I just want to quickly call your attention to an excellent Wall Street Journal article on the effects of the Obama administration's decision to regulate the internet. It goes under the misleading moniker of "net neutrality," and it looks like one segment of the economy the administration had not been able to stymie is now feeling the pinch:
It’s back-to-school time, and Internet executives are getting an unhappy lesson in basic economics: Government regulation results in less of the regulated activity. New data show the Obama administration’s decision to regulate the Internet as a utility has already caused a steep drop in Internet investment.
Internet service providers’ investments in broadband enable Netflix to deliver video seamlessly over the Internet. Apple takes these investments for granted when it designs new mobile devices. But in February the Federal Communications Commission, after allowing network engineers and developers to operate freely for 20 years, subjected them to bureaucratic oversight in the name of “net neutrality.” Apple was silent on the move, and Netflix cheered it on.
The FCC never planned to set rates and terms for broadband under the laws that dictated how railroads operated in the 1880s and the phone system in the 1930s. But President Obama decided “net neutrality” was good politics, so he demanded that the commission impose the most extreme form of regulation. Today bureaucrats lobbied by special interests determine what is “fair” and “reasonable” on the Internet, including rates, tariffs and business arrangements. The FCC got thousands of requests for new regulations within weeks of the new rules.
The regulations are being written in Washington, D.C., but investors are clearly preparing to live with them, and that means less investment in the internet.
Capital investment are down 29 percent at AT&T and Charter Communications, 10 percent at Cablevision, and 4 percent at Verizon. Gordon Crovitz, who wrote the article, points to the irony that companies such as Netflix, which supported the FCC's intrusion, will suffer. As Crovitz says, it's hard to feel sympathy for them, given their encouragement for regulations, but the consumer, whose costs will go up, is an innocent bystander.