Harper on “Network Neutering”

I want to second Jim’s recommendation that you read his Regulation article discussing PFF’s new book on network neutrality regulation. He argues persuasively that each side in the network neutrality debate gives the other too little credit:

It is hard to pin down what exactly the Internet is. There are several versions, with convergence around the idea that the things making up the Internet can be described as a series of layers. At the bottom, there is the physical layer–the wires, cables, and fibers that Internet communications travel over. Next there is the logical layer, the routing rules that send packets of data from origin to destination. Next there is the application layer–the programs that people use to create content and send it from one place to another. (Think of e-mail programs, browsers, and the like.) Finally, there is the content layer. This is the actual material people send to each other in those e-mails, the websites that show up on their screens, and so on.

Robust protection of property rights is the best approach for the physical layer. People invest in and maintain things they own and can profit from. Tangible things that are un-owned or shared tend to see overuse and neglect. This is because no one benefits sufficiently from maintaining resources, but anyone can benefit from using them. The 2003 Cato Institute book What’s Yours Is Mine: Open Access and the Rise of Infrastructure Socialism appropriately criticized the trend against property rights in favor of mandatory sharing of communications infrastructure.

Given how essential property rights are for the Internet’s physical layer, some in the property rights camp believe strongly that the same principles apply equally well to higher layers, to logic and content–intellectual assets toward the top of the stack. This viewpoint has some good authority behind it: the U.S. Constitution, for example, empowers Congress to secure authors’ exclusive rights to writings and discoveries so as to promote the progress of science and the useful arts.

But there is also evidence that property rights in intellectual goods are not always needed. Humans’ natural drive to create–for the sheer joy of it and to accumulate reputational assets among other things–means that there is a growing amount of “peer production” of information assets like protocols, computer programs, commentary, and entertainment. Indeed, there is evidence that property rights in intellectual assets retard production and innovation, especially when the scope of a given right is too broad or the term too long. Analysis and debate in this area should continue.

The net neutrality debate is the product of spillover in the opposite direction, however. Like their colleagues in the property rights camp, the proponents of peer production, open standards, and open source also seem to believe that their way of thinking “explains the world.” They see it working well in the logic and content layers–it does–and they imagine it could work well in every layer of the network.

The fundamental point here is that markets are an important form of voluntary, decentralized social organization, but they’re not the only form, and they’re not necessarily the best choice in every situation—at least if we think of “markets” in the narrow sense of interactions mediated by financial transactions. The BitTorrent protocol, for example, is an example of a way of coordinating the actions of millions of people (or their computers, anyway) without any money changing hands.

Libertarians tend to be excited about market-oriented means of social organization, whereas the Benklers and Lessigs of the world are more interested in non-market forms of organization. The latter fears that re-organizing the Internet in a more market-centric way will make the network more centralized (because AT&T, Verizon, et al will exert more control over the upper layers), thus making it less diverse, vibrant, and open. The problem with their argument is not with their goals–it’s undeniable that a diverse, vibrant, and open Internet is a good thing. The problem is that the advocates of regulation are naive about the regulatory process. Instead of casting aspersions on their goals, we should be explaining the lessons of public choice economics–that the political process is a threat to all forms of voluntary social organization, market-based and otherwise. And that in the long run, the FCC is a much bigger threat to an open, decentralized Internet than AT&T could ever be.

Anyway, Jim’s essay is quite good, so I encourage you to check it out.

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