Not neutrality, courtesy of the FCC

The Federal Communications Commission (FCC) has just finished collecting yet another round of comments in the “net neutrality” debate over proposed regulation of Internet traffic management (you may find CEI’s latest filing by Ryan Radia here). It is important to appreciate the profound significance of the fact that the FCC is unwilling to even affirm that it will leave future managed, specialized Internet services alone. And wireless services? The FCC is chomping at the bit to regulate those.

“Agency neutrality” is the only proper public policy; just leave the competitive marketplace alone. But the FCC won’t even stay out of what doesn’t exist yet.

While for the time being, customized services are largely exempt from regulatory scrutiny, the FCC clearly wants that to change: “[W]e are sensitive to any risk that the growth of managed or specialized services might supplant or otherwise negatively affect the open Internet,” the agency said in an earlier request for comments. The agency asked — as if it were even conceivable in this predatory environment for no one to take the bait and say “yes” — “Should any of the rules proposed here for broadband Internet access service apply to managed or specialized services?”

The FCC is not asking for input to dissuade itself, it intends to regulate; this is not a “should we?” proceeding, it is a “we are going to” proceeding. Unless Congress stops it, of course; that’s where we are now with autonomous, unelected, unaccountable agencies across government.

Of course, nothing about fostering “smart pipes” on the Internet precludes the maintenance and expansion of the “dumb” ones with unfettered access that characterize our experience now. Dumb pipes can flourish alongside the new. That “background hum” of the Net will escalate with private investment in smart, specialized networks over coming decades.

If the FCC were concerned about consumer welfare rather than it’s shrinking turf (from a reason-to-exist perspective), it would best contribute by being out front articulating the case for smart pipes, not treating the Internet’s infrastructure as some inexplicable husk that fell out of the sky. Indeed, the agency seems to adhere to a “big bang” theory of infrastructure origins: It just showed up somehow, and we needn’t worry about where future generations of infrastructure will come from.

Critical new developments in economics such as the work of Hernando De Soto and Daron Acemoglu stress the private property rights foundation undergirding the creation of wealth in developing nations.

What the FCC, in every important respect, fails to realize is that property foundation’s importance for wealth creation in frontier areas — like broadband infrastructure deployment and pricing — in which property rights have yet to be adequately extended. I always argue that homo sapiens is fairly competent at legitimizing property rights for “short and fat” property like a house or a car; but we remain in the Stone Age when it comes to legitimizing proprietary approaches to “long and thin” property (or intangible property and many other complex varieties).

We lack a “John Locke for the digital age,” so to speak; perhaps capitalism is still too new historically for one to have emerged. Nonetheless, the proper policy is “agency neutrality”; Congress should command the runaway FCC to allow both open and proprietary network approaches to flourish, not impede the latter with regulatory constraints.