‘against Net Neutrality’ position, and this article doesn’t explain it. After building a great case why Net Neutrality is good, it states a few wild assumptions and says it’s bad. Seems like a sad attempt to appease Trump or something.

      • Frederic Bastiat November 29, 2017 at 6:32 am

        I was unclear, it seems. I meant that the original article demonstrates that having the government enforcing a concept such as Net Neutrality is in almost every measurable way a negative thing for us.
        The removal of this Net Neutrality act is necessary if We the People want our Internet back. What I see as the most egregious aspects of the Net Neutrality act is that it is an unjustified takeover of private property, based on spurious interpretations of the 1934 regs on public utilities.
        I want the removal of the Net Neutrality act, especially because it is an unjustified intrusion by the government into areas that have no constitutional authority to do so. It is also an act of prior restraint, one I find detestable.

        • snowmanjack November 29, 2017 at 8:04 am

          I must be dense, because all I hear is rhetoric and ideaology, and no actual good points why net neutrality is bad. The article above details MANY ways it is good. Could you please detail specific reasons why it “is in almost every measurable way a negative thing for us”? The only one you listed was you just want no government at all for anything. That’s a fine platform, but seems to discount the good that government policies can do, and really isn’t relevant to this policy in particular.

          How will it’s removal give the internet back to the people? To me, Net Neutrality gives the internet to the people. It ensures you the consumer have equal access to all internet websites you choose to visit, and you are ensured fair and equal speeds for all of those sites. I see these as positive factors “for the people”.

          With the removal of Net Neutrality, the internet is given to the ISPs. Now they have the right to choose what you have access to, what sites they may slow down, what your speeds will be, if you have to pay more for certain sites. I see these as negatives for “the people”.

          • Frederic Bastiat November 29, 2017 at 11:16 am

            I’m not certain how to answer you on this. Do you understand that the Internet overwhelmingly is owned and controlled by private entities? It is primarily private property, though there are aspects of the Internet that do properly belong to the government. It was designed for the government and other institutions to have a form of communication capable of surviving catastrophe.
            I also must ask you about your understanding of the principles of free market capitalism. I mean no disrespect here, but unless you are a believer in the free market approach, convincing you that it is a better system than a centralized, one plan for all may be difficult.
            I’ll ask you a question that may make my point better. You want plain old vanilla ice cream. You don’t want any of the fancy toppings, you just want vanilla ice cream. Now your government comes along and tells you that because they think everyone should have chocolate ice cream, with all the toppings, thats what you must have. Ridiculous, isn’t it?
            Yet, the Internet is technology capable of amazing things, one is being tailored to the use of the individual and their preferences. One person may have need of only modest Internet bandwidth demands, and another, like me a gamer, needs and is willing to pay for access to higher bandwidth access.
            Should we both pay the same, and receive exactly the same services? I say no, those in favor of Net Neutrality demand that access is equal among all. The Internet isn’t infinite in it’s bandwidth, and usage is user dependent.
            Then there is the aspect of real and true competition. The Internet is what the imagination and ingenuity of man is capable of making it. If the government creates any standard, that becomes the only standard, and when have you ever known the government to opt for better choices?
            Lastly, when the government controls anything it tends to enforce ideological standards on it, and I have no confidence that our government will not find the temptation to interfere overwhelming. They’ll crush any variations from orthodoxy, as they have proven by the results of the PC movement itself.
            Leave the Internet to those who have built it, and innovate it through research, development and profit! I do not ever believe that because the government wants to control anything,it is for our better interests, it is always for theirs.

          • snowmanjack November 29, 2017 at 11:57 am

            I again appreciate the info, but I believe most of your points are just not accurate. Let me try to address them.

            Free market approach? The problem is, it’s not like buying a video game system. These ISPs have a near-monopoly, with only one or two choices available to most Americans. THAT’S the problem with the free market not solving this issue. You are stuck with your ISP, and they can hold you over a barrel and you have to take it if you want internet access. Net Neutrality is not forcing “a centralized, one plan for all” – your ISP will do that for you. And it will be worse without them being held to some reasonable standard that, yes, is set by the government.

            The ice cream analagy is totally wrong. That’s like saying Net Neutrality is killing babies – and you don’t want to kill babies do you?

            Net Neutrality does not mean everyone pays one price for the same speeds – not at all. The ISPs ALREADY charge different rates for different speeds. It’s not one price for every consumer. So this is ALREADY happening with Net Neutrality – we don’t need to get rid of it to make it happen. What removing Net Neutrality will do is let your ISP charge you more if you want Netflix, or CNN.com, or FoxNews.com, or any specific website they want. Or they may just choose to throttle your speed to certain sites they may not like, and you won’t have any say. Do you not think your ISP should keep your internet access the same for all the websites you want to visit?

