Net Neutrality Isn’t As Awesome As You Think

This week the internet’s picking Net Neutrality is the issue du jour. Here’s a few points to consider when crafting your opinion on net neutrality.

1. Big ISP’s like net Neutrality.

Yup. That’s right. Here’s some backstory. In order for Net Neutrality to exist through the federal government, the FCC had to declare that ISPs are “common carriers” like electricity companies. Without getting into whether or not that’s a good idea, this redesignation meant more regulation and compliance costs for ISPs. ISPs then turn around and pass that cost onto the consumer. That’s probably not news to you. What you likely haven’t considered is that ISP’s want this to happen.

Comcast and Verizon don’t mind adding a legal and compliance team to their already leviathan bureaucratic structures. They can increase their costs and just pass that increase off to the consumer as long as their competition has to play by the same rules. This doesn’t give ISPs that are already large a competitive disadvantage against one another. Now imagine these increased compliance costs in the eyes of the small, upstart ISP. If I’m trying to start an ISP and I only have 10,000 customers, the fixed, human capital cost of compliance gets distributed amongst a substantially smaller customer base than Comcast and Verizon have. A high regulatory burden makes it nearly impossible for upstart ISPs to compete with the giants on price.

That’s bad for consumers and good for giant ISPs. Comcast and Verizon only have to deal with each other as competition and therefore have a reduced incentive to improve their services. That also has the negative consequence of making marginal innovations very difficult to get to market. If my new internet service is 2x better than Comcast’s but my price is 2x higher because I don’t have enough customers to distribute the fixed cost of regulation between, my company isn’t going to succeed even though my service is better. A successful upstart ISP needs to be comparatively 10x or more better than existing players for people to pay the amount of money necessary to keep them afloat while they grow their customer base enough to distribute fixed regulatory costs competitively.

Net Neutrality and its increased regulatory burden essentially regulate out marginal innovations in the ISP space and secure the thrones of the corporate giants it’s supposed to keep in check.

2. Net Neutrality solves a problem that doesn’t exist.

Theoretically, without Net Neutrality, internet giants could charge more for certain services and prioritize some content over other content. This has pretty much never happened because consumers demand a free and open internet. Nearly every other industry self-regulates to provide optimal outcomes for consumers. The internet will do the same and we’ve seen no evidence to the contrary. If we are to pursue a course of Net Neutrality, let’s wait until a content prioritization problem actually exists before removing the possibility that new entrants to the ISP market might solve both content prioritization problem that net neutrality is intended to solve, and improve the internet in ways we can’t imagine yet. Having the government solve this problem before we’re sure that the market won’t solve it limits the internet’s future possibilities.

3. The internet is absurdly good at protecting itself.

Remember SOPA and PIPA? Those bills would’ve given the government the ability to take down a website and have way too much control over the internet. Wikipedia and a bunch of other popular websites went dark for a day as those bills were being considered in protest and it worked! The bills died. Imagine the protests that would occur if ISPs started unfairly prioritizing some content over other content.

4. The government is the internet’s biggest threat.

This Net Neutrality debate is happening against a backdrop of NSA spying, Russian hacking and all manner of threats to the health of the internet largely orchestrated by world governments. Do we really want the people who were secretly spying on us for years to have even more control over the internet? While today this power is being claimed to do good, who knows how it’ll get usurped in the coming years (need I remind you that the body regulating the internet, the FCC, is part of the executive branch which is controlled by President Trump). Case in point, antitrust legislation was originally created to taken down Standard Oil and other huge trusts that were monopolistic. 110 years later, it’s possible that President Trump’s FTC is considering stopping a Time Warner merger because CNN is a political rival of his. The government never gives up power and as time goes on governments abuse all power they’re given.

Instead of trying to solve a problem that doesn’t exist with a solution that threatens the internet a lot more than ISPs do, let’s trust the market to deliver us quality services with gradual improvements as it does in nearly every other industry. The internet is free, open and beautiful. Let’s keep it that way.

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