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Prelude: Troy asked me to adapt this piece from a private thought that I distributed to a conspiratorial listserv of which I am a member. Because I know Troy, I am reasonably confident that he suggested this piece to me principally because it would open me up to immolation at the fingertips of Richard Epstein, whom I have had the pleasure of hosting for dinner in Palo Alto several times, on no occasion succeeding in winning an argument against him. Richard wrote recently on this page that net neutrality is “a solution in search of a problem.”
Conservatives should be for net neutrality. It isn’t a perfect solution, but network discrimination is indeed bad, and the last-mile Internet industry is more like a government whose actions we should seek to restrain than a private market which, unmolested, will constantly improve.
As the GOP embarks upon a one-year-long period during which its only responsibility is to avoid doing deeply unpopular things that subvert conservative principles, it would seem on the verge of doing just that.
First, the pragmatic picture: net neutrality is, with the voter, on the side of the angels. The only entity widely known to oppose net neutrality is Comcast, the company with the lowest customer satisfaction rating of all companies in the United States. The manufacturer of this tube of catheter lubricant delights more people than Comcast.
Until a week ago, Comcast was the only major brand widely thought to oppose the notion that all websites should be treated equally. Then the President announced that he supported net neutrality. Like contrary lambs to the slaughter, certain elements within the Republican party immediately discovered a passion for perfect fealty to libertarian principles in this area.
So at the very least the GOP ought to save its breath on net neutrality.
But in fact the GOP should be advocating strongly for net neutrality, and taking a moment to explain why consumers who lust for fast and fair Internet access to bank, trade stocks, buy Chinese baubles, read news, view films, and speak with family are being denied just that by ancient ’60s-era left-wing contumely that sought to control the ownership of copper networks, insensible of a future day in which those networks would be part of an open global network rather than, as they were then, a closed circuit. The need for net neutrality today is the result of short-sighted big-government subornation yesterday.
In other words: liberals screwed up the largest and most lovely experiment in conservative free-marketism that has ever existed: the Internet.
You can see this in a subcutal layer of the Internet: content delivery networks. Akamai and Level3 are two examples. These represent a market solution that came about as a competitive resource allocation layer to solve the issue, borne of government-monopoly-assigning local Cable Franchise Boards, of last-mile carriers being slow and uninnovative and lazy. They consolidated for twenty years, because that was the only way to grow, and no one could run new cable. (Because of liberals.) These guys make decent margins and live in a highly competitive space. Anyone can use or not use any one of them, and their packets will still get through.
Now that there are trillions of dollars transacted over the web, the last-mile guys — Comcast, Time Warner, AT&T, and the rest — want to play toll collector, working both sides of the road. Their new way to grow is to build a wall around individuals’ homes. Individuals need to pay to get out, and businesses need to pay to get in.
This is a sea change in the product they are selling. ISPs profess to sell Internet Access, which is a product that is defined like this:
a certain uniform speed of best-efforts routing of packets from the net, through your ISP, into your home; and from your home, through your ISP, out onto the net.
Now they want to silently change the product. They want the product to be access to The Comcast Network, which may or may not be the Internet. The only reason consumers would put up with this is because of blunt force. These tolls booths were built by the government.
Another, simpler, way of viewing the issue is that the net is a digital analogue of the real-life marketplace. You protect the sanctity of the marketplace with everything you’ve got, because the cupidity within it, the ability to sell and profit within it, is what creates innovation and wealth and solves diseases and cuts away poverty. In real life, the government is the big boss whom we constrain with law and, at its very taproot, with the Constitution. On the net, the last mile carriers are the big bosses. Every other step of the Internet is perfect competition — literally. Google ‘traceroute‘ and run some. Your network request could traverse any number of networks. It’s only that wire to the home of the consumer that allows for abuse.
It’s better for free market principles for Comcast and TWC and ATT to have 10% margins and for us to have millions of new businesses built, movies made, songs released, stocks traded, genomes parsed, Uber calls processed, &c., than for Comcast and TWC and ATT to have 20% margins. Especially because these guys only have the share they do because of government created scarcity.
So the GOP is presently to defend an Internet situation that displeases virtually all voters by the exercise of an abstract principle — don’t regulate — which, applied to a market rigged by government a long time ago, produces a deeply unpleasant result which does in point of fact restrain trade. By seeking purity on an uneven playing field, the GOP will lose popularity and the argument.
Instead, the GOP could support net neutrality and work at the state level to dispossess state and local bodies of the ability to prevent Internet innovators from running new pipe. It could proscribe the FAA’s authority over drone- and balloon-delivered Internet. It could make it easier to launch satellites. It could wrest from the FCC control over radio spectrum and allow manifold microwave operators (like Monkeybrains in San Francisco) to launch high-speed links in dense areas.
It could strip many D.C. bureaucrats of many powers and allow genuine innovation, all the while ensuring that a few companies who connived over the years to collect up old government toll booths cannot use them to prevent free trade.
In short, this is an easy one.
This is all I have time for just now, but happy to get into it on a much more technical level later.