            Lastly, the government is not forcing technical standard upon the companies. Net Neutrality is only ensuring ISPs can’t censor your access. This will not prevent competition in the least.

          • Tia December 6, 2017 at 10:12 pm

            your point about only having 1 isp is exactly the issue with net neutrality because of it the smaller ISP’s CANT move into your area because the regulations make it to expensive my company has slowed its expansion because of this regulation it takes me out of any location that has a ISP like comcast in it because the regulations make it impossible to make a profit because we have to increase everything equally to what they offer in that area and with smaller budgets than the big guys we cant get into your neiborhood to give you a cheaper option cause the price to do so is too high

    • Foot trails December 1, 2017 at 10:07 am

      We are the government. We are not corporate ISP companies.
      I trust the government to do what is right. ISP companies have only one goal: to make money off of me.

  2. Andy November 28, 2017 at 11:36 am

    Big corporations always have the consumer’s best interests at heart. And I know that calling my cable company is always a delight. So why not trust them to regulate themselves? Sure, most metro areas are serviced by only one ISP but the “invisible hand” is invisible so I’m sure there will be some competitive incentive to make things super great for everyone if we just believe hard enough and trust them. Whee!

    • Frederic Bastiat November 29, 2017 at 6:39 am

      “Big corporations always have the consumer’s best interests at heart.” And the government is occupied by only honest, public minded servants?
      Do you have any interest in purchasing the Brooklyn Bridge?

    • Andrés De La Oliva Guzmán December 2, 2017 at 12:28 am

      Big corporations always have the consumer’s best interests at heart. That’s why Google and Facebook (among other huge quasi-monopolies) support Net Neutrality… Honestly friend, think about it for a second…

      • snowmanjack December 2, 2017 at 6:40 pm

        Are you implying if Google and Facebook support it, it must be bad? Your comment makes no sense at all. So they support it. And Comcast and AT&T are against it. Now what, you’re going to pick you favorite companies? Sheesh.

        • James Weigel December 5, 2017 at 4:48 pm

          Google, Facebook, Netflix etc support it and yet don’t practice it on their platforms. Yet consumers still flock to them and use their services nonetheless. In fact, such practices by these entities are defended as about providing a tailored experience to their users. Why should ISPs be held to a standard that is very rarely enforced in other areas of the economy, As outlined by this article?

          Net neutrality isn’t the sole issue here, what this article is getting at is that the FCC decided, after losing a case to Verizon in court, that it should change the definition of ISPs from information services to utilities under title 2 of the communications act. That act has vast powers beyond making them common carriers potentially affecting every aspect of their business model. New ISPs are less likely to break into markets with new technology when regulatory uncertainty or restrictions on how they can recoup profit on investing in network upgrades for parts of the country that are underserved like rural markets. There’s no reason requiring ISPs to be common carriers is necessary, the article pointed out several examples such as taxis and telephones where it actually hurt.

  3. snowmanjack November 28, 2017 at 8:02 pm

    This article seemed to make an excellent case FOR Net Neutrality. I’m really not clear how in the end it states it’s a bad thing.

    The biggest gap is how content providers like Facebook, Google or Twitter will really be affected either way. They can still control their stuff regardless of how much consumers are paying for internet service, no? What am I missing here?

    • GAbuck November 29, 2017 at 9:32 am

      1. Stifles innovation by freezing the model of internet providers. Future ISPs will never even come to market because they will find it impossible to be profitable under this regulatory system. That’s the Atari and Uber examples.

      2. It actually protects current ISPs by discouraging competition with new technology/business models leading to regulatory capture. Think Ma Bell.

      3. Demands heavy bandwidth users be subsidized by their neighbors who use less but pay the same. That would be like everyone paying the same water bill no matter how much they consume.

      4. It’s the thin wedge of government regulation. Once the FCC defines the Internet as a public utility, it opens the door to incredibly invasive regulation and probable censorship.

      And yes, Google and Facebook and Twitter will still be able to censor folks they don’t like. But that will lead to competitors who choose not to censor.

      • snowmanjack November 29, 2017 at 11:45 am

        Thank you, I appreciate your attempt to explain some of this. However, I see holes in all the arguements, and I’m still waiting for someone to say why killing Net Neutrality is a good thing. Let me see if I’m understanding your points correctly.

        1. Re: the Atari example, when you buy a game, you can get any one you want. When you buy internet, you have one or two choices typically. So the ‘free market’ wouldn’t really help here – you’ll be stuck with no options and at the mercy of your ISP. Net Neutrality doessn’t force any monetary rates. And it doesn’t stop anyone new from coming into the market. So again, it doesn’t make any sense.

