The Deontological Case Against Net Neutrality Regs

by on December 20, 2009 · 29 comments

We’ve spent a lot of time here at TLF talking about the sound economic arguments against net neutrality regulation. We argue that net neutrality regulation will result in worse consequences than leaving the internet relatively unregulated. But to me, the more important point is that net neutrality regulation is itself unjust.

Why do I make such a strong claim? Simply put, people own their stuff. People can decide what to do with their stuff. People can enter into mutually-consensual agreements about what to do with their stuff. As long as both parties agree on the terms, both parties are deciding what to do with the property they each bring to the table. All that is just. It is unjust, on the other hand, to take someone’s property. It is similarly unjust to use force upon someone (e.g. by taking their money, which is other property they own) as a punishment for doing something just. So, it would be unjust for me to reach into your wallet and take a “fine” from you because I don’t like that you sold your copy of Anarchy State & Utopia to Berin for what I think is far too low of a price. I could argue to you that Berin is giving you a bad deal or tell Berin to stop exploiting you, but it is unjust for me to steal from you to enforce my personal desires about the terms of your agreement.

People can certainly disagree with what I’ve just said. I have defended those views, which are the central core of the libertarian conception of justice, elsewhere. But if you accept what I said in the last paragraph, then net neutrality regulation is unjust. Why? Well, the ISPs own their pipes (or own the rights to use pipes in the way they’re using them). They can do whatever they want with them. They could just use their wires for their own purposes, e.g. hanging Christmas decorations or sending communications between their employees like an internal telephone system, or leave them unused. Instead, they reach mutually-consensual agreements with others (“customers”) whereby the customers get to use the wires in the way and for the purposes the ISP specifies in exchange for money. The ISP alienates some of its rights to use its pipes and transfers them to the customer. But the only rights the ISP alienates are the ones it consents to alienate. So, if the ISP says “You can use my pipes, but only on Tuesdays and Thursdays,” or “You can use my pipes, but they’re not connected to anything,” or “You can use my pipes, but only to access the parts of the Internet I like,” all of that is just. And it would be unjust to fine the ISP for making such an agreement.

So, regardless of how great the consequences of having a neutral network or even using regulation to mandate a neutral network are, using force to punish someone for making her network non-neutral is unjust.

Now, of course, one major assumption I have been making is that the ISP and the customer have actually both consented to the terms and both parties follow them. This would not occur if, for example, the ISP promised access to the full Internet but then blocked parts of it. That is unjust. It is not providing the right the customer now has, which the ISP alienated by its consent. Such scenarios may be part of the appeal of net neutrality regulation. And, indeed, they may have already happened. But we already have systems of law – torts and contracts – for punishing those sorts of offenses. Net neutrality regulation, on the other hand, is an attempt to impose, by force, the terms of an agreement mutually consenting parties come to about what to do with their property. That is unjust.

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  • dmarti

    And the people who own the dirt have the right to say if the pipes go there or not.

    Right?

    Or does the state use the power of eminent domain to give the carriers access to other people's property? Or does this private property run on public rights of way?

  • http://www.openmarket.org/author/alex-harris/ AlexHarris

    Yeah, fair enough. I only went one level deep. The whole present state of the world is so messed up in terms of who has stolen what from whom… But if it is the case (I have no idea) that the ISPs somehow stole, or got the government to steal for them, other people's property, then we should fix THAT, not impose new regulations on top of the mess.

  • dmarti

    So if the state uses eminent domain to widen the road in front of my property, and then allows AT&T to run a fiber optic cable there, I should be able to demand that AT&T dig that section of cable up? Sounds like a good deal for me.

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  • http://techdirt.com/ Michael Masnick

    Gotta side with dmarti here. You can't just pretend that gov't granted rights of way weren't the very crux of the telco system. And, as such, you can't pretend that the telco system is private property like traditional private property. It's not — and never has been. And that's part of what makes this complicated — and makes simplistic arguments for or against neutrality pretty pointless. Arguing that telcos should be able to do what they want with their networks because “they own them” ignores how they got them in the first place.

  • http://www.openmarket.org/author/alex-harris/ AlexHarris

    If ISPs committed injustice in the past to get their property, the principle of rectification lays out what can be done to fix the injustice. The principle of rectification definitely does NOT say that whenever I steal something I have to be subject to net neutrality regulation. Rather, it says that I owe compensation to the parties I stole from. This is not what net neutrality regulation does; not only are the customers and content providers who supposedly benefit from the regulation not the parties from whom I stole, but clearly net neutrality is not equivalent to cash compensation. If customers preferred a neutral network to the amount of money it would cost to provide them a neutral network, well then they would get it because companies could make a profit providing a neutral network. (Also, to the extent companies would provide a neutral network anyway, net neutrality regulation does nothing; how can that be compensating for past injustice?)

