I continue to be mystified by the contention of some Net neutrality advocates that it is not a form of economic regulation. The reality, of course, is that Net neutrality would ban business models and necessitate price controls. If that ain’t regulation, I don’t know what is. As Robert Litan and Hal Singer note in their new Harvard Business Review essay, “Why Business Should Oppose Net Neutrality,” “Non-discrimination under the FCC’s net neutrality proposal means that ISPs cannot offer enhanced services beyond the plain-vanilla access service to content providers at any price.” Thus, any type of service prioritization or price discrimination would be prohibited under the FCC’s Net neutrality regulatory regime.
As I explained in this earlier essay and in the video below, this would be a disaster for investment, innovation, and consumer welfare. Differentiated and prioritized services and pricing are part of almost every industrial sector in a capitalistic economy, and there’s no reason things should it be any different for broadband. As Litan and Singer note, “The concept of premium services and upgrades should be second-nature to businesses. From next-day delivery of packages to airport lounges, businesses value the option of upgrading when necessary. That one customer chooses to purchase the upgrade while the next opts out would never be considered ‘discriminatory.'”
And let’s not forget, something has to pay for Internet access and investment in new facilities. Differentiated services can help by allowing carriers to price more intensive or specialized users and uses to ensure that carriers don’t have to hit everyone – including average household users – with the same bill for service. Why would we want to make that illegal through Net neutrality regulation and the misguided price control schemes of a bygone regulatory era?
http://www.youtube.com/v/AgxzFwqqFGw?fs=1&hl=en_US
The release of a joint policy framework from Google and Verizon this week touched off even more activity in the never-ending saga of Net Neutrality than the rumors about the possibility such an agreement was in the works did the week before.
Op-ed pages, business and technology news programs, and public radio’s precious moments were overrun with anxious talking heads denouncing or praising the latest developments, or even a few of us trying just to explain what was and was not actually being said and done.
That’s not how August is supposed to be in policyland, when Washington reverts to the swamp from which it came. (John Adams left early one summer during his Presidency and refused to return long after the heat had broken.) I had hoped at long last to get around to finalizing last year’s tax return or maybe fixing my perennially-broken irrigation system, but oh well. Continue reading →
CNET has just run the guest column, “Just say no to Ma Bell-era Net neutrality regulation,” Adam Thierer and I wrote in response to “Just say no to fake Net neutrality” by Derek Turner (of Free Press), which decried the win-win-win compromise suggested by Amazon’s Paul Misener, just as Free Press has more recently denounced the compromise proposed by Google and Verizon.
We make a few key points:
- History demonstrates the dangers of regulatory capture, and the costs to consumers of regulation from lost investment and innovation.
- These dangers and costs far outweigh the purported benefits of regulation (in addressing a non-existent harm).
- Broadband markets are competitive enough to prevent the kinds of abuses advocates of net neutrality regulation fret about.
- Government could foster more broadband competition by deregulating spectrum and local wireline franchising.
I’ve been having a lively debate with the commenters on the piece, so feel free to join in! Unfortunately, we don’t seem to be getting much substantive engagement with our argument—just the usual mix of “These guys are just corporate whores!” and “Can’t you see the sky is falling?”
There are few things I find more annoying in the Net neutrality wars than the silly assertion by groups like Free Press and other regulatory radicals that “Net neutrality is the Internet’s First Amendment.” It’s utter rubbish as I have documented here many times before. But now Sen. Al Franken is running around sputtering such nonsense, as he did in this recent CNN.com editorial, claiming that “Net neutrality is foremost free speech issue of our time.” The folks at CNN invited me to response and below you will find the piece PFF press director Mike Wendy and I submitted.
“Big Government the Real Threat to Internet“
by Adam Thierer & Mike Wendy
In his recent CNN.com opinion piece, “Net neutrality is foremost free speech issue of our time,” Sen. Al Franken claims that “our free speech rights are under assault — not from the government but from corporations seeking to control the flow of information in America.”
He alludes to potential corporate blocking of online products and speech and says, “If that scares you as much as it scares me, then you need to care about net neutrality.”
Chicken Little, call your office!
Such sky-is-falling scare tactics are all too common in the heated debate over net neutrality regulation, but actual evidence of such nefarious corporate scheming is nowhere to be found. Perhaps that’s why Franken resorts to such tall tales.
Moreover, his reading of the First Amendment is at odds with the one most of us learned about in civics class (“Congress shall make no law…”). His would empower regulators by converting the First Amendment from a shield against government action into a sword that bureaucrats could wield against private industry. Continue reading →
At ten A.M. Pacific this morning, CNET News.com asked if I could write an article unraveling the legal implications of a rumored deal between Google and Verizon on net neutrality. I didn’t see how I could analyze a deal whose terms (and indeed, whose existence) are unknown, but I thought it was a good opportunity to make note of several positive developments in the net neutrality war this summer.
