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Before net neutrality eats the world

Posted By Wayne Crews On 9:46 AM 08/06/2010 In | 3 Comments

The Federal Communications Commission has called off closed-door talks with tech lobbyists, talks meant to iron out a government driven compromise on “net neutrality.” The talks ended today in the wake of as-yet-unconfirmed reports that Google—the leading neutrality proponent—and Verizon may have reached a separate agreement enshrining non-neutral treatment of online content. No firm could ever actually support the policy as a general principle, and if this development hadn’t made that plain, it’d have been something else eventually.

Parties to the collapsed negotiations claim disappointment. As someone who’s spent years defending the unpopular concept of “long and thin” property rights in networks and wondering aloud where is our John Locke for the Digital Age, I’m not so disappointed myself. With this door closed, a window can open—one that recognizes that government and compulsory neutrality are not the sources of an “open Internet”—everybody’s buzz-phrase. The closed-door negotiations might have ultimately opened into the wrong room anyhow; all should take heart.

Years ago, the Competitive Enterprise Institute insisted in an FCC filing that the content companies themselves were going to want “tiers” and service quality guarantees on the Net rather than neutrality—and properly so.  There is no foreseeable future in which the very content providers once insisting upon neutrality will not themselves seek “preferential” treatment, or to pay less for non-vital transmissions, down the road.

For that reason and many others, we have long urged America’s high tech CEOs, as leaders of frontier industries, and before compulsory net neutrality eats the world, to get on a different train when it comes to cooperating (so called) with America’s anachronistic but bullying FCC.  CEOs on both sides will regret the harm compulsory “neutrality” does to their business models and customer service.

Rather than net neutrality, CEOs and Congress need to insist upon Agency Neutrality.  We need hands off, not public policy that picks arbitrarily between the content and infrastructure sectors, creating uncertainty in the communications marketplace seemingly as an end in itself.  The so-called non-discrimination principle, the one FCC is trying to strongarm into place now even without any congressional authority, itself bizarrely discriminates against infrastructure creation as an entrepreneurial phenomenon as such; and the very fact that policymakers allegedly expert in communications don’t know this or care about the creation of customized networks underscores the need to stop them. See page 12 of this filing to FCC for descriptions of the important role “discrimination” plays in infrastructure and content wealth creation and the danger of FCC’s neglect of these principles.

If a Federal Communications Commission didn’t exist now, I can’t imagine bothering to create one.  Initiatives like today’s predatory make-work-for-bureaucrats National Broadband Plan is little more appropriate to free enterprise than a National Elevator Plan (yes I proposed this) or a National 10-Pound-Paperclip Plan, both of which America also lack.

Growing bipartisan opposition to FCC’s power grabs on neutrality (letters have been flying around Washington) are a starting point for a change in emphasis.  Agency Neutrality needs to be Congress’ new imperative: no picking favorites or winners and losers between the content and infrastructure industries. This implies that the agenda should not be for Congress to grant FCC new power, as some are seeking (incredibly). The policy imperative now is legislation to rein in the arrogance of regulatory commissioners that nobody ever elected, to sunset much of the antimatter version of public policy the agency engages in, and to task the agency with little more than liberalizing spectrum and relinquishing oversight and leaving the First Amendment and property alone.

The Net doesn’t need forced neutrality; nor does it even need the two tiers of Verizon and Google; it needs as many tiers as the market wants to sustain. Proper public policy would encourage the creation of as many tiers as the voluntary marketplace can possibly handle and insist upon an unfettered future in that respect.  The fact that such a stance is alien to today’s policymakers explains why in America we are negotiating over such a thing as whether one owns one’s own infrastructure, even that not yet created.  It truly is remarkable that the default assumption is that owners and creators don’t get to decide, that What’s Yours is Mine.

Washington’s scheme to turn tomorrow’s otherwise unlimited and non-depletable “splinternets” and “cyberspaces” into a high-tech C&O Canal complete with mules would merely ensure neutrality on a network that few of our descendants will much care to use, compared to what could otherwise emerge.  Let’s not continue to waste more billions on a battle over neutrality on an increasingly suboptimal network that FCC would selfishly regulate as a socially owned husk. Interference with infrastructure proliferation is bad for wealth creation, bad for content, bad for cybersecurity and privacy, bad for smart grids, bad for entrepreneurship, bad for the public interest.  Simply look at the lack of imagination, the absolute unwillingness to consider deregulating across network industry sectors—electricity, communications, transportation—where cross-industry partnerships, mergers and ventures could make today’s grids look primitive. Neutrality offers nothing compared to the “open Internet” such liberalization could foster; it undermines.

Emergent tiering and splintering online represent the beginnings of a groundbreaking explosion in the Web’s basic capabilities for the coming decades rather than a curtailment. So while I appreciate the disappointment some feel when negotiations go pear-shaped, I’m not overly upset.  To me, negotiations that at their core would restrict the principle of private property rights in communications infrastructure and content alike, and lay the groundwork for future regulation at the very dawn of the communications age, are hardly “neutral.”  This rulemaking campaign should to be antiqued, quickly, before the Internet itself is.  Here’s a chance to say so.

Wayne Crews is Vice President for Policy at the Competitive Enterprise Institute in Washington, D.C., and the author of the 2010 edition of “Ten Thousand Commandments.”


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