    The fact that there was injustice in the past does not justify piling on more injustice now. We have to actually think about what the principle of rectification says. See pp. 77-82:
    http://www.scribd.com/doc/19013558/Libertarian-

  • mwendy

    Sounds like extortion to me, dmarti. A familiar communications game the state plays. The state grants spectrum, rights-of-way, pole attachments, franchise agreements, etc. – “Hey, you wanna' to gonnect? Den you gotta' pay Da' Boss.”

    A lot of t-com policy is based on this, seriously.

  • http://srynas.blogspot.com/ Steve R.

    The discussion is not simply the “evil” government placing some sort of onerous regulatory burden on the ISPs, but it is also a question of recognizing that those who use “the pipes” have private property in those pipes. Come again?

    When you send something through those figurative pipes you are sending packets of information which is your private property. You have hired the ISP to deliver your private information. Think of it this way, when you go to Fedex or UPS you are hiring them to deliver your package in good shape, unopened, and on-time. Those opposed to net-neutrality don't mention this obligation. Of course those opposed to net neutrality actually don't recognize any such obligation. So by implication they believe it is justified for them to use “force” such as filtering and traffic management to “take” your property (packets) while they themselves don't want to be limited. (Yes there a times when it would be legitimate to manage traffic based on technical constraints.)

    In fact, the mantra of those opposed to net neutrality is that the “market” will magically prevent this type of abuse. No one wants unreasonable regulation, but when you visit TechDirt, there are numerous examples of abuse occurring. Of course, these examples could simply be aberrations and not a real indication of wide-spread abuse.

    Nevertheless, when an industry fights a concept such a net neutrality shrilly shouting that any such regulation is unnecessary and fails to disclose how they will really treat your property it raises a red flag. After all, if the regulations are really unnecessary since they (ISPs) would be figuratively complying under market force concepts then why all the noise and whining????? The obvious conclusion is that the industry is not disclosing the “real” truth behind their position. So much for transparancy.

  • mwendy

    In that model, the obligation to serve was always rewarded with some sort of compensation – rate-of-return, or price caps, etc. That was the duty of the common carrier. While I agree that simplistic arguments miss the point, I think Alex's point is nonetheless valid.

    Much of the facilities of broadband's so-called “dumb pipes” isn't regulated. Info services aren't regulated (at least not like common carriers) as per Congress' intent / law. In the present NPRM, the Commission says, “Hey, we want incumbent ISPs to traffic all traffic without discrimination, and, by the way, we won't allow compensation for the capacity we're taking. We want you to be a common carrier without actually calling you that.”

    Access to the end user through largely unregulated, privately-risked facilities – that doesn't have value? Or, it can't be fully realized through (among things) a two-sided model by the ISP? C'mon.

    Among other things, I think if the issue of compensation is addressed, as well as the underlying 1st Amendment issues, then maybe the Commission starts standing on firmer ground. Until then, it has the look of a takings of private property because of the compelled duty to speak for others on one's private facilities (or parts thereof).

  • http://techliberation.com/author/berinszoka/ Berin Szoka

    You'll have to pry my copy of Anarchy, State & Utopia out of my cold dead hands, Harris!

  • http://techliberation.com/author/berinszoka/ Berin Szoka

    As usual, Mike, you have hit the nail on the head. What makes this issue more complicated is the fact that local governments have created artificial monopolies through the franchising process. I wholeheartedly agree with you that that is both a problem from a practical perspective in terms of how many physical networks we have competing against each other, and also a moral injustice. So what should we do about it?

    The typical pattern would be that this “original sin” of franchising monopolies would be used to justify a never-ending series of further regulatory interventions designed to compensate for the competition that's missing in the market because of government intervention. Yes, we can start treating broadband providers as common carriers because we think there isn't enough competition.

    Or we could simply “strike at the root,” as Thoreau put it, and abolish America's silly system of allowing local governments to engage in highway robbery, extorting as much money out of cable companies as possible in grants to build local swimming pools, affordable housing, etc. or an outright bribes. Instead, we could recognize that there is no real scarcity over rights-of-way. It is a pure fiction invented to justify this ridiculous system of monopoly grants. And there's plenty of room for more fiber!

