The Trojan Horse: “Net neutrality” as Obama defined it will make things worse on the Internet, less free, less open, slower

from ACC

Here is the President’s recent statement on “net neutrality.” Or the Netflix/Hollywood Crony Internet Act of 2014 as I like to call it. The entertainment industry is all about this move. Short term good for them. Long term bad for all of us and the marketplace.

Obviously we are big advocates of a free and open Internet at ACC. We have long fought corporate/government takeovers of large parts of it. We gladly joined the anti SOPA and CISPA fights. We will happily join those fights again if need be. But the fight for “net neutrality” is not as clear cut as the fight against SOPA and CISPA.

For example SOPA and CISPA hand more power to the regulators and specific industries connected to the regulators. It’s obvious why those who love freedom, liberty, and transparency would be against such efforts. “Net neutrality” as defined by the president also gives massive power to the government, and yet many Internet people have no problem with it because – and let’s be frank here – they don’t want to pay more for Netflix.

Basically the argument is about the “last mile” of Internet service. This last mile is usually provided by a private Internet service provider or ISP. Right now massive amounts of data are flowing across this last mile which was constructed by private companies. Because of this overall traffic speeds are being reduced as data becomes clogged. This is an obvious problem.

The last mile can be thought of as a toll road. If suddenly a road goes from handling mostly cars (normal non-streaming websites) to giant tractor trailers (movies, etc.) traffic is going to become congested. The thoroughfare will become clogged.

If the owner of the road was able to charge an appropriate fee for the increased strain on the road caused by the trailers traffic could be kept open and free flowing. The price for the trailers could be adjusted according to traffic strain.

If one is going to use more of a resource it makes sense to pay for this extra use. Otherwise people will pile in and exploit what is essentially a subsidized (not by taxpayers but by other motorists) service.

If the road owner (the ISP) is forced to allow trailers on at the same rate as cars the incentive for the owner of that road to upgrade and maintain the road is greatly reduced. Why make the road better if the owner can’t expect any increased revenue from an upgrade?

And that is the danger here. The Feds are likely to mandate that big chunks of data move at the same pace as smaller pieces of data across the last mile of “road” thereby reducing quality some for everyone immediately and greatly reducing quality for everyone over the long term as the Internet becomes an ossified utility.

So called net neutrality may set back you getting that holodeck you’ve been pining for by 10 years, if you see it at all.

There is one very important wrinkle to all of this. It’s not like the ISPs have just operated in a vacuum all these years. They’ve played the crony game very well.

Ever notice if you go to turn in a cable box the cable company’s office has all the charm and efficiency of the DMV? That’s because long ago many of the cable companies secured monopoly or near monopoly rights in different areas thanks to local governments. As such the ISPs act in many ways like the government.

So in fairness, most of the “last mile” wasn’t constructed entirely because the free market indicated the best way to do it.

Saying this turning the Internet into some federal information highway is a very stupid idea. Have you ever seen what I-95 looks like at 4:30 PM anywhere from Boston to Richmond? Now imagine your Internet moving at that pace.

You may not like your cable company. (That’s why Mr. Obama, who never worked in the private sector in his life, kept talking about the big bad Internet companies in the video. It’s good politics if manipulative.) I certainly don’t like my ISP particularly. But at least on some level the ISP has an incentive to provide higher levels of service. The government on the other hand by its nature just enables mediocrity and kills innovation.

This is a government (virtual) land grab. But for many it will be popular. Who’s going to come out and say “Please charge me more so I can watch Game of Thrones. Please let my Internet company make more money.” However, as ISPs stop investing in infrastructure over time because that big bad terrible profit incentive has been taken away we’ll all be much worse for it. Much worse.

Obama in his recent speech on the subject said “There should be no tolls on the information superhighway.” Well, why not? One of the reasons our regular old superhighways are so messed up and probably cost the economy billions and billions of dollars and jobs (not to mention time with the kids at home) is because there aren’t ENOUGH tolls. Tolls are a valve. A means by which to keep traffic flowing.

But this is not obvious. Almost no one is clamoring for a privatized highway system. They prefer it to be “free” and “open.” Just like the Internet may soon be.