Just as I was finishing the piece a few hours later, another shocker came when the FCC announced it was concluding talks it had been holding since June with the major net neutrality stakeholders. It’s possible the leaked story about Google and Verizon, and the feverish response to it, whipped up by the straggling remnants of a coalition aimed at getting an extreme version of net neutrality into U.S. law by any means necessary, soured the agency on what appeared to be productive negotiations. Or maybe they’ve just gone as far as they can for now. Continue reading →
Today I appeared on CNBC’s “Power Lunch” to debate Net neutrality issues and the specific role of pricing in this debate. Specifically, the producers wanted to know whether websites should be allowed to pay a higher fee to allow consumers faster access to their sites or should it be equal for every website. The show was partially a response to the rumors that the may be some sort of deal pending between Verizon and Google about prioritized services. On the program, I was up against Craig Aaron of Free Press. During the discussion I made several points, many of which first appeared in my 2005 essay on “The Real Net Neutrality Debate: Pricing Flexibility Versus Pricing Regulation.” Here are the key points I tried to get across:
- In a free-market economy, companies should be able to freely set prices for goods and services without fear of government price controls.
- This isn’t about consumers paying more for basic Internet access or having their connections “slowed down”? This is about whether the government will allow some broadband services to be differentiated or specialized for unique needs, such as online gaming, live event telecasts, secure telepresence conferences, telemedicine, etc.
- Differentiated and prioritized services and pricing are part of almost every industrial sector in a capitalistic economy. (ex: airlines, package shipping, hotels, amusement parks, grades of gasoline, etc.) Why should it be any different for broadband?
- It’s always important to remember that there is no such thing as a free lunch. Something has to pay for Internet access. It doesn’t just fall like manna from heaven. Differentiated services may help in this regard by allowing carriers to price more intensive or specialized users and uses to ensure that carriers don’t have to hit everyone – including average household users – with the same bill for service. Why should the government make that illegal through Net neutrality regulation?
- Heavy-handing tech mandates – especially Internet price controls – could have a profoundly deleterious impact on investment, innovation, and competition. After all, there can be no innovation or investment without a company first turning a profit. We don’t want to return to the era of rotary-dial regulated monopoly, in which our choices were few and our services were standardized and rudimentary. We should let our current experiment with facilities-based, head-to-head competition continue.
http://plus.cnbc.com/rssvideosearch/action/player/id/1559985749/code/cnbcplayershare
Interesting article in the New York Times today about how the radical media activist group Free Press is now working with an organization called The Harmony Institute toward the goal of “Adding Punch to Influence Public Opinion.” The way they want to “add punch” is through entertainment propaganda. The Times article notes that Harmony’s mission is “aimed at getting filmmakers and others to use the insights and techniques of behavioral psychology in delivering social and political messages through their work.” And now they want to use such “behavioral psychology” and “political messaging” (read: propaganda) techniques in pursuit of Net neutrality regulation.
More on that agenda in a second. First, I just have to note the irony of Harmony’s founder John S. Johnson citing “The Day After Tomorrow” as a model for the sort of thing he wants to accomplish. According to the
Times interview with him, he says the movie’s “global warming message [and] rip-roaring story, appeared to alter attitudes among young and undereducated audiences who would never see a preachy documentary.” I love this because “The Day After Tomorrow” was such a shameless piece of globe warming doomsday propaganda that it must have even made the people at Greenpeace blush in embarrassment. After all, here is a movie that claims global warming will result in an instantaneous global freeze (how’s that work again?) and leave kids scurrying for the safety of New York City libraries until a quick thaw comes a couple of weeks later. (Seriously, have you seen that movie? That’s the plot!) So apparently we can expect some pretty sensational, fear-mongering info-tainment from Harmony and Free Press.
But here’s what’s better: Do you know who produced “The Day After Tomorrow”? Oh, that’s right… Rupert Murdoch’s News Corporation financed and distributed that movie!! The man that Free Press casts as the nefarious media overlord set to take over all media and program our brains gave us the greatest piece of radical environmental propaganda of modern times. Now, which does that prove: (A) Rupert Murdoch is hell-bent on programming our minds to embrace a sweeping global warming regulatory agenda, or (B) Rupert Murdoch is out to entertain people and make money? If you answered B, congratulations for being a sensible person. If you answered A, then click here now to start giving money to the Free Press!
OK, so let’s get back to Free Press and what they are up to with the Harmony Institute (which I originally thought was an online dating site). Free Press apparently hired Harmony to research public attitudes about Net neutrality and how to influence them. Harmony’s Johnson tells the
Times they got interested in the Net neutrality because Free Press and the Pacific Foundation paid them handsomely to do so. And it appears Free Press got their money’s worth. Continue reading →
The White House and the Federal Communications Commission have painted themselves into a very tight and very dangerous corner on Net Neutrality. To date, a bi-partisan majority of Congress, labor leaders, consumer groups and, increasingly, some of the initial advocates of open Internet rules are all shouting that the agency has gone off the rails in its increasingly Ahab-like pursuit of an obscure and academic policy objective.
Now comes further evidence, none of it surprising, that all this effort has been a fool’s errand from the start. Jacqui Cheng of
Ars Technica is reporting today on a new study from Australia’s University of Ballarat that suggests only .3% of file sharing using the BitTorrent protocol is something other than the unauthorized distribution of copyrighted works. Which is to say that 99.7% of the traffic they sampled is illegal. The Australian study, as Cheng notes, supports similar conclusions of a Princeton University study published earlier this year
Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.