Opinion: Who'll Really Benefit from Net Neutrality Regulation?

(This guest column was authored by Adam Thierer, a senior research fellow at the Mercatus Center at George Mason University.)

No one disagrees that the Internet's openness is what made it great, or that consumers benefit from the free flow of traffic and applications over broadband networks. That's why saying anything negative about today's 3-2 vote by the Federal Communications Commission (FCC) to approve so-called "Net Neutrality" rules will, no doubt, make me a pariah in the eyes of some.

FCC Chairman Julius Genachowski

/ CBS

But will consumers really benefit from expanded FCC regulation of the Net and digital networks? History suggests otherwise since it is littered with examples of "regulatory capture" and what economist call "rent-seeking": Special interests and Washington insiders have repeatedly co-opted regulatory programs and process to achieve their own ends. As Tim Wu, the man who coined the term "Net neutrality," notes in his new book, The Master Switch:

"Again and again in the histories I have recounted, the state has shown itself an inferior arbiter of what is good for the information industries. The federal government's role in radio and television from the 1920s through the 1960s, for instance, was nothing short of a disgrace.... Government's tendency to protect large market players amounts to an illegitimate complicity ... [particularly its] sense of obligation to protect big industries irrespective of their having become uncompetitive."

Wu is correct and he's not the only progressive who has identified this problem. Back in 1913, President Woodrow Wilson noted: "If the government is to tell big business men how to run their business, then don't you see that big business men have to get closer to the government even than they are now? Don't you see that they must capture the government, in order not to be restrained too much by it?"

In other words, all the wishful thinking in the world isn't going to change the fact that any government agency or process big enough to control a major sector of our economy will be prone to influence by those most affected by it. Even film critic Roger Ebert, a vociferous Net Neutrality supporter, pointed out this problem in a Tweet on Monday night, saying: "Both Left and Right slam FCC on Net Neutrality. Only the lobbyists like it, possibly because their jobs depend on it."

This is why it was liberal Democrats -- not business-friendly Republicans -- who took the lead in America's most sweeping deregulatory push of the past quarter century. The effort to liberalize transportation markets in the 1970s was led by officials in the Carter Administration and on Capitol Hill (including the late Sen. Ted Kennedy, and future Supreme Court Justice Stephen Breyer, who worked for Kennedy at the time). Consumer crusader Ralph Nader was also on board. So, too, was self-described "good liberal Democrat" Alfred Kahn, an economist who was appointed Chairman of the Civil Aeronautics Board and set to work with these other progressives to dismantle anti-consumer cartels that had been sustained by government regulation. These men understood that consumer welfare was better served by innovative, competitive markets than by captured regulators, who talked a big game about serving "the public interest" but who were typically busy stifling innovation and market entry.

Some will argue that things have changed and that a better breed of bureaucrat and legislator now is in charge, immune from such influence. It's a hard case to make, though, especially when Washington is teeming with telecom, media, and technology lobbyists and lawyers hungry to grow the regulatory state in various ways.

Thus, for all the talk we hear about how the FCC's move to impose Net Neutrality regulation is about "putting consumers first" or "preserving Net freedom and openness," it's difficult to ignore the small armies of special interests who stand ready to exploit this new regulatory regime the same way they did telecom and broadcast industry regulation during decades past.

The opinions expressed in this commentary are solely those of the author.

[glerke]

