Why Net Neutrality and Libertarians Don't Mix

I read Nick Gillespie's thoughts on Net Neutrality (and more) today, here

And I respond to him thusly:

 An interesting article.  I enjoyed reading your take on it, and discovering the viewpoints on that side of the issue.  I fundamentally disagree with many points you've made, however.  I'd like to respond to some of your points here:

10MB/s being the top-rated FCC speed: netindex.com shows how our speeds compare to other developed countries.  We're in 31st place, last I checked.  And we're the second-biggest user of the internet.  These upward trends have been slow.

On addressing a problem that doesn't exist yet: My ideology allows for the prevention of these problems, while sticking pretty closely to "if it ain't broke, don't fix it."  It seems like your motto is closer to "if you can't tell that it's broke, don't fix it."  I'd prefer to avoid the potential trouble rather than wait and see if it happens.

On your stance that what net neutrality proponents fear won't become a reality (that vast and completely hypothetical leap) : Capitalism without proper regulation begets monopolies.  It's math.  That's why we want this type of regulation.

On your allusions to the past: What you reference is true.  The FCC has lost in court.  Netflix and Comcast have set a precedent.  My ideology allows me to assess these happenings as "good" or "bad."  It seems like yours does not allow you to make these types of judgement on past events.  If a law was passed, if a business transaction occurred, if a court ruled, then it MUST be the best thing.  I wish you were more open to questioning the past.

On the FCC being terrible: I ABSOLUTELY AGREE!!! I don't want the FCC to have more regulatory power that could further ruin the internet.  However, I believe true Net Neutrality regulation is needed to keep ISPs in check, and disallow practices that can exacerbate the progress along the inevitable path to monopoly.

I am personal witness to the effects of the absence of such regulation.  Comcast provided me particularly choppy service when I was using Microsoft Lync (business Skype, basically) for work.  Incidentally, Comcast offers phone services which are in direct competition with this type of internet usage.  So I got a device that encrypted my data.  Since then, Comcast doesn't know I'm making internet phone calls, and the connection has been flawless.

What I want to see (and I believe the rest of the Net Neutrality proponents can agree to this) is regulation that mandates ISPs to not give priority to certain services.  We don't want ISPs to be able to use their oligopoly power to strongarm users into buying more of their services or hold content hostage unless content providers pay them a fee.

It is clear that your libertarian outlook shapes your thoughts on this issue.  The fundamental difference between you and me is that I don't trust corporations the way you don't trust government.  In this case, however, the evidence for your stance is weak and ill-founded.  Net Neutrality is a real issue with real consequences which are already being felt, and it's about time we did something about it.

Why Net Neutrality Is The Best Option (and what you can do to help its cause)

               Here’s a story.  There once was a lobbyist named Tom Wheeler.  He worked hard to make sure the cable and wireless industry’s interests were well-heard by policymakers.  Heck, he even used to be President of the National Cable Television Association and CEO of the Cellular Telecommunications & Internet Association.  His work contributed greatly to the profits of cable and wireless companies alike.  With such a background in helping to tailor policy in favor of these mostly conglomerated oligopolists (and allowing them to become more conglomerated and market-controlling), he was chosen to become Chairman of the FCC.  Although the folly of such an appointment is apparent at first glance, it has only been recently that the general public has been uproarious.  This is due to the issue known as Net Neutrality, and is the topic of this post.

               Net Neutrality, for the underinformed, basically is the idea that the Internet is a medium through which all content should be equally available.  That is to say that the speed at which your computer would be able to access this blog post should be the same speed at which your computer can access all other parts of the internet, good and bad.  There should be no preference for any type of data access over any other type.  This has been the standard since the birth of the Internet.  The reason Net Neutrality has been in the news recently is because FCC Chairman Wheeler plans to allow Internet Service Providers (read: the cable and wireless companies he used to lobby for) to charge fees to content companies for preferential treatment through their pipes, drastically changing the landscape of the Internet we’ve come to know.  He wants to allow an internet fast lane service, with fees payable to Internet Service Providers.

               The debate at hand is multifaceted: should the FCC protect Net Neutrality against corporate interests, or allow the free market to dictate Internet speeds for various content?  Is it governmental overreach, or a moral imperative that the FCC step in and regulate the activities of Internet Service Providers (ISPs), and in what way should they regulate?  As has become the norm in US politics, this debate is lopsided.  Giant corporations back their interests with loads of money which drowns out both their smaller competitors’ and the general public’s opinions and interests.  For the sake of this post, when I refer to “ISPs,” I mean those constituents of the US oligopoly, mostly Comcast, Road Runner, SBC, Verizon, and Cox, whose combined share of the market totals 63.37%, and whose interests are threatened by Net Neutrality.  Further destroying the level playing field, the Chairman of the FCC has built his career being on one side of the argument.  This is once again a seemingly hopeless battle, and I am once again compelled to share my beliefs in hopes of raising awareness and tipping the scale in the proper direction.

