{"id":28761,"date":"2014-11-19T00:03:15","date_gmt":"2014-11-19T05:03:15","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=28761"},"modified":"2014-11-18T20:32:17","modified_gmt":"2014-11-19T01:32:17","slug":"net-neutrality-is-a-good-thing-right","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2014\/11\/19\/net-neutrality-is-a-good-thing-right\/","title":{"rendered":"Net Neutrality is a good thing, right?"},"content":{"rendered":"

Net Neutrality is back in the news thanks to President Obama making a PR push to the regulators who may (or may not) be crafting regulations to bring the internet under government supervision<\/a>:<\/p>\n

Because this issue is still in the FCC\u2019s hands, no one can know for sure what rules the agency will adopt. One important question, though, is: will neutrality apply to wireless services or only to cable-based ISPs, such as Comcast, Time Warner, and AT&T? In addition, will failure to preserve the status quo slow down the speed at which Internet connections and broadband capacity expand (because ISPs won\u2019t be able to shift more of the expansion costs onto the \u201chogs\u201d)? And what exactly is wrong with ISPs wanting to charge content providers higher prices for more bandwidth and faster, more reliable downloads?<\/p>\n

More certain, however, is that regulations requiring \u201cnet neutrality\u201d will end up benefiting the large, established ISPs. Incumbent firms have gained from \u201ccommon carrier\u201d regulation throughout U.S. history. As a matter of fact, the FCC predictably will be captured (if it has not already been) by the very companies President Obama wants to regulate \u201cin the public interest.\u201d<\/p>\n

The president\u2019s call to action sounds eerily similar to demands for federal railroad regulation that ultimately led to the creation of the Interstate Commerce Commission in 1887. Until it was put out of business in the early 1980s by President Jimmy Carter, the ICC allowed the railroads and, later, motor carriers and pipelines to charge prices exceeding competitive levels, thereby trying its best to protect the carriers\u2019 profits at consumers\u2019 expense.<\/p><\/blockquote>\n

William Shugart<\/a> follows up on his original post:<\/p>\n

The source of today\u2019s online bottleneck can be traced back to local and regional government authorities, who quickly recognized the benefits (to them personally) of creating and granting exclusive franchises to one ISP that would, for the term of the contract, be a monopolist. (Government officials can extract more rents if they negotiate with only a handful of contestants.) Given that only one ISP would \u201cwin\u201d the right to provide online content to local customers, the local monopolists also recognized a benefit of exclusive franchises: They would have the freedom to discriminate against some content suppliers by adding extra fees for privileged access.<\/p>\n

So, a simple solution to the absence of net neutrality is readily available: Foster competition between ISPs.<\/p>\n

Some people might raise the objection that, in this realm, robust competition for consumer dollars is unlikely because the suppliers of connections to the Internet are \u201cnatural monopolists\u201d. In fact, ISPs are not \u201cnatural monopolists\u201d as some commentators would have us believe. They are local government-granted monopolies. (Even Frederic Scherer, the author of the influential textbook Industrial Market Structure and Economic Performance, wrote that such claims of \u201cnatural monopoly\u201d are \u201ctrumped up.\u201d) Competition between ISPs nowadays is a contest for the favors of mayors and city councils who ultimately will determine who will win the exclusive franchise; it is not competition for the business of paying customers.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Net Neutrality is back in the news thanks to President Obama making a PR push to the regulators who may (or may not) be crafting regulations to bring the internet under government supervision: Because this issue is still in the FCC\u2019s hands, no one can know for sure what rules the agency will adopt. One […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,84,10,28,15],"tags":[158,484,727,58,469,661],"class_list":["post-28761","post","type-post","status-publish","format-standard","hentry","category-bureaucracy","category-government","category-liberty","category-media","category-technology","tag-barackobama","tag-competition","tag-cronycapitalism","tag-internet","tag-monopolies","tag-regulation"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-7tT","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/28761","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=28761"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/28761\/revisions"}],"predecessor-version":[{"id":28762,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/28761\/revisions\/28762"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=28761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=28761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=28761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}