    Few advocates of net neutrality regulations seem to realize that they are blaming the market for the sins of government, which has severely limited broadband competition through the basic structure of telecom regulation (just as it limited radio and television competition before that). Clint Bolick's classic 1984 Cato paper Cable Television: An Unnatural Monopoly starts by asking the the right question “if cable is a natural monopoly, why do we need to guarantee it with a franchise?” Of course, he was talking about Cable TV, but the basic issue applies equally to wireline broadband infrastructure. The answer, of course, has been the myth of scarcity: Just as the FCC regulated (and heavily censored) the airwaves based on the myth that only central planning of spectrum could prevent chaos, the Federal government has forced cable operators to pay huge amounts state and local governments (and sometimes public officials) in exchange for a local franchise. Not until December 2006 did the FCC finally allow telecom companies to begin offering video service—which began the build-out of long-awaited fiber services for broadband as well as video.

    No one better demolishes the myth that “We simply can't have multiple cable systems in the same area” than Jonathan Emord in his 1991 masterpiece Freedom, Technology & the First Amendment (285-286):

    As with broadcasting, those who want cable regulated have argued that it is physically and economically scarce. Although no cacophonous collision of voices on the airwaves can be posited with cable, Judge Posner and others have argued that physical scarcity does plague cable because cable “involves another type of interference—interference with the users of telephone poles and underground ducts.” The city of Los Angeles, in the Preferred Communications, Inc. case has argued that the space on utility poles and in public streets and rights-of-way is limited and that this creates the requisite scarcity that justifies regulation. Posner has argued that cable, like broadcasting, is not available to all because it is a natural monopoly with formidable market entry costs.

    The physical scarcity argument has only a modicum of factual support. Posner’s analogy to broadcast interference is an erroneous one. Although the addition of cable lines to utility poles and public streets and rights-of-way may cause utilities some inconvenience in installing and maintaining their own lines, it assuredly will not prevent them from transmitting their messages or delivering power.

    Furthermore, the inconvenience is small, for each cable line consumes but a de minimis part of utility pole and public street or right-of-way space. Of greater significance are natural physical obstructions such as large trees. Shrubbery, and ice accumulations, as well as man-made obstacles such as traffic.

    The lack of space argument is a weak one. For years, utilities and telephone companies have strung all manner of bulky cable lines on utility poles and under ground without concern that space on poles or public property would be so consumed as to leave little room for the installation of more utility lines. Moreover, for years utilities and telephone companies have not engendered even half as much concern by local governments as has surfaced in recent years surrounding the installation of cable lines for mass communication. only with the advent of cable television has the need to preserve the unencumbered use of the streets and the availability of space on public utility poles become matters of grave import for local authorities.

    The change is telling. The argument about lack of space appears to be disingenuous. There simply is no proof that adequate space is unavailable in fact rather than in theory. There is no logical reason or adequate explanation why minimal regulations, limited in duration and scope to protect the public from the disruption caused by the installation and maintenance of cable lines, are not fully adequate to protect public safety.

    Cable poses no significant burden either from disruption during installation or from any shortage of space created by cable placement as would warrant anything but limited public safety regulation. As Sol Schildhause has explained, cable lines are fir less disruptive than telephone and power lines. The cable itself is “small, light, and almost unnoticeable,” composed of copper (and, increasingly, fiber) coaxial wires. The average size of a copper coaxial wire (the largest kind for cable use) is “the thickness of a man’s thumb.” These cables are typically attached to utility poles or are buried a few inches under the ground in a neat crevice driven by a vibration plow.” The limited need to protect the public during periods of cable installation and repair does not justify denying the cable press full protection from government content and structure regulations [under the First Amendment].

    So… if insufficient competition among broadband providers is supposedly what necessitates Net Neutrality mandates (as well as “excessive” prices and too-slow service), maybe we should start thinking about getting the government out of the business of creating cable monopolies and start allowing more direct competition to provide wireline services (beyond just the telcos). State and local governments won't like the loss of revenue and bribes will dry up for the thugs who currently dole out monopoly privileges, but consumers would benefit from increased competition. That competition will provide a much more powerful constraint on network traffic management than Neutrality regulations. If we'd done this in 1991 when Emord was writing, we'd probably have had telco fiber roll out years earlier, and an even more competitive broadband marketplace that we have today.

  • dmarti

    But when was the theft? When the state used eminent domain to widen the road? When the state gave a cable right-of-way under the road to the old, regulated Bell System?

