Arnold Kling  

Net Neutrality, Again

Outside-the-Beltway Mentality... Question for Arnold...

Tim Swanson has a set of links, including one to wise essay by Martin Geddes.

Network neutrality makes competition and consumer welfare dependent on law and lobbying, not natural competition. So you’ve chosen the area in which the telcos are strongest on which to fight!

This is such an important point, and it applies to regulation in general. Regulation creates an evolutionary process in which the most heavily regulated industries become the most adept at manipulating the government. The skill set changes from economic competition to rent-seeking. Telecom firms are a prime example of this. I think that the insurance industry is another example.

Comments and Sharing

COMMENTS (5 to date)
Mark Horn writes:

This is an impressive article. Prior to reading it, I had assumed network neutrality was a good thing. It's good to question your assumptions, especially when you don't know that you're making them.

In any case, the appeal of network neutrality for me is in having another mechanism to enforce my contract with my broadband provider. I have exactly two broadband options where I live: the telco and the cableco. They have walked (more or less) in lockstep with each other when it comes to changes. Some of which have been to my benefit, some have not. My personal fear is that two things will happen and I will have no recourse to continue to receive the service I have today:

1) Both companies offer telephone service. Which means that both have an incentive to provide poorer quality service to Vonage or VoicePulse or any one of the other non-local VoIP providers. I use Vonage. They're dramatically cheaper than both the cableco and the telco. But if both of them degrade the vonage bits, I'm now forced to get phone service locally, in an environment with less competition. The broadband service that I signed up for was non-discrimantory. But there are now rents to be gained by being discriminatory. It's only a matter of time, and I see no recourse for me other than to provide them their rents.

2) I run my own email gateway. By doing this, I have much greater control over incoming email. Although I post my email address all over the place ( I get maybe 2-3 spams each year. Additionally, I can completely control email access that my 8 year old son has. The service that I signed up for allows me to do this. But if the telco and the cableco don't like it, my only recourse is very expensive. And, again, this is not what I signed up for.

The big problem that I have with all of this is that bandwidth is cheap, and getting cheaper. So both of these problems should simply not exist. Competing providers should be fighting to give me extra service not less service.

The appeal of network neutrality, to me, is to be able to enforce the service that I signed up for. From my perspective, last mile network provision is not competitive. If it were, I'd have a much easier way to enforce my contractual service: switch to someone else.

In this climate, what other options should I be thinking about?

KipEsquire writes:

Are you suggesting that Verizon, AT&T, BellSouth and Comcast have more of a free-market pedigree, and better free-market credentials, than Microsoft, eBay, Yahoo! and Google?


Vincent Clement writes:

I think it is quite telling that the most regulated companies (telcos and cablecos) are opposed to net neutrality (aka regulation of the internet) while the least regulated companies (Google, Microsoft, eBay, Yahoo, etc) are in favor of net neutrality. That should tell supporters of net neutrality legislation something.

Mark Horn writes:

This article is a good answer to my previous set of questions. Basically, my answer assumption was that since the telcos and cablecos are regulated, it justifies further regulation in access and discrimination to prevent last mile censorship.

But the solution relies in looking at the other potential solution: remove the regulation and monopolies granted to telcos and cablecos on laying cable. I like this position.

Joshua Macy writes:

So you think that the telcos are lobbying hard to reduce their competitive advantage in manipulating government regulation? That seems unlikely to me.

Comments for this entry have been closed
Return to top