               Let’s start by examining the reasons some people believe Net Bias (the antithesis of Net Neutrality, represented here by the decision to allow a paid fast lane for certain content) is a good idea.  The most compelling argument, I think, is that certain heavy-bandwidth content is expensive for ISPs to offer.  They must spend money to improve their infrastructure to allow for more and more users to come online and have speedy access to things like ever-clearer streaming HD video, online gaming, and video chatting.  Why should my grandma, who only uses her internet connection to send and receive e-mails, have to pay as much as a constantly-streaming movie buff, if her impact on the system is so minimal?  If the ISP can charge Netflix a fee for the bandwidth they hog (30% by some measures), that money can go toward infrastructure improvements needed to keep up with the demand.

               Economically, this system only half makes sense.  It makes sense that there is a certain cost of providing bandwidth, and, as is seen in ISPs’ tiered services, if users want access to faster internet speeds, they have to pay a higher price.  Here is where logic stops.  If heavier users are already paying prices proportional to their (maximum) usage, there should be no sudden need now for another market factor to supply the money necessary for infrastructure improvements.  If an ISP has not factored into their internet pricing scales the cost of infrastructure improvement for projected demand growth, an ISP with better foresight should have a market advantage.  The extra cost should not fall to content providers or consumers.

Let’s imagine a similar situation with a 100% wind energy electric company.  Each windmill costs a certain amount to place in service and maintain, has a certain lifespan, and is estimated to produce a certain amount of electric energy.  In their business model, they expect demand for their electricity to grow at a certain rate.  With these variables in place, they can charge an appropriate dollar amount for their service to ensure a profit margin large enough to support the continued growth of their infrastructure to meet market demands.  I find it very difficult to believe ISPs did not think about the issues surrounding demand and infrastructure when pricing out their service, and even if they all didn’t, I have no pity for their bad business practices.  If ISPs are really struggling (and let’s be honest, they aren’t), the fast lane idea is a bail-out program that costs end users more money.  I believe that this argument is a farce meant to allow higher profits for the companies at the expense of users and content providers alike.

               It is also difficult for me to believe that United States ISPs are doing their very best to keep the infrastructure up at a pace with market demand.  Let’s look outside the US for some perspective.  The Ookla Net Index measures the month’s mean Internet speeds worldwide.  There is a running list of the top-speed countries, and the United States is on it…in 31^st place!  The United States has the second-largest internet-using population in the world, accounting for over 10% of total internet users, and our speeds are slower than Spain’s, whose users account for only 1.3% of the total.  There is a force that has slowed the improvement of our internet infrastructure, and I say that it is the oligopoly’s interests lying in the opposite direction of progress.  The United States’ oligopoly is the slum lord of the internet, maintaining as little as possible, improving next-to nothing, and its existence is supported only by market demand combined with a stark lack of competition and regulation.

               Another argument against Net Neutrality is that supporting a free and open internet interferes with the free market, that the government has no right to regulate the internal policies of ISPs.  Let’s introduce a broader concept with a question: why do we even have any regulation, and are there any effective examples?  Answers: The FDA regulates the food and drugs deemed fit for human consumption, the point of which is to ensure the health and safety of the populace.  The EPA regulates the pollution of our land, water, and air, the point of which is to ensure the health of the populace and environment.  The FTC (supposedly) regulates business, the point of which is to protect consumers against anticompetitive practices such as coercive monopoly.

Now then, is the internet a service that needs regulating?  What is at risk if it is not regulated?  Answers: Some activity on the internet is illegal or threatening to the privacy and safety of consumers.  With Net Neutrality, ISPs have to give equal access to hackers exploiting security holes like Heartbleed (btw, change your passwords, folks), people downloading Breaking Bad illegally, and kids enjoying the website for Dora the Explorer.  I know that even with a Net Bias policy in place with an emphasis on mitigating against such activity, there would still be ways to exploit security holes, download media illegally, and otherwise use the Internet in malicious ways, which would not be traceable by the ISPs.  Even if the ISPs have the power to slow down activity they know to be “bad” internet activity, they would not be effective in stopping these activities.

Whether you believe the FCC should enforce rules like Net Neutrality or Net Bias (either the anti-crime version or the preferred content version, or a combo of both), there is a catch.  Any argument that the FCC should be more involved in regulating ISPs goes pari passu with the January 14, 2014 DC Circuit Court determination that the FCC has no authority to enforce Net Neutrality rules because ISPs are not “common carriers,” like telephone companies.  ISPs are classified under a different section of code, Title I of the Communications Act of 1934.  A common carrier designation would mean, as eloquently described by Google, that “Just as telephone companies are not permitted to tell consumers who they can call or what they can say, broadband carriers should not be allowed to use their market power to control activity online.”

Without regulation, ISPs have the power to decide what can and cannot be done on the internet, and what is fast, easy, high quality content, and what is slow, frustrating, pixelated infuriation.  In my opinion, and in yours, if I’m convincing enough, ISPs are close enough to a coercive monopoly (being an oligopoly already) that there should already have been much more regulation from the FTC to prevent their power from growing to this point.  I agree that the government should not punish companies for being successful, but only as long as that success is merit-based, driven by innovation, hard work, great customer service, and the like.  The ISPs’ success stems from their oligopoly status.  Now that they have all their power, it is also my opinion that they should not be able to profit just from the fact that they’ve accumulated all the power, and Net Neutrality regulation would protect against that kind of profiting.