  • James Riso

    Alex — It's worth pointing out that you may be oversimplifying property rights here, but I'm just as surprised you fail to mention market power. If significant, it certainly complicates “consent” to the terms of a service contract. I'm not drawing any conclusions about the state of competition in the access market, but this is part of the debate. Your “deontology” is a bit too cut-and-dry for my taste.

  • http://www.timothyblee.com/ Tim Lee

    I think it's more complicated than this. The use of eminent domain to build the incumbents' network isn't a distant memory. Right now, the Bells are using preferential access to public facilities, and in some cases outright eminent domain, to deploy their fiber networks. I don't necessarily object to this; the networks need to be built and it might be really hard to do it entirely by private transactions. But I don't think it's unreasonable to say that if the Bells are going to get these privileges, they bear some corresponding duties.

    I think a good place to start in thinking about these issues is with the Fifth Amendment, which requires both “just compensation” and that takings be for “public use.” This is a recognition that compensation isn't enough to satisfy the demands of justice; we also restrict the kinds of uses to which property acquired through eminent domain can be put. It's libertarians who ordinarily demand greater government control over land seized via eminent domain. When I lived in Missouri, I helped draft a proposed constitutional amendment that made clear that land taken by eminent domain could not be transferred to a private party except under certain strictly defined situations. One of those situations was for use by a railroad or regulated utility. The “regulated” part was important; the idea was that if we were going to convey the power or benefits of eminent domain to a private party, we wanted to ensure government oversight to ensure it was used in the public interest.

    Now, I don't think this is an argument for network neutrality regulation in particular. There are any number of good reasons to oppose the Genachowski proposals, not least because network neutrality is doing fine without the FCC's “protection.” But I'm unmoved by the kinds of deontological arguments you're raising here precisely because the moral status of the incumbents' “property rights” are so murky. Find me a “last mile” telecom incumbent who hasn't benefitted from decades of eminent domain and preferential regulatory treatment and I'll reconsider.

  • mwendy

    Tim, what you really meant to say in that last line was – “Find me a regulator / politician who hasn't benefitted from from decades of eminent domain…”

    The pay-fors; in-kinds; street cut “studies”; franchises rights / fees; municipal, county and state telecom taxes; PEG channels, etc. – the state makes out like a bandit.

    So, more duty should be heaped on the telecoms because they occupy rights-of-way and get “favorable treatment”? Again, this sounds like a racket to me.

  • http://www.timothyblee.com/ Tim Lee

    The telecoms enjoy a state-granted monopoly privilege, and they've ruthlessly used their privileged relationship to regulators to squeeze out potential competitors. Most of these companies are not innocent victims, and haven't been for decades. So I have zero sympathy for them if the regulatory state is now turning on them. If you live by the sword I'm not going to shed a tear when you die by the sword.

    Which isn't to say network neutrality regulations are a good idea. But my primary concern is not with the telcos, who can take care of themselves and then some. My concern is with the way the politicization of the Internet will ultimately work to the benefit of entrenched interests at the expense of the public.

  • mwendy

    I agree with the concept that when you sit down to sup with the devil, you'd better have a long spoon.

    To be sure, few can sympathize with the “poor” incumbents. Still, it seems the regulators have the upper hand if only because broadband must be rolled out in order for these incumbents to survive. And, regulators seeing this, have appended all the public interest reasoning they can to get in on this action.

    I think ultimately we'll end up having a new contract for the broadband world, probably through legislation. Right now, the incumbents are doing this “at will”; it seems likely that some sort of common carrier (mutual) obligation / contract will be imposed so that carriers aren't giving away their risk, and the public gets wired.

  • http://enigmafoundry.wordpress.com eee_eff

    People can certainly disagree with what I’ve just said. I have defended those views, which are the central core of the libertarian conception of justice, elsewhere. But if you accept what I said in the last paragraph, then net neutrality regulation is unjust.

    Not at all. The problem with libertarian philosophy is that it has to make all sorts of informational exclusions. This one example above (that the government acted in many ways to help build the network that the internet was built from, and that without that government action it is impossible that the internet would have come into existence at all) is part of a larger example of libertarians denying any value to a commons. Free people may decide to build a commons, and they have, through a reasonably democratic and transparent processes (which admittedly were not perfect), built the commons that is the internet. It is entirely the role of the government to protect that commons and protect it from enclosure through appropriate regulation. To not do so would amount to a huge subsidy to those private entities who would seek to enclose it.

