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

FCC Chairman Julius Genachowski (AP Photo/Jacquelyn Martin) CBS

(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 (AP Photo)
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.

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