The capitalist view of net neutrality

The new Republican-appointed chair of the Federal Communications Commission, Ajit Pai, announced on Nov. 21 the commission would soon vote to repeal the 2015 Open Internet Order (OIO) net neutrality regulations imposed by the former Democratic-appointed chair, Tom Wheeler. Pai called net neutrality “a solution that won’t work to a problem that doesn’t exist.”

Net neutrality, or the regulation of Internet Service Providers under the rules in Title II governing telephones, is supposed to keep the internet “open” and “equal.”

Only, the most important thing is to keep the internet free. Pai’s resolution is named Restoring Internet Freedom.

The long-term trend of the world wide web is innovation and creativity. The internet is only a few decades old, and it has changed the world. So why has net neutrality inspired such passions by both proponents and opponents who otherwise would be happily liking each other’s posts and tweets?

At bottom, net neutrality is a debate over capitalism. Net neutrality advocates are terrified that the freedom enjoyed by the commercial internet will create that old progressive nightmare—monopoly power used to generate obscene profits while consumers are forced to pay more.

The specter of monopoly power arising in a relatively free market where new entrepreneurs can enter without artificial barriers is nothing more than a bad dream caused by a bit of undigested meat. Private market monopolies are extremely hard to sustain against new competition. Net neutralists cannot point to real-world examples.

What exactly is wrong with paying more for services you desire, or, for that matter, paying less for what is adequate for you? People pay for first class, economy, extra leg room seats, early boarding and other ancillary services every time they take a plane trip. Why shouldn’t Necromancer holed up in his parents’ basement playing Forge of Empires not be able to pay extra for the extreme bandwidth he wants? Someone who only logs into social media and streams some movies would happily pay less for what is adequate for his needs.

The anti-capitalist mentality is morbidly static and pessimistic. It sees a world where everyone is looking out for their own self interests as a world without a conscience. Competition is portrayed as a zero sum game like sports contests when in fact firms are competing to serve the public in a dynamic win/win process. Profit is not the theft of the surplus value of the working class. Profit is the reward for efficiently satisfying the needs of the masses.

Those who favor government regulation because of fear of commercial monopoly power have an exaggerated opinion of the competence of the state. It is government regulatory power that often is the source of monopoly power. Pai has accused social media giants (Google, Facebook, Twitter, etc.) of a kind of regulatory capture, claiming they filter far more content than ISPs can under the OIO regime while loudly telling users they favor an open internet.

Commissioner Pai believes internet competition violations should be investigated by the Federal Trade Commission instead of the FCC. Even more important, large government agencies should not be able to have the power to institute contradictory regulatory frameworks every few years. Markets need stability to encourage long term investments. Our elected representatives in Congress should step up and assume responsibility to clearly define internet property rights and procedures.

On the other hand, Congress is busy attacking social media and internet service providers over political and sexual content this session. I am not confident the serial gropers on Capitol Hill should have much power over the internet, either.