November 14, 2014

My thoughts on Net Neutrality

Filed under: Uncategorized — admin @ 2:11 pm

Over the past few years my work in Qbix has put me at the crossroads of internet and politics. I welcomed the opportunity to discuss and debate political issues and philosophy with many people — friends, radio hosts, and so forth — and in the process this helped me better understand my own political philosophy and articulate my views.

I am neither Libertarian nor Republican, nor Democrat. I guess the closest terms I’d apply are Liberal, Minarchist, Distributist, and Realist. I care that arguments are made in good faith and supported by facts. I don’t rely on using the political system to solve most of our problems, and I think I live in a country whose general population’s ability to influence public policy has greatly diminished. We can see, for example, that 95% of our representatives in Congress have just been re-elected despite a dismal 14% approval rating just prior to the election. What does that say about our democracy?

The Net Neutrality Debate

Anyway, now that our electorate has spilled a lot of ink regarding Net Neutrality and 3 million comments were sent to the FCC, the issue remains. The current Chairman of the FCC, Tom Wheeler, was a former venture capitalist and lobbyist for the Telecom industry. Obama placed this man to head up the FCC, perhaps partially because of his personal efforts in raising money for Obama’s campaign – this kind of stuff happens at all levels of government. And the current fight is currently over whether the FCC should reclassify broadband Internet service back as a Common Carrier Utility rather than an Information Service. Some Telecom companies and Billionaire mavericks warn against this, while Net Neutrality advocates say it’s a bunch of fearmongering. I think the problem is something deeper — it’s the fact that corporations have gotten so big and centralized that we as a population need to argue about one-size-fits all policies that are then imposed on everyone.

“Net Neutrality” is a term that one side uses to dress up a bunch of complicated policy decisions, and not all those 3 million people writing comments to the FCC understand the implications, if anyone really does at all. It’s a marketing term, same as “Right to Life” and “Right to Choose”, that casts the opposing viewpoints as straw people. Meanwhile, the actionable proposal is to reclassify Broadband Internet as as a “Common Carrier”, undoing its earlier reclassification by the FCC as an “Information service” – which the FCC expected would speed up Broadband adoption in the US. One issue is whether that reasoning applies anymore, and if not, why not. Another issue is whether rules that apply to telephone networks, which carry conversations between people, should govern the transit of Internet data, which can be sent by one site (such as Netflix) to millions of customers at once. But the real issue here is the size of the participants involved, and the amount of data on the Internet they handle.

Earlier this year, we’ve seen merger taking place between AT&T, DirectTV, Comcast and Time Warner. Over the last two decades we’ve seen something similar happen in the banking industry, where “too big to fail” banks merged to be even bigger. Say what you want about politics or the free market, but it’s pretty obvious that the more top-down these companies the run, the more one-size-fits-all solutions we will be debating, and the more unintended consequences might arise from the fallout of either decision.

General Principles

As for myself, I think that we would fare much better if our governments were set up differently. Analyzing all the different political debates, one theme has emerged for me over and over again – government does well when its role is limited to ensuring people’s minimum expectations are met. These expectations vary from place to place and increase with better technology – for example, Romans had aqueducts, while most of us have come to expect running tap water that’s safe to drink, and would be up in arms if we didn’t have that. Along with access to safe drinking water, the UN has recently proclaimed internet access to be a “fundamental human right.”

But as with any guarantees and free things, there should be a limit on how much something can be consumed before the consumers have to pay for resources. Let’s analyze that issue without resorting to an easy-to-defeat straw man. Basically, we can think of free things (free food on a cruise, etc.) as an egalitarian layer which delivers goods and services only up to a certain point — usually this point is a reasonable one that would satisfy many consumers. For example, if a person started eating all the food, stuffing it in their luggage, throwing it overboard, etc. then at some point the cruise operators would approach the person and either ban them from consuming any more resources (”by force”) or give them the option to continue doing it, but pay. This doesn’t mean the lower level wasn’t free to consumers – only that it was limited.

What’s nice about this free layer is that it’s provides safety net for people down on their luck, and also lowers the barrier for new entrants and trying new ideas. Yes, the markets are distorted by the guarantees and resource transfers, but there’s also quite a bit of data to show that we get a lot of bang for the buck and also leads to better resource allocation in society.

But it’s only free up to a point. In my opinion, a company sending 34% of the internet’s traffic shouldn’t expect the same treatment as a company that’s hosting a small website. It’s pretty obvious that Netflix is setting up special peering agreements with tier 1 providers such as ComcastVerizonAT&T. Net Neutrality isn’t about this, and it shouldn’t be. It’s about “the last mile”, which the FCC admits is basically a duopoly.

The Takeaway

So the real issue here is one of mergers, giant corporations, and lack of competition. This leads to top-down solutions that are then debated in a political way. Many libertarians are especially conflicted in this debate since a free and neutral Web has obviously shown to produce a lot of wealth and innovation, and yet the size of the corporations is now causing debate whether “free market” should be meant in the Adam Smith sense or the strict Laissez-Faire sense. By contrast, my position is clear even in this case. In my opinion, we should have been seriously considering distributism and and implementing an unconditional basic income.

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