Pethokoukis

Obama’s ‘net neutrality’ attempt at Internet regulation just crashed

Image Credit: shutterstock

Image Credit: shutterstock

There haven’t been too many good days for free marketeers over the past five years, but today is one of them. A federal appeals court struck down the Federal Communications Commission’s “net neutrality” Internet rules, in a ruling that will help enable the global computer network’s continued evolution free of government meddling. The FCC rules were meant to impose one-size-fits-all price controls on Internet service providers and force them to treat, as The Wall Street Journal describes, “similar content on their broadband pipes equally.”

Sounds innocent enough. Sounds fair. Sounds neutral.

But at its core “net neutrality” really is nothing more than an attempt at rent seeking by content providers who want the ISPs to pay the tab for future network upgrades. It’s kind of like Apple lobbying for price controls on shippers like FedEx when transporting iPads from China to America. Whenever the transport firm bought new planes, it would have to eat the cost or pass it downstream to some other customers. In this case, the customers would have been regular consumers. As I wrote a while back:

In a net neutral world where prices were fixed at, essentially, zero, the telecom operators would pay — before passing costs along to consumers, of course. On the other hand, maybe operators want to charge content providers tolls for putting their traffic into express lanes. Or perhaps another business model is just around the bend. Under net neutrality, the current system would be locked into place.

Indeed, once Google moved into broadband with Google Fiber, it started thinking and lobbying more like an ISP. The economics of Obama’s “open Internet” are totally screwy. Net neutrality would allow content providers like Netflix, as AEI Visting Fellow Gus Hurwitz explains

To pass costs of their services on to ISPs and consumers broadly, which simultaneously protects these firms from consumer response to increased prices and subsidizes their services, with the possible net effect of harming consumers.

The FCC still has the option of regulating broadband Internet like they were telephone companies. Good luck with that. AEI Visiting Fellow Brett Swanson:

Internet is a fast changing, multipurpose network, built and operated by numerous firms, with many types of data, content, products, and services flowing over it, all competing and cooperating in a healthy and dynamic environment. Old telephone style regulation, meant to regulate a monopoly utility that used a single purpose network to deliver one type of service, would have been a huge (and possibly catastrophic) step backward for what is today a vibrant Internet economy.

Let market-driven innovation and investment continue …

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

2 thoughts on “Obama’s ‘net neutrality’ attempt at Internet regulation just crashed

  1. JP, you write: “Net neutrality would allow content providers like Netflix, as AEI Visting Fellow Gus Hurwitz explains ‘To pass costs of their services on to ISPs and consumers broadly…with the net effect of harming consumers.’” but you do not explain what kind of costs or why this is a bad thing. Since your entire argument seems to hang on this detail, I think you need to be a little more explicit. And, if you want to abandon net neutrality, then I think you have a responsibility to explain how to prevent the sequester of smaller entities into low-performing channels. Otherwise it seems you are arguing only for no regulation at all, which sounds like a really bad idea.

  2. This article is SO one-sided. All you guys care about is taking away are personal freedoms. Yeah, and you might as well throw out our free speech and amendment rights. What good are those anymore?

    ““net neutrality” really is nothing more than an attempt at rent seeking by content providers” Uh… WTF? You’ve got it completely backwards. Net neutrality protected just those kind of things from happening; obviously you didn’t know about that before typing out this biased dribble.

    “Let market-driven innovation and investment continue” You do realize that the big cable companies can block or slow down other websites? So what innovation are YOU talking about?

    So there ya go. You wanted a pep talk, you got it! Now get those dirty, greedy, lick-fingering, money-driven, corporate hands off of OUR internet. Oh, and tell all your friends at AT&T and Comcast to do the same!

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