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Net Neutrality...The Bad Idea That Won't Die
May 17, 2012
So, net neutrality. Misguided policy, likely imposed illegally by the FCC, and subject to an ongoing court challenge. In short, it's a bad idea. But that hasn't stopped advocates from continuing to sing its praises while concocting horror stories of a world without it.
First, it was Susan Crawford. Writing on Wired.com, she posited that her inability to store her viola in the first class cabin of a U.S Airways flight while on a coach ticket somehow spelled doom for an internet without net neutrality. The solution of many who think like Crawford is to impose restrictive, 1930s monopoly telephone-style regulation on internet service provision and pricing (via reclassification of internet services under Title II). If we extended that logic into Crawford's airline example, this type of regulation would rewind the clock back to the days when government bureaucrats dictated flight routes and prices, creating massive inefficiencies and effectively locking millions of Americans out of the commercial flight market. The deregulation of air transportation is considered a huge success by people across the ideological spectrum, and yet Crawford and her ilk are encouraging a return to that anachronistic model for the internet.
Then came the New York Times' Eduardo Porter, who spun a tale of the horrors of Comcast's attempt to exempt its Xfinity app on Xbox 360 from usage limitations. Luckily, free market-oriented folks much smarter than I were quick to respond. Eli Dourado pointed out the raw economics involved: broadband networks are expensive to build and those costs must be allocated among consumers somehow. They don't just disappear because Netflix delivers content via the internet.
The incomparable Adam Thierer followed on Eli's post by pointing out that the bandwidth caps Porter, et al, so detest only exist because of net neutrality regulations:
"Consider bandwidth caps, which critics paint as some sort of nefarious, anti-consumer plot. In reality, they are just a tool to manage capacity; a tool that has been necessitated by Net neutrality regulation. When the law says you are not allowed to differentiate or specialize service offerings, you have to find other ways to manage capacity and make sure you can recoup fixed costs."
Adam concluded with a few ruminations on experimental pricing structures, the likes of which you'll surely see much more in the future.
Crawford and Porter seek a world of free-flowing Netflix, ever-rising internet speeds, ever-dropping consumer prices, and vigorous competition to win the favor of consumers. So do I! The question is how best to achieve it. They seem to believe the answer is in empowering Washington to regulate just about everything internet service providers can and can't do. I can't pretend to speak for Eli and Adam, but I vehemently disagree and I think the arc of history bears out my belief that restrictive federal regulation puts a damper on innovation and proliferation of telecommunications services.
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