This past week, we witnessed the occurrence of two events with the capacity to reshape the Internet for the worst. First, the White House offered a full-throated endorsement “for the strongest possible rules” in support of “net neutrality,” which would prevent telecommunications suppliers from offering their customers priority services in exchange for higher rates.
The second was the response of AT&T CEO Randall Stephenson that his company was going to step back from investing billions of dollars in building out its own GiGaPower fiber network until it received greater clarity from the FCC as to what the rules of the game will be going forward. Stephenson clearly fears that the President’s call to the FCC will result in heavy new regulations that will reduce the profit potential of the company. AT&T is holding back to see just how badly the new rules will damage its investment prospects.
The company’s concerns are, unfortunately, right on the money. Right now, the President is importuning the FCC to reclassify broadband services from lightly regulated “information services” to heavily regulated “telecommunications services.” Unless it takes that dramatic step, the District of Columbia Court of Appeals recent decision in Verizon v. FCC will prevent the FCC from imposing any version of net neutrality, including any anti-discrimination rules which would prevent broadband carriers from charging higher rates for superior classes of services.
The President defends this supposed pillar of the Internet policy by insisting that “an entrepreneur’s fledgling company should have the same chance to succeed as established corporations, and that access to a high school student’s blog shouldn’t be unfairly slowed down to make way for advertisers with more money.”
But why should this be the case when paid prioritization is the norm in virtually all highly competitive markets? A quick trip to the Federal Express website, for example, reveals a wide range of “fast and full of options” like “FedEx Priority Overnight and FedEx Standard Overnight.” There is also two- or three-day shipping and Saturday service for those who want it. The different tiers of services are offered, not surprisingly, at different rates. These differential services are available to all customers. It is simply wrong for the President to assume that any system of paid prioritization entrenches established companies at the expense of new entrants, or greedy advertisers at the expense of high-school bloggers.
Read the rest of this great Richard Epstein essay.
The first thing to know about “Net Neutrality” is that there is nothing neutral about it. It’s been given a fraudulent name to make it appear to be something it’s not. It’s an attempt to regulated the internet in much the same fashion the government used to regulate telephones in the 1920s. The result, if this monstrously bad idea ever comes to pass, will be just like Obamacare. If you like what you have now, that’s too bad. You will not be able to keep it. What you will get will be more expensive and not nearly as good as what you have now. That’s not even factoring in the lost opportunity cost. We’ll never know what good things might have happened because of the disincentive for companions like AT&T and others to invest billions of dollars to improve their service. Business investment is the key to economic growth, and that is what creates economic opportunities for everyone. Killing business investment is just about the worst thing Obama could be doing right now.
As usual, Obama is the great destroyer of good things, always fixing stuff that isn’t broken.