February 26 is the day we will see the FCC vote on what Ryan Radia calls “the U.S. government's most brazen effort yet to police the Internet—which, until now, has thrived thanks to the absence heavy-handed federal mandates.”
The government power grab comes in the form of a proposal to regulate the internet just like the phone company and other public utilities are regulated. FCC Chairman Tom Wheeler, an Obama appointee, has been the public face of this effort and I didn’t know before reading Radia’s article that he was a “reluctant” convert to the idea.
Radia writes in Reason magzine:
The rallying cry behind the FCC's impending rules can be summed up in two words: net neutrality. According to this superficially benign concept, coined by the left-leaning law professor Tim Wu, Internet providers should be barred from discriminating against applications, services, content, or devices without an extremely good reason. Over time, net neutrality has morphed into the broader notion that Internet providers shouldn't even be allowed to accept payment from content companies such as Netflix or Amazon for priority traffic handling.
In practice, therefore, net neutrality means that content companies can't partner with Internet providers to fund improvements to the last mile—that's the portion of the Internet closest to individual subscribers' homes and devices. In the name of fairness, net neutrality declares unlawful a wide swath of voluntary arrangements that have the potential to fuel lower prices and better services for consumers.
Net neutrality will be hardest on the start-ups and for that reason some established outfits, seeing a way to protect themselves from competition, are in favor of the proposal. But not all of them.
Some companies prefer facing competition in the business arena to government regulation:
Though Apple, Google, Microsoft, and Facebook are large and profitable enterprises that face few imminent competitive threats, each firm nonetheless continues to invest in risky and seemingly fanciful gambits, such as virtual reality, driverless cars, wearable devices, and holographic displays. These companies realize that long-run success depends not only on their ability to plan for the future, but to make it happen. It's no coincidence, then, that Google Chairman Eric Schmidt urged the White House not to regulate network owners as utilities. …
To be sure, the broadband market isn't the poster child of perfect competition as it's taught in college microeconomics, with lots of firms cranking out undifferentiated products for negligible profits. But so what? The fact that relatively few firms account for most Americans' Internet subscriptions is no justification for letting bureaucrats in Washington dictate how broadband is priced and delivered. Indeed, markets are remarkably capable of self-correcting when firms think they can act like monopolists and get away with it.
The rationale for regulating competition and handicapping start-ups is that infrastructure is so important that it simply must be under the control of the government. Companies such as Google, this argument implies, cannot be trusted to determine what businesses they might want to partner with but need the federal bureaucrat to decide such matters.
One advantage for the administration is that net neutrality is an arcane topic—the administration gets out front with some platitudes about helping and protecting people, and it all sounds just dancy.
Gordon Crovitz back in August explained some of the technicalities and explained how regulating the internet as a utility would “spell the end of permissionless innovation on the Internet. Bureaucrats would have authority to dictate how networks operate, which technologies can be used, and what prices can be charged.”
For my money, Senator Mike Lee posed the question before the FCC best in an email letter opposing net neutrality:
Who do you want in charge of the direction of the Internet: people at dot-com startups that brought us game changing companies like Facebook, Google, Twitter, Amazon and Uber; or nameless, faceless, unelected bureaucrats in our nation’s capital?
The FCC has a Democratic majority, and, with the exception of some defections in recent votes in Congress, Democrats have had a tendency to stick with the president, no matter how disastrous his proposals. This is a disastrous proposal.