Bill Totten's Weblog

Wednesday, December 29, 2010

Net Neutrality Again

by FSK (December 27 2010)

The FCC made another "net neutrality" ruling. It isn't clear if they are legally allowed to do it.

"Net neutrality" is a confusing issue. You might say "It's the phone company's private property. They may do as they please with their property."

The fallacy is that the phone/cable companies have an explicit State-backed monopoly. It's illegal for me to lay wires and start my own ISP. It's illegal for me to put up towers and start selling wireless Internet. The phone corporations were given the monopoly right to use certain frequencies, for free. More precisely, large phone corporations borrowed money from banks/government and bought frequency rights from the government. It was a State-subsidized purchase; their frequency ownership claim is not legitimate.

In a really free market, no net neutrality law would be needed. Any ISP [Internet Service Provider] that started acting like jerks would lose customers. In the present, there's a State-backed monopoly/oligopoly; competition is illegal.

Where I live, if I want landline Internet service, my only choices are Verizon or Time-Warner. If I want wireless Internet, it's a small handful of choices. (The smaller vendors have deals to use spare capacity on the bigger networks.)

Consider a regular telephone. If I have a Verizon phone and you have an AT&T phone, I can call you and it works. AT&T doesn't say "This call is from a Verizon customer. I'll make him wait before putting the call through." That is enforced by law. If there was a really free market, they would take each others' calls voluntarily.

For the Internet, phone and cable corporations want to violate net neutrality. They might sign a deal with Microsoft, so that Bing is fast and Google is slow. With a monopoