Tuesday, February 17, 2015

Toward a Less-Free Internet: The FCC’s New ‘Net Neutrality’ Regulations

The Federal Communications Commission recently announced new “net neutrality” rules, ostensibly to guarantee a “free and open internet.” But as the New York times reported, the new rules are “a strong hand to regulate the internet.” In reading FCC Chairman Tom Wheeler’s defense of his plan, one can uncover hidden threats to internet freedom.

For example, Wheeler claims his rules are “bright-line rules.” But that doesn’t jive with his claim that the plan gives the FCC regulatory powers that are “strong enough and flexible enough not only to deal with the realities of today, but also to establish ground rules for the as yet unimagined.” That sounds like arbitrary power to me. With that kind of ‘flexibility,” Wheeler’s assurances that there will be “no rate regulation” ring hollow. Under arbitrary, “flexible” government regulatory power—i.e., the power of legalized aggressive force—backroom armtwisting can easily be used to impose de facto price controls. And what does it mean to “ban paid prioritization’ (so-called “fast lanes”), if not price controls?

Similarly, the new rules would forbid Internet Service Providers (ISPs) from “blocking and throttling . . . lawful content and services.” But if the FCC has the power to force companies to carry content it may not want to carry, on what basis can anyone say that the FCC cannot itself order ISPs not to carry content the government disapproves of?

Recently, the New Jersey Star-Ledger defended the new FCC net neutrality rules, which would regulate the internet as a public utility “just like your gas, water and electric service.” The S-L called Wheeler’s decision “smart and righteous.”

“Under current law,” the S-L claims, “the internet was an unregulated ‘information service,’ subject to the whims of internet service providers such as Verizon and Comcast. . .” Yet, private companies must ultimately heed, thoughtfully and with long-term planning, the demands of the market, not their own whims. If anyone is subject to whims, it is government regulators—to political whims.

I left these comments:

“Net neutrality” is more complex than catch phrases make it sound. I acknowledge I’m not an expert. But from what I’ve read and heard from both sides, this is what I’ve concluded:

Net neutrality is a government power grab to “fix” a problem that doesn’t exist. It’s a joke to say today’s internet styfles innovation. Every few months or so another internet billionaire bursts on the scene. Just look at the economic revolution the internet spawned in just two decades. The internet is a thriving coldren of websites freely competing for customers. New internet companies are constantly arising, seemingly out of nowhere, capturing vast markets, and challenging big incumbents. While some companies may be able to buy faster speeds, there are no “limp along” slow speeds, just less-fast speeds.

I remember when telephone service was tightly controlled by government. It was a time when you needed a second job to pay for long distance phone calls, and innovation was essentially absent for decades. It wasn’t until government stepped back, broke up the government-enforced AT&T monopoly, and largely deregulated the telephone market that innovation really took off. Do we want to regress the internet to the likes of the unholy government/AT&T monopoly alliance?

“Net neutrality” is really about putting government in charge of setting contract terms between ISPs and content providers. Government bureaucrats will have the back-door power to set content, and ultimately prices, and—like with any state regulatory apparatus—open the lobbying floodgates. This will favor big established companies who can afford big lobbyists, provide welfare for big businesses to get cheaper rates than they can by voluntary agreement, reduce the market power of consumers, violate the rights of ISPs to manage their networks—which they spent $billions building—according to market conditions, and threaten the First Amendment.

If you're really against monopoly, you should oppose Net Neutrality regulations. Private ISP “monopolies” are not a threat. They are market-driven. The government, with its law-making powers, has a monopoly on the legal use of physical force and compulsion. That’s the monopoly we should be concerned with. “Net neutrality” is anything but neutral. It would put government bureaucratic whim in charge. Do we really want a handful of government bureaucrats overriding the market, dictating content, setting prices, catering to the most powerful lobbyists and special interests, and picking winners and losers, rather than consumers? That’s what regulating the internet will mean. And giving this coercive monopoly power to government is advocated in the name of “internet freedom”! Somewhere, George Orwell is saying, “I told you so!”

For a counter-argument to net neutrality advocates, I recommend Net Neutrality vs. Internet Freedom and Net Neutrality: Toward a Stupid Internet.


The Star-Ledger likes to trumpet polls when they support its case, and pooh-pooh them when it doesn’t. In this case, the S-L noted the “4.5 million emails flooding Wheeler's inbox the last 12 months - proof that consumers can get their hackles up and lead a righteous fight” in support of its case. But in another recent editorial, the Star-Ledger lamented the fact that most people oppose a hike in the NJ gasoline tax because of its “refusal to face fiscal reality.” But the S-L called on legislators to hike the tax anyway, noting that public support is not needed for legislatures to exercise its taxing powers. “[L]et’s first give a nod to the Founding Fathers for keeping this kind of decision out of the hands of the public,” cheered the S-L.

Well, the public is certainly wrong on net neutrality. Fortunately, the Founding Fathers kept the power to dictate how private individuals and companies manage their property and contract with each other out of the hands of both the public and the government. Let’s hope that in the coming legal challenges to these net neutrality rules, the courts understand this.

Related Reading:

Related Viewing:

NET NEUTRALITY NEUTERS THE INTERNET—Interview with Steve Simpson, the Ayn Rand Institute’s director of legal studies.

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