Today, President Obama said the FCC should reclassify the internet as a utility. He sees it as a public good, similar to water. He said,
An open Internet is essential to the American economy, and increasingly to our very way of life. By lowering the cost of launching a new idea, igniting new political movements, and bringing communities closer together, it has been one of the most significant democratizing influences the world has ever known.
“Net neutrality” has been built into the fabric of the Internet since its creation — but it is also a principle that we cannot take for granted. We cannot allow Internet service providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas. That is why today, I am asking the Federal Communications Commission (FCC) to answer the call of almost 4 million public comments, and implement the strongest possible rules to protect net neutrality.
It is hard for me to disagree with his plain vanilla statement, but as they say the devil is in the details. Predictably, Senator Ted Cruz had a response,
‘”Net Neutrality’ is Obamacare for the Internet; the Internet should not operate at the speed of government,” Cruz wrote on Twitter.
Cruz’s spokeswoman, Amanda Carpenter, added that net neutrality would place the government “in charge of determining pricing, terms of service, and what products can be delivered. Sound like Obamacare much?”
Cruz has a very good point. Government run services always perform subpar to private ones. The Veterans Administration is a case and point, and there are a gazillion other data points to show how government is far less efficient and more expensive when it comes to providing service to people.
At the same time, I can see where startup companies could have a hard time because the monopolistic internet service providers could make them pay for access. In the case of very large companies like Netflix, they pay extra to make sure they have the bandwidth necessary for customers to download stuff.
Who created the monopoly? Government regulation.
There are a couple of questions I would like to know the answer to:
1. If the internet is classified as a utility, then what incentives do companies or providers have to make it faster and better? It’s pretty clear when things are government run, they mostly suck, or are sub par.
2. If the internet is a utility, then what economic incentives are there for new competitors to enter and try and win market share?
The current tech of the internet allows two or three ISP’s to dominate. What if tech changes? What if we can access it a different way that puts them out of business. Ten years ago, who would have thought we would cut the cord on cable-yet today streaming and not paying a cable bill is real. Ten years ago, who would have thought about not having a land line. Yet, today, millions of people don’t have land lines.
It’s impossible to compare the internet with something like water. We can live without the internet-it’s a lot tougher but we can. We can’t live without water. Also, the technology around delivering water is basically the same as it was when it was first invented. The internet isn’t like that.
Personally, I don’t like to see any government takeover of any private industry. It generally screws things up royally. All you have to do is look at how screwed up a lot of heavily government regulated industries are.
The net neutrality stuff I saw from years ago was a non-starter with me. I want government to regulate in such a manner that the ISP’s have to face incredible competition. That will drive down price, and drive up service.
On the flip side, I am open to arguments for total deregulation and turning internet access into the wild west. Let private companies compete and may the best one win. I am also open to hearing arguments from the net neut side about preserving equal access and having no throttling etc.
Transparent debate, with everyone showing where their bread is buttered is the best way to get the best policy. Obviously, VCs will be for net neut because it’s cheaper for their companies to get access. Comcast and ATT are probably against net neut, but would support it as long as any current competition is killed-and regulations are set up to prevent economic incentive for future competition. Coase Theorem would work perfectly to solve this situation.
I also don’t think the issue is isolated here. I think that there are plenty of folks in government that want to tax the internet big time. They see the internet as a green field that can be seeded with taxes.
There ain’t no such thing as a free lunch, and there ain’t no such thing as free internet access.
UPDATE
On Twitter, someone reached out to me and said that if the government turns the internet into a utility, that will be the end of free speech on the internet. The government will be able to decide what’s appropriate. I am not sure if this is true, but certainly the government bureaucracy has a vested interest in limiting free speech.
Would liberals like it if a Republican controlled bureaucracy had a say in what Google used as their search algo? What they used to decorate their logo?
It’s not far fetched when you see bills like Dodd-Frank get passed that give government bureaucrats the ability to go into your credit statement and check book to analyze transactions line by line if they think you are a risk to the financial system.
Congressman Darrell Issa, no fan of Obama released a statement. It’s here:
President Obama’s decision to put political pressure on the Federal Communications Commission to regulate the Internet is bad for American consumers, would stifle economic growth, and would open the pathway for unnecessary government interference. The Internet’s revolutionary success is due in large part to an entrepreneurialism that adapts and innovates freely as the Internet evolves. A free and open Internet allows Americans to operate their small businesses, communicate freely, and stay competitive in a changing global economy. Instead of bowing to political pressure from the President, the FCC should take into account the strong bipartisan support for keeping the Internet free and open.”
My question to Congressman Issa would be
1. Hasn’t the FCC created the oligoloply/monopoly that Comcast and other service providers have? Isn’t that monopoly a threat to innovation as well?
2. Absent regulation, how do we ensure that startup companies get the same access to the internet as established companies that are paying for access? Imagine if Facebook had to pay an ISP a bunch of money monthly in order to make sure it’s content went through the pipes—-when it was just starting out in a Harvard dorm room.