Yet again, the government wants to fix a problem that doesn’t exist. According to the Obama administration and the FCC, it is necessary to regulate internet service providers so that they don’t interfere with people’s access to the web. The claim immediately prompts one to ask: Who is being denied access to the web?
In the past twenty years, access to the internet has only become more widespread and service today is far faster for many people — including “ordinary” people — than it was twenty years ago, or even ten years ago. Today, broadband in Europe, where the internet is more tightly regulated, has less reach than it has in the United States.
The administration’s plan is rather innocuously called “net neutrality,” but in fact it has nothing at all to do with neutrality and is just a scheme to vastly increase the federal government’s control over the internet.
What is Net Neutrality?
Currently, ISPs are regulated by the FCC, but as an “information service” under the less restrictive rules of so-called Title I. But now, the FCC wants to regulate ISPs as utilities under the far more restrictive Title II restrictions. For a clue as to how cutting edge this idea is, remember this switch to Title II regulation would put ISPs into the same regulatory regime as Ma Bell under the Communications Act of 1934.
So what does this mean for the FCC in practice? According to FCC Commissioner Ajit Pai, “It gives the FCC the power to micromanage virtually every aspect of how the Internet works.” More specifically, Gordon Crovitz at the Wall Street Journal writes:
[With Net Netruality,] bureaucrats can review the fairness of Google’s search results, Facebook’s news feeds and news sites’ links to one another and to advertisers. BlackBerry is already lobbying the FCC to force Apple and Netflix to offer apps for BlackBerry’s unpopular phones. Bureaucrats will oversee peering, content-delivery networks and other parts of the interconnected network that enables everything from Netflix and YouTube to security drones and online surgery.
The administration insists these measures are necessary because — even though there is no evidence that this has actually happened — it is possible that at some point in the future, internet service providers could restrict some content and apps on the internet. Thus, we are told, control of content should be handed over to the federal government to ensure that internet service providers are “neutral” when it comes to deciding what is on the internet and what is not.
Can Goods Be Allocated in a “Neutral” Way?
The problem is that there is no such thing as “neutral” allocation of resources, whether done by government or the marketplace.
...As economist Douglass North noted, regulatory regimes do not improve efficiency, but serve the interests of those with political power:
...As economist Douglass North noted, regulatory regimes do not improve efficiency, but serve the interests of those with political power:
Institutions are not necessarily or even usually created to be socially efficient; rather they, or at least the formal rules, are created to serve the interests of those with the bargaining power to create new rules.
So, if populists think net neutrality will somehow give “the people” greater voice in how bandwidth is allocated and ISPs function, they should think again.
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