A Free Market (libertarian) View on Net Neutrality
10.28.2009My parents left India at a time when an autarkic socialist regime actively antagonized entrepreneurs and left hundreds of millions of people in poverty. That’s mostly why they (and millions of others) left India in search of economic opportunity in places like Hong Kong, Singapore, Dubai, the UK, the US, etc. I'd venture to guess that most of the Indian diaspora, some 24 million people worldwide, took place between 1950 and 1990 when the Indian regime was its most heavy-handed. A general distrust of government-intervention in economic matters is still pronounced among the Indian business people worldwide, but my guess is that Indian expatriates who left for the professions or with technical degrees are more motivated by racial issues than liberal economic values (by the way, nice work, Mr. President, and thank you for the Diwali message!). Theories on the political leanings of the Indian Diaspora are a topic for another blog post.
I've been trying to clarify my stance on Net Neutrality in light of a general desire for less government intervention in our lives. The Silicon Valley (whether it recognizes it or not) is philosophically libertarian. We take pride in our self-sufficiency, capital efficiency, lack of regulation, and fairness to employees, unlike numerous industries dependent on corporate welfare to stay afloat, and labor unions to protect the rank-and-file. When the going gets tough, we fix it ourselves, and very rarely turn to the government for help... much to the chagrin of polticians who always try to fill their campaign coffers with contributions from wealthy Silicon Valley executives.
So is it possible to be a simultaneous proponent of Net Neutrality and Free Market Capitalism? Most right wingers would argue that Net Neutrality is a huge encroachment on the property rights of the ISP industry. Furthermore, they worry whether it invites further regulation of the Internet in the future. But given the obvious fact that the Internet has become so essential to people for their jobs, education, and entertainment, is it really possible to deny that a neutral, fair, and open network is in the consumer’s interest? It has clearly been in the ISPs interest so far allowing them to generate tens of billions in new revenue streams for data connectivity, and it’s definitely the reason the Internet as we know it exists (at least according to those who built the Net).
Putting Neutrality in practical terms, if a website you load, video you stream, or file you download was degraded in performance without warning, where would you take your customer service claim? Do you call the Website provider? The ISP? The manufacturer of your PC or router? The publisher of your operating system, firewall software, or browser?? The Internet as a packaged experience is truly miraculous when you consider how many layers of technology and services exist to simply load a website. Fundamentally, what people really want is disclosure. We want to know if the ISP, which is the most invisible layer in the “Internet stack,” is responsible for an improved or degraded experience for any of the services we use.
As consumers, how could we desire anything less than a fair and open Internet? Analogously, we’re in favor of clean food in our restaurants, functional planes in our airlines, low-emissions from our cars, clearly marked lanes on our toll roads, and stock brokers who don’t lie about the value of our 401ks. The debate lies in how we achieve these outcomes from the private sector. And if we’re being sensible, how can we achieve these outcomes using the Government as little as possible? After all, I don’t think anyone really loves the idea of using the legislature to settle disputes if there are more responsive/efficient mechanisms available, right??
Disclosure, and clear Rules of the Game are good for everyone. Entrepreneurs whose ingenuity has driven the Internet thus far desperately need more clarity. Ambiguity is not a good thing for entrepreneurs because it scares off investment. The FCC could do start-ups a great favor by clarifying what our country’s broadband policy actually is. That will usher in new confidence and investment for entrepreneurs that are desperately looking for ways to finance their ideas in a tough economy. But before the Government has a chance to do anyone any favors, why don’t ISPs proactively do it themselves? Everyone around them is asking for the same thing, so why don’t they respond??
When Comcast tried network management procedures that inhibited BitTorrent transfers in 2007, consumers had a very negative reaction to the practice. The public outcry compelled Comcast to change policies, but ultimately no government action was needed because Comcast responded to the market. The free market prevailed mostly because the people “injured” by Comcast’s network management policy (ie, YOU) are probably the most passionate, the most informed group of citizens in the world. You are extremely focused on this issue, and you have ample means to scream bloody murder if you are not happy (through blogs, youtube, twitter, etc).
Outside of the BitTorrent/Comcast incident, it’s difficult to cite any major confrontations requiring new laws and regulation. Most proponents of Neutrality are mostly fearful of bad behavior in the future. Imposing punitive measures to enforce Net Neutrality seems premature and even unnecessary in my opinion. Not being a policy maker, I will characterize my personal views in broad strokes, again striving for as little regulation as possible:
- I think the activists, regulators, and law-makers in this area would be wise to define what we want from the ISP industry and couple those things with rewards (eg, tax breaks) rather than penalties.
- Furthermore, ISPs should figure out a way to self-regulate through some non-governmental, Self Regulatory Organization that collectively publishes guidelines for network management, discloses the practices of its membership, and praises/rewards its membership for investments made to improve the Internet experience.
If the ISPs proactively embraced Net Neutrality (since they’re pretty much already neutral, anyway), and then figured out a way to self-police, wouldn’t the need for new laws pretty much dissipate? Analogously, the securities industry self-polices itself with the NASD/FINRA. Couldn’t an equivalent non-governmental, SRO be formed to handle these matters before ever escalating to the FCC? The subscription TV services (MSOs, telcos, and DBS providers) have banded together in the TV Everywhere initiative... Seems like the right stakeholders are already at the table. They should just nip this issue at the bud.
A lot of folks worry whether Net Neutrality, if implemented, will open the door for further regulation. I am less concerned about that if Neutrality is implemented with positive reinforcement. Or better yet, if ISPs working through a new industry group can evaluate the “ask” we have as consumers, and choose to take it or not. If ISPs reject the tax break, either we’re asking too much or not giving them enough. Surely an ISPs shareholders would love the new-found cash flow in an economic climate like this, and if the “give” is what they’re giving us anyway, everyone’s happy!