This posts only addresses the argument put forth in this Opinion Piece.
The excerpt from Wu's book does not support the author's claim that negative outcomes by government regulation occur in the information industry in more recent decades. Wu quote sites incidences of government failures that take place during the period of 1920 to 1960, almost 30 years before the internet revolution. In addition, the quote describes regulation of radio and television, not the internet. Theirer continues to make sweeping generalizations about the effects of government regulation by comparisons of statements by Wu, a current University of Columbia law professor, and President Wilson, a scholar of political science. Theirer fails to elaborate on how these two men, separated by 90 years, would come to the same conclusions about failures of FCC regulation of today's computer based information network. The author chooses respected figures who are experts in the field of technology and politics. However, he leaves the reader to figure out the connection between past negative events, the ever changing industry of the internet and failures of the current FCC to properly regulate policy.
In addition to technological and political experts, Theirer adds a third expert opinion to reflect consensus among "progressives" who identify problems with government cooperation with businesses to manipulate the information industry. Roger Ebert's biased appeal that "only lobbyist would like it because their jobs depend on" it matches the assumed audience distrust for special interests that convince government regulators to mold rules to fit big business. However, Ebert's comment lacks credibility as a source because it is a tweet. The evidence is not taken from a carefully analyzed assessment of influences over FCC voting or regulatory practices. Instead, it comes from a frustrated, virtual chatter session by a film critic. The essay lacks validation to show that lobbyists inhibit government from constructing independent conclusions and rulings. Special interest groups are often made up of consumers who contact state or national government representatives to address issues pertaining to consumer safety or protection. Should business, by their nature to be persuasive through collective power, exclude themselves from the democratic process? The author could create a stronger argument using readily available instances where government decisions most recently side with interests of information industry giants like Google, Yahoo! or Comcast. Without these tangible examples, Theirer's argument for government regulation coercion relies heavily on prejudiced opinion rather than current evidence.
regulation, the transportation industry and free market regulation of the economy.
"Who Really Benefits from Net Neutrality Regulation?" boldly sets out to defend a minority opinion on Net Neutrality using a wide range of historical evidence, esteemed authors and a clearly written thesis statement. The author argues against a Washington legislative move to approve Net Neutrality that provides government regulation of internet usage. He argues Net Neutrality regulation is a veiled attempt by the government to serve its own interests through appeasing lobbyist who push for the legislation behind the scenes in Washington. By it's nature, a democratic government must consider and often accept a majority opinion on a given issue, which may appear to outsiders to look like coercion of the entities' original purpose. In addition, Theirer leaves the audience unclear on which specific big businesses currently maintain a presence in the halls of government. Are there current FCC chairpersons with a history of abuses of their legislative power? Although the premise of Theirer's thesis sounds plausible, he uses false logic by his inclusion of indirectly related quotes and experiences of experts and lacks focus and direction within each point's defense by the end of his opinion piece.
At the conclusion of Thierer's opinion piece, the audience is led to conclude that the author is a supporter of the free-market regulating what happens to consumers, not government. This is not surprising given the arguer is a senior fellow at a university based research center that works to provide solutions to the world's most pressing economic problems. The text, however, does a poor job of adhering to the political problem of government coercion involved in the regulation of free access internet information and the effects on the average consumer. In conclusion, regular consumers of internet services would not find in this document a clear vision of how government regulation of the information industry potentially operates differently from the current free market system when it comes to protecting their freedom of access to the internet highway.

[Rodeo_Joe]

Who will benefit? Netscape!

[LibertarianOH]

Follow-up to my prior post.

It's easy to see these little gotchas on your contract if you know what you are looking for.

Look for well hidden catch-phrases like "You, the subscriber, agree to and are bound by, the terms and conditions of the 'Fair Access policy'" or similar wording to the same affect.

Translation...
You agree to be bound by contract to 'Not Exceed' a set Download / Upload usage limit. The 'Policy' will then state what that usage entails, i.e.
1 - 2 Gbits total download per month and 100 - 250 Mbits upload per month.
(remember... each character uses 8 bits). The average photo, as an example, if not compressed uses anywhere from 1 - 3 MBytes per picture as a reference to how quickly to can exceed your quotas if you are not very careful.

Then you agree to any number of punishments such as "Throttling Down" for a period of time until you are below your quota within an average of thirty days, or "Excess Usage" fees or Both in some cases.

Trust me... I am not making this up... just informing everyone that these limitations and penalties do exist in nearly every contract in one form or another. We must ALL be vigilant in attempting to get this practice stopped, which is where the FCC failed miserably!! Net Neutrality my A$$!

The FCC doesn't deserve a pass on this deliberate omission of regulation that was fought for vigorously by the big carrier's lobbyists.

TCG-L

[LibertarianOH]

One really big concession of this is that it gives the big carriers more flexibility than ever to "Ration" bandwidth!

For example: My internet connection is broadband through Sprint over an 'AirCard' installed into my router and unlike my old 'Satellite' connection with "WildBlue", it doesn't die in a rain storm.

Here's the rub though! All non-cabled carriers (G-3 or Satellite) impose a bandwidth 'Usage Cap" which negates ones ability to download purchased streaming video as one file would put you over your download limit, hence dramatically increasing your monthly bill and/or dropping your speed to a trickle making it not worth using!

Most monthly wireless providers charge $59.95 per month for basic internet data connections.

When I dumped WildBlue (who was charging me $89.95 / month for 'Pro' speed, 1.5M) for twice "throttling me down to dial-up speed for exceeding my quota, I swore never to allow that to happen again! At that time, Sprint was the ONLY wireless carrier with "unlimited" usage! They no longer offer it now either, but I am one of the lucky FEW that is "Grandfathered" to that unlimited usage plan, otherwise, I would be screaming bloody hell at them too!

This is what so-called Net Neutrality will cost users big-time! The large carriers are all foaming at the mouth for this little leeway in FCC regulation that is currently on the books.

It's a very BAD DEAL for ALL wireless users, but very good for the big carriers! The FCC are a weak bunch of 'Jack-Wagons' for not putting an end to this practice.

This was better explained yesterday... read it for yourselves:
http://www.cbsnews.com/stories/2010/12/21/tech/main7171081.shtml?tag=stack

[jefflz-2009]

Thanks President Obama for another sell-out by your administration. You are now fully engaged in complete double-talk. This is not net neutrality and you know it. This is a complete cave-in- your specialty - to the ATT's, Verizons, Comcasts and Googles of this world. Along with the tax-cut fiasco you really are racking up quite a record as a Republican. What about a few considerations for the people who fought hard to elect you.