The weakest argument, and one that I won’t spend too much time on because of its vulnerability, is that a precedent against Net Neutrality has already been set.  Comcast slowed down Netflix, holding their access to normal bandwidth at ransom until Netflix agreed to pay fees.  Comcast artificially slowed down the Netflix stream, and has been doing so with other types of data in direct competition with their services as well, unless those content providers pay a fee.  These accusations may be refuted by Comcast, but the facts and logic dictate that their version of the story (that the quality of Netflix streaming reduced suddenly and significantly due to increased demand) is impossible.  So, now that Comcast has gotten away with this activity, they argue that it is the way the world should be.  To be clear, corrupt actions are no less corrupt if there is no punishment.  The idea of setting a precedent is inherently problematic in a society whose governmental system is one of revision and amendment.  Proclaiming that a precedent has been set in this situation should be as effective as proclaiming that the precedent has been set for the legitimacy of slavery.

 Now let’s dive into more arguments against Net Bias and the path which the FCC is on.  The focus here is on a self-serving system which has the power to suppress any opposition.  This situation is very similar to a monopoly, but much more robust.  Let’s explore.

First, let’s think about the interests of every citizen.  The United States is, after all, supposed to be democratic.  Some people work directly for ISPs or at jobs in which the success of ISPs is proportional to their own success.  On the other side of the equation, the rest of us (the consumers) do not profit from ISPs success.  We pay for the services they provide, and benefit from receiving the cheapest and best service available.  The exact opposite is true for the ISPs: they benefit from providing the most expensive and worst (least costly to provide, but reliable enough to keep customers and beat their competition) service possible.  In this system, without regulation, there could be a happy equilibrium at which compromises are made on both sides, and the market naturally dictates the growth and improvement of the Internet.

Unfortunately, this is not the case in the real world.  ISPs have conglomerated, centralizing their power and mustering lobbyists backed by millions if not billions of dollars.  Free market rules which would dictate fair prices and natural growth do not apply, because this market is not free.  There are aspects of the market that tip the scale in favor of the ISPs.  In this (real) case, we need regulation to ensure the consumers’ interests are protected against these more powerful adversaries.  Without this regulation, ISPs will be able to continue to provide sub-standard quality of service for an above-fair price.  Furthermore, with the paid fast lane in place, ISPs will be able to profit at least thrice: once for the consumers connecting to content (our monthly internet bill), again for the content providers’ competitive access to consumers (the fast lane fee), and a third time with the advantages that come from being on both the ISP side and the content provider side of the market (their affiliated content companies incur less cost for fast lane treatment).  More profit in the hands of the ISPs means a tighter grip on the market, and further deviation from a system which is fair.

One force that could throw a wrench in the ISPs’ plan would be the arrival of a better, smarter, cheaper competitor raising the quality of service bar.  However, this eventuality could be prevented through the economics of the oligopoly which is allowed by policy.  There is no better way to influence policy than to have a member of your own team making the policy.  This is exactly what is possible when a former lobbyist for the cable and wireless industries is allowed to take a leadership position at a regulatory agency.  The dissonance of a regulator governing his former colleagues is a recipe for bad policy, yet the FCC is not the only entity which has had vested interests towards the top.  Such situations do not lend themselves to fair progress through the innovations of new companies.  They do lend themselves to increased profit for the oligopolies, such as the ISPs.

It is abundantly clear to me that money talks in American politics, and these ISPs have lots of it; more than enough to outbid any grassroots-funded campaign set against them.  It is clear to me that the state of the Internet in the US is drastically worse than what it should be.  It is clear that without Net Neutrality regulation, companies like Comcast, AT&T, Verizon, and more will be able to put systems into place that provide themselves substantially more profit for substantially less merit-based improvements.  What can we do now to fix this problem?

At its root, the problem is this: money can buy you policy, which can make you more money, which can buy you more policy, and so on.  If money was not as powerful a speaker as public opinion (and, more importantly, scientific fact), the role of lobbyists would change.  They would not be money mules, delivering cash from corporations to policymakers, but fair representatives of people’s opinions.  Perhaps lobbyists would not be needed at all.  With equal and abundant access to resources like the internet, everyone has a chance to voice their opinions to their policymakers.

And that means you, dear reader.  The FCC has opened their proceeding number 14-28 for public comment on this matter.  Before we tackle the problems of income inequality and enhanced access to the legislature of those people and companies with the most money, we must attempt to revitalize respect for that ideal of Democracy: That the opinions of all the people matter, not just those of the wealthy.  To do so is an uphill climb, and we may not win this battle, but if you add your comments to the discussion, as I am here in this blog post, you will at least be able to say that you did not sit idly by while an oligopoly of ISPs attempted to further ruin the Internet for their own profit, and at your own expense.

Note: Please feel free to use my language in your comments to the FCC or to your Congress people.  I'd prefer if you'd write something like "I agree with what this guy wrote" at the top, but I don't have the authority to enforce what you do on the Internet.