    Other examples that libertarians have issues with are building codes and zoning rules, without which cities and neighborhoods would not come to realize the value they have attained.

    See: Development as Freedom by Amartya Sen for extended discussion of the fundamental informational exclusions that libertarians have to make,
    For examples of Enclosure of a commons and it's consequences I would recommend Karl Polyani's book The Great Transformation

  • mwendy

    Interesting argument. But, I gather for you it assumes that the commons can only be policed by regulators / state and not the market / spontaneous order.

  • http://enigmafoundry.wordpress.com eee_eff

    Certain types of commons are most efficiently defended by governments. It is not the only way to defend all commons.

  • http://enigmafoundry.wordpress.com eee_eff

    Could you conceptualize a way that building codes could come into existence without government intervention? Perhaps it is just barely conceivable, but it has in fact never happened that way–in every society that I know about that had building codes–from Tokugawa shogunate Japan to Victorian London to present day America, building codes have always come into existence through government action. It solves issues (free rider problem for example) that wouldn't get solved through any other way.

    Also, there is a set of assumptions in your statement–for example that government is not spontaneous. If it is not spontaneous, why is it that whenever humans gather in groups, government comes into existence?

  • mwendy

    Governments may spontaneously combust, but they do not of their own become. There may have been a time when government spontaneously ordered itself, now – no. A 2074 page Senate healthcare bill is not spontaneous order. 47 CFR et seq. is not spontaneous order.

    That said, I do not disagree that some government involvement is needed (for a variety of needs). However, in the case of “net neutrality + 2″ – the FCC has not made its case. The market isn't broken. There's isn't a compelling or even significant interest to justify its meddling.

  • http://enigmafoundry.wordpress.com eee_eff

    “Governments may spontaneously combust, but they do not of their own become. There may have been a time when government spontaneously ordered itself, now – no. A 2074 page Senate healthcare bill is not spontaneous order. 47 CFR et seq. is not spontaneous order.”

    The rules of our democratic process–while very far from perfect–are somewhat transparent and somewhat accountable. If they were more transparent and more accountable the healthcare bill would have been a good or even excellent one… As it is we will be saddled with a very iffy bill that does not provide nearly the coverage it should, but instead is a testament to the fact the the Insurance industry has captured those who should be regulating it….

    Note that in Canada, contrary to what you see in the Mainstream American Press, nearly everyone is very happy with their coverage.

  • mwendy

    Because of the morphinated, palliative care. The stream across the border to get what they need.

  • http://enigmafoundry.wordpress.com eee_eff

    Not so, Wendy.

    Solveig Singleton (who will attest that we very rarely agree) has written about the strong support of public healthcare in her hometown. I also have very many Canadian relatives. They are all quite happy with their healthcare, and justly so.

    If Canadian healthcare were not excellent, then one of the political parties would advocate changing their public heath system. Do we in fact find that one of the major canadian parties advocates changing from a public system? No, all major parties support the public option in Canada. That is why those who are opposed to such a system are now fighting tooth and nail–they realize if such a system is passed, it would be popular, and would not go away…

  • mwendy

    To your last point – it would not go away. Nothing truer could be said.

    I read Solveig's initial posting on same this summer – she was not in overwhelming support of that system. In fact, she lamented the hard choices not being made:

    This from her piece (which we both commented on then): “Competition and choice are the main mechanisms by which hard cost and choice problems get solved. Competition and choice do *not* feel good. People end up in different boats. Disparity and problems of access exist. People look around and see others similarly situated receiving different treatment. We hate that. Choice is confusing and complicated. But every patient in a pickle is an opportunity for someone to provide a new service, to take a different approach. Real improvements do result, inventions in new types of pricing, cost savings, treatment methods, treatment philosophies, the whole thing–from the ground up. This cannot happen when the system is designed from the top down. Choices must include hard choices. Ugly is opportunity.”

  • http://enigmafoundry.wordpress.com eee_eff

    I don't agree with much of Solvieg's post-it had it's problems.

    But she did admit the system was popular, and that I thought was significant.

    The Canadian healthcare system is very popular. Could you figure that out from reading the usual American press? I doubt it.

  • http://enigmafoundry.wordpress.com eee_eff

    I don't agree with much of Solvieg's post-it had it's problems.

    But she did admit the system was popular, and that I thought was significant.

    The Canadian healthcare system is very popular. Could you figure that out from reading the usual American press? I doubt it.

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