        So making your XBox gaming system ‘open to anyone’ is not the same as making your internet ‘open to anyone’. Your internet service SHOULD be open to every website. You don’t get the choice to buy one ISP if you want Amazon, and another ISP if you want Netflix. It’s not at all like gaming.

        2. Re: “in the age of “Ma Bell,” everything that hooked into the telephone network was controlled, including the telephone handsets themselves”. With the internet, it’s not the govenment or ISP or websites that are enforcing the technology. Wifi and DSN and ethernet and fiber optic are all technology-driven, and are not at all limited by Net Neutrality. So again, this arguement does not hold up.

        3. Subsidizing bandwidth. The ISPs ALREADY charge different rates for different speeds. It’s not one price for every consumer. So this is ALREADY happening with Net Neutrality – we don’t need to get rid of it to make it happen.

        4. This is the old “slippery slope” arguement. This can be used on some may topics and so many levels, it’s pretty useless. The internet is such a vital part of our lives now, I DO think it’s as necesaary as public access to electricity and water, and I do think we should ensure that everyone has equal and fair access to the internet. Don’t you?

  4. Paul Murphy November 29, 2017 at 9:04 am

    Dear Mr. Roach:

    This is a nice article but I think you missed (as almost everybody does) the key reason large companies favor net neutrality and, by extension , why its effects are opposite to those promised by the name and its supporters.

    The bottom line on “net neutrality” is that it requires compliance with an evolving regulatory framework.

    For a large company maintaining compliance has a near zero incremental cost because compliance departments already exist and hiring another couple of ex civil servants, even at excessive salaries, has no noticeable effect on the bottom line. For a small company, however, compliance costs can easily amount to a significant portion of the budget – and startup licensing costs in particular, can often stop a potentially disruptive small business from ever getting started.

    Thus net neutrality, like so much of the regulatory universe, favors larger, established, companies over the smaller startup companies that typically drive technological change and is therefore anything but neutral in its effects. A better name might be something like “net freezing” or “monopoly protection”.

    • snowmanjack November 29, 2017 at 11:59 am

      How does Net Neutrality require compliance by large companies? If you have a website or ecommerce company on the internet, you don’t need to be compliant with anything related to Net Neutrality.

      Now, if you are an ISP, you will need to ensure you are not throttling any specific websites. But I wouldn’t think that would really be that big a burden, and most ISPs are pretty large anyway, and they already let information flow freely. Without net neutrality, it would actually take more work for them to cherry-pick who they want to throttle, and which websites they want to charge to let their information flow more freely. But that would of course pay for itself.

      Please let me know what I might not be understanding.

      • Andrés De La Oliva Guzmán December 2, 2017 at 12:23 am

        I believe you’re confounding throttling with peering… Also, he’s not referring to ecommerces, he’s talking about new ISPs I believe…

    • Dan Martin December 2, 2017 at 7:55 am

      Are you the Paul Murphy from the great white north, and “Managing L’Unix” fame?

  5. Mike Hunt December 1, 2017 at 3:57 am

    what the fuck. Wait is this a satire. Why do the arguments obviously support net neutrality but then im reassured that its against net neutrality. For example why does it say that facebook, twitter and google are the oppressive overlords of the internet and are a threat to free speech (which is a fair point) but then support net neutrality. I mean seriously man. You talk about the free market without even addressing that because of it, these companies have enough money that they would be virtually unaffected forcing everyone to use it because the competitors cant pay the ISP ransom. You talk about the internet like there is not enough to go around but Jesus Christ man. In Australia where our internet is slower than Kenya and it takes ten hours to download anything and even i know getting rid of net neutrality is a scam. Just cause every now and then your 4k porn starts buffering and you’re left with your dick in your hand staring your own reflection doesn’t mean the internet is crap. Your demographic’s backwards logic is half the reason everyone in the rest of the world thinks america is a shithole. Maybe you should try not speaking when your mouth is full off corporate ass.

    • Tia December 6, 2017 at 10:42 pm

      because google is blocking videos for no reason or for political reasons if you start looking they want this regulation on ISP’s because they can control what you can see or not see on the internet simply by using there “terms of service”
      the term “net neutrality” is nice but this regulation is NOT neutral, it’s just a way to control what businesses can do with their on property and it hinders smaller ISP’s as a mater of fact we used to have 8 ISP’s in the area and prices were competitive but NOW we have 4 all the smaller ones had to merge to get by with the regulations and the prices have doubled in the last few years because of it

      and YES net neutrality is a good thing but that’s not what THIS IS it’s actually almost the opposite if you look at it from a global point of view whoever named it was playing everyone for a fool. it’s ISP regulation and has nothing to do with a free open INET

  6. Dan Martin December 2, 2017 at 7:51 am

    Re: “Now, under chairman Ajit Pai—a Trump appointee—net neutrality is at risk….”

    Ajit Pai was appointed by Obama in 2012.

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