Jeff Chester of the Center for Digital Democracy wasted no time responding to my recent Heritage piece on neutrality regulation, posting a comment on his blog over the weekend. Well, sort of responding. Actually, the piece didn’t discuss my arguments or facts at all. (Chester promised to do that later.) Instead, he focused on the scoop that Heritage has received money from AT&T and Verizon, which he says should have been disclosed. “Hey, Guess Who Helps Fund the Heritage Foundation?” the blog title breathlessly asks.
Hey, guess how Chester found this out? In the Heritage annual report, of course. Where it was disclosed. Along with the names of hundreds of other donors. Other donors that include pro-neutrality regulation Microsoft, as well as Verizon and AT&T. The report also discloses that only about five percent of our revenue comes from corporations of any kind. The rest comes from individuals and foundations.
Yet all of this is skipped over by Chester. There’s a tactical advantage to this. There are times that attacking your opponent’s motives is an attractive alternative to substantive arguments. But I won’t say that he wrote for merely tactical reasons. While not reciprocated, I’ll assume
he actually believes what he writes.
Yet this may be the more disturbing prospect. His ad hominem approach represents a nice black-and-white picture of the policy world, one where pro-regulation consumer advocates fight for what they believe is right, and everyone else has somehow been paid off. That view is all too common among many on the left. These erstwhile trust-busters relish their own perceived monopoly on white hats, and won’t suffer competition.
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In case you haven’t had your fill of net neutrality yet, here is a new paper of mine, published today by The Heritage Foundation, surveying the issue. My conclusion:
Proposed network neutrality rules would impose comprehensive, unnecessary, and harmful mandates on broadband networks. Such unnecessary mandates–the most extensive regulation of the Internet ever considered by Congress–would stymie the efficient use of scarce Internet capacity, discourage investment, and even threaten the growth of competition among broadband networks.
Despite the grim scenarios painted by the supporters of regulation, there is little or no evidence of market abuse by network owners. This is for good reason: Today’s broadband market is competitive, and any network abusing its position would quickly lose customers. Moreover, if any abuse does occur, existing competition law is more than sufficient to address the problem.
Advocates of neutrality regulation argue that the future of the Internet is at issue in this debate. They are correct. This is why such regulation of the Internet should be rejected.
In other words, regulation would be a bad thing.
The Pew Internet Project came out with a fascinating report this week about broadband usage in America. According to their most recent survey, the number of Americans with broadband access at home has soared by 40 percent in the past year (growing from 60 million in March 2005 to 84 million in March of 2006). And the growth wasn’t just among the well-to-do: some of the biggest growth rates were among African-Americans and those with less thatn a high school education).
Much of this growth is no doubt due to dropping broadband prices. Pew found the average month broadband rate dropped from $39 in February 2004 to $36 last December. Interestingly, all of this decrease was from DSL, which decreased from $41 to $32, with cable modem prices holding steady.
These findings are especially interesting in light of the current debate in Congress over neutrality regulation. The case for regulation rests, in large part, on an assumption that their is no competition in broadband. Instead, the market is said to be “a cozy duopoly”. But, Economics 101 tells us monopolists (and duopolists) restrict supply and maximize prices. Pew’s numbers show things going in the opposite direction.
Of course none of this
proves that competition is working. And Pew did note that some people don’t currently have a choice of broadband provider (although regulation would make it less–not more–likely they will ever get a choice). Moreover, the report didn’t compare what prices and access rates might have been under alternative industry structures.
Still, this has got to be bad news for those arguing that the broadband market needs regulation. And, if I were an aspiring duopolist, I’d be unhappy too–this industry doesn’t sound all that cozy.
As a consumer, though, I see Pew’s report as pretty good news. Now only if Congress doesn’t muck it up.
The Christian Coalition now has a whole section on its website devoted to network neutrality regulations. Unfortunately, the letter from president Roberta Combs is chock full of misleading arguments, as well as some outright errors. For example:
Since its birth, the Internet has existed on phone lines, which were covered under what are known as “common carrier” regulations, (or “net neutrality”), which prevented discrimination by network providers based on content or where a call originated. This principle carried over to the Internet and helped make it a dynamic engine for free expression and economic growth.
I’m not sure what “has existed on phone lines” is supposed to mean. The Internet has always used a variety of interconnection technologies. In any event, as I’ve written before, common carrier regulations have never applied to the Internet backbone. Nor has it applied to cable modems or to dedicated high-speed lines like ISDN or T1 lines.
She goes on to raise wildly implausible scare stories:
Under the new rules, there is nothing to stop the cable and phone companies from not allowing consumers to have access to speech that they don’t support. For example, a cable company with a pro-choice board of directors could decide that it doesn’t like a pro-life organization using its high-speed network to encourage pro-life activities. Under the new rules, this could happen–and it would be legal!
Sure, it would be legal. But it would also be commercial suicide, as millions of irate pro-lifers would switch to their local Baby Bell and call their Congresscritters. It’s ludicrous to think that any large telco would think about pulling that kind of stunt.
Finally, the letter trots out the only three examples of alleged network discrimination that the pro-regulatory side has been able to muster: The first was in Canada, and involved blocking a site that Telus subsequently got shut down by a court order for violating the privacy of its employees. The second was probably an accident, and was quickly corrected. And the third is a case in which the FCC’s authority was sufficient to address the problem.
In short, there’s nothing new here: Combs is repeating the same misleading arguments as left-wing sites like MoveOn.org. Which is a shame, because there are some smart telecom experts at conservative think tanks who I bet would have been happy to set her straight.
The Abstract Factory flags something I’ve begun to notice when I periodically go through our comments to weed out spam: our posts about network neutrality have begun to get a steady stream of highly generic supportive comments: see here, here, here, and here, for example. Cog posits that some PR firm must be paying people $10/hour to troll the web making anti-regulatory comments on blog posts on the subject of network neutrality.
The posts almost never make substantive arguments, and they’re often made days or even weeks after a particular post is made. Moreover, the comments consistently appear only on pages related to network neutrality. Cog’s term fits the bill perfectly: this is astro-spam.
I don’t think I’m going to delete it, though. It’s not clear to me there’s anything unethical about paying someone to post random comments on blogs advocating a point of view. Certainly, people pay others to write press releases and talking points. It’s not clear to me how this is different.
But more importantly, it’s not obvious to me how I’d go about drawing the line here. I have a pretty good hunch about which of the pro-NN comments are paid astro-spam, but I have no way to prove it. And I don’t want to go down the path of trying to decide which comments are “real” and which are not. Ordinary spam is easy to identify: it links to a porn site or a generic viagra store. But I have no way to positively identify astro-spam.
In any event, the far more effective way to deal with the problem is by allowing the spam to stay in place and then make it look ridiculous. So if anyone in the media is reading this, this seems like a great story lead: telcos are so desperate that they’ve resorted to hiring shills to promote their point of view in blog comments.
Kevin Drum takes Matt Yglesias to task for suggesting that network neutrality might be new regulations rather than the simple continuation of existing regulations:
The 1996 Telecommunications Act defined two different types of service, information services (IS) and telecommunications services (TS), and cable companies were originally classified as IS and telephone companies as TS. Although both cable companies and telcos provide local internet access, the backbone of the internet is carried exclusively by telcos, which were regulated as common carriers under the tighter TS rules. The common carrier rules effectively enforced the principles of net neutrality on the internet backbone.
Is this right? I’ve always had the impression that peering agreements on the backbone itself have been basically anarchic–you could basically peer with whoever you wanted on whatever terms you wanted. That’s certainly the impression that the Wikipedia article on the subject gives. Can anyone fill me in on the subject?
Update: James Gattuso points to this excellent article by the Progress and Freedom Foundation on the Internet backbone. Some comments on this below the fold.
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My old roomie Julian Sanchez and my friend Matt Yglesias go at it over neutrality regulation on Bloggignheads.tv. If you haven’t seen it yet, Bloggingheads.tv is (as its name implies) a site featuring popular bloggers debating the issues of the day on camera. My favorite thing about the Sanchez/Yglesias spot was the fact that Julian was smoking. People haven’t smoked on TV in decades–and especially not talking head pundits! It felt deeply subversive to watch politics being debated in between drags of a cigarette.
Anyway, my sympathies are with Julian’s side of the argument, but I thought Matt’s argument, which he dubbed a vulgar Marxist perspective, is interesting: basically, he doesn’t feel qualified to evaluate the technical merits of the issue, but he figures that given that Google’s interests lie in getting more content to consumers cheaper, their interests are more likely to align with those of consumers. And therefore, for those who aren’t competent to analyze the issue on their merits, it’s best to err on the side of supporting Google and other Internet companies.
In evaluating this argument, I think it’s worth distinguishing the short-term and long-term impacts of regulation. Julian covered the short-term argument pretty well: it might be that without the ability price discriminate, telcos will have less incentive to invest in new infrastructure. That’s clearly bad for consumers, but it might be good for Google if it ensures Google free access to whatever new infrastructrue investment the telcos
do make. I don’t think it’s crazy to think that Google’s interests might diverge from those of consumers on this front.
But I think the long-term implications are more interesting, and ultimately a lot more important. Because what network neutrality does, for the first time, is to give the FCC (or some federal agency) authority over the administration of the networks that comprise the Internet. The debate so far has focused on cable and telephone companies, but there’s no reason to think the extension of authority contemplated by the pro-reguatory side would be limited to those networks. University networks, WiFi hotspots, hotel connections, and any new broadband technologies that arise in the future would also be covered.
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At today’s Judiciary Committee mark-up session, Chairman James Sensenbrenner contributed a new and quite imaginative argument as to why neutrality regulation is ok: its not regulation at all. It–at least the Judiciary Committee’s version–is simply good old fashioned antitrust. Specifically he said:
Opponents of this legislation have sought to portray efforts to provide a meaningful remedy for anti-competitive misconduct by broadband providers as regulatory in nature. However, the antitrust laws have served as a competitive backstop against competitive abuse by market-dominant forces for over a century.
In other words, just move along, nothing new here that hasn’t been around for a century.
But wait a second. The provisions of the Sensenbrenner bill are very much the same, even using some of the same language as, many of the other “regulatory” bills out there. There are some differences of course–one key one is that Sensenbrenner has no role for the FCC, the provisions are to be enforced by the courts. But substantively the regulations imposed look very much the same.
Oops. Did I say “regulations”? I meant to say “antitrust laws”. Its not regulation, you see, because all the provisions are to be tacked on to the existing Clayton Act. That makes it part of that hundred-some year old antitrust law.
This is a nice feat of bootstrapping. In fact, maybe Congress could try it elsewhere. Having trouble funding the newest bridge to nowhere? Put it in as an amendment to the Clayton Act, and– “poof”– its antitrust law, not wasteful spending. Or maybe the immigration reform controversy could be settled that way–put it all at the end of the Clayton Act and its instantly part of the long antitrust tradition. The possibilities are endless.
The ironic thing is that it actually might make sense to apply existing antitrust law to broadband providers instead of creating a whole new regulatory scheme. In fact, the chairman of the FTC says that it already does apply.
But that’s not what the Judiciary Committee proposed. It proposed regulation. It should call it that.
Every reporter loves a “man bites dog” story, something that’s out of the ordinary, a reversal of the norm. Especially so when the subject is something as abstuse to the average reader as, to give a random example, Internet regulation. Add in the opportunity to use the term “strange bedfellow” and you’ve got an irresisitible angle.
Thus, it’s far from surprising that so much ink and bandwidth has been spilled on the “strange bedfellow” coalition supporting neutrality regulation. Most recently, National Journal spun the tale, with a story today on the “unusual alliance” that has brought together rock band such as Nine Inch Nails with the Gun Owners of America and the Christian Coalition. “[T]he battle to ensure net neutrality has created an atmosphere where the lion can lie with the lamb,” NJ reports.
The problem is that, with a few exceptions, political animals are not mixing in this debate. Each species is pretty much sticking with its own.
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Proving just how surreal the debate over Net neutrality has become, we now have many people telling us that it is “the Internet’s First Amendment” and that federal regulation is needed to “Save the Internet.”
Apparently, these folks have convinced themselves that, at least in this instance, government regulation is really no big deal and that it won’t threaten the future of the Internet. They want us to believe that the same people who have gave us Bridges to Nowhere and an endless string of unbalanced budgets are somehow now well-suited to manage something as complicated as the Internet and broadband networks. They imagine that lawmakers and bureaucrats will regulate
just enough to get the job done and help bring about some sort of idyllic Internet nirvana. Moreover, they apparently believe that policymakers will do all this without expansively regulating other online activities, commerce or speech.
How can smart people make this leap of faith? I really think Net neutrality supporters are caught up in a hopeless illusion about government regulation in this case. It all reminds me of a line from those rock-n’-roll sages Guns N’ Roses: “I’ve worked too hard for my illusions just to throw them all away.” (Yes, it’s true, I’m a bit of a head-banger at heart. Moreover, I just get tired of quoting Aristotle and Milton Friedman all the time.)
While it’s true that I am a skeptic about government regulation in almost every instance, I am still surprised about how many Internet-savvy people are willing to make this major leap of faith and put their trust in government without considering the unintended consequences of Big Government control.
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.