The Justice Department vs. 'Net Neutrality'

Between “Net Neutrality” being an arcane concept, misleadingly named by its supporters, and out of the news for much of 2007, many Americans are unaware of the issue’s importance as well as the fact that the push for “Net Neutrality” may fortunately be dead after the Justice Department released its position on the issue on Thursday.

Those who can define the terms of a debate frequently win it.  A good example is the “Progressive” movement, whose definition of progress is essentially to make true as quickly as possible Jefferson’s warning that “the natural progress of things is for liberty to yield and government to gain ground”.  “Net Neutrality” is another such misnomer: Its supporters mean to use government to prevent internet access providers (mostly phone and cable companies) from being able to charge different customers for different types of access, such as higher speeds, highly fault-resistant connections, more bandwidth usage for games, etc.

A Democrat bill stuck in a Senate Committee cloaks a direct attack on the fundamentally free nature of the Internet in bogus terms of non-discrimination.  It says a broadband service provider shall not “impose a charge on the basis of the type of content, applications, or services made available via the Internet….” In other words, a cable or phone company can not charge more to a customer or group of customers whose “content” might use 100 times the bandwidth of the typical customer, or who want some special service.

Imagine a car company not being able to charge more for options or even for different cars. They make a car with a V-8 engine and can’t sell it for more than the V-6, or can’t charge more for a car with a navigation system than without one.  What do you think you’ll get?  A bunch of V-6 cars with no navigation systems and no incentive by the car companies ever to build better products even if they know there are customers who would pay more for them. Not to mention how difficult it would be to fund the development of new products with limited customer revenue and no incentive for investors to pay for improvements which customers will be prevented from paying for.

Supporters of “Net Neutrality” are arguing that by forcing everybody to drive a V-6 without any options, the car world would be “neutral”, i.e. nobody would have a better car than anybody else, and wouldn’t that be grand?  Can you say “Yugo”?

And who supports this outrageous encroachment on free markets? It’s easy to understand why today’s liberals who repeatedly demonstrate a complete lack of respect for or understanding of free markets might support an internet price control regime. After all, they want government control of everything economic. But what is really disturbing is that the members of the “Open Internet Coalition”, a leading pro-Net Neutrality group, include such internet pioneers as Google and eBay.  In the world of the internet, a place that has demonstrated to the public like nothing else in history the value to consumers, investors, citizens, game players, and people looking for a date, the type of creativity that a truly free market can unleash, it is disappointing that some of the biggest beneficiaries of that freedom now want to limit it.  

Disappointing but not entirely surprising, as Jefferson could just as easily have said that it is the natural progress of things for companies to want free markets and limited government while they are becoming successful, but then want to use government to fetter markets and dampen competition once they have a position of dominance.  And far too frequently, government complies, often to the tremendous detriment of the citizens.

But not this time.  In their press release, the Department of Justice, dispatches claims that AT&T, Verizon, and Comcast (the favorite whipping boys of the Net Neutrality movement) must be economically neutered:

Some important quotes from the highlights of the DOJ release:

•    …precluding broadband providers from charging content and application providers directly for faster or more reliable service "could shift the entire burden of implementing costly network expansions and improvements onto consumers." If the average consumer is unwilling or unable to pay more for broadband Internet access, the result could be to reduce or delay critical network expansion and improvement.

•    …differentiating service levels and pricing is a common and often efficient way of allocating scarce resources and satisfying consumer demand. The U.S. Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery. These differentiated services respond to market demand and expand consumer choice.  No one challenges the benefits to society of these differentiated products. "Whether or not the same type of differentiated products and services will develop on the Internet should be determined by market forces, not regulatory intervention."

•    "The FCC should be highly skeptical of calls to substitute special economic regulation of the Internet for free and open competition enforced by the antitrust laws. Marketplace restrictions proposed by some proponents of ‘net neutrality’ could in fact prevent, rather than promote, optimal investment and innovation in the Internet, with significant negative effects for the economy and consumers."

I can’t remember the last time the government said something as well as I could, but this time they did.

There is an important political lesson in this, and I hope it isn’t lost on the American people: It matters whom we elect President of the United States.  Federal regulatory agencies are headed by political appointees who presumably set policy within existing law but leaning toward the philosophy of the person who appointed them.  If you want to avoid a highly regulated internet as much as I want to avoid government-run medicine, the events surrounding Net Neutrality make another compelling case for electing a supporter of free markets and liberty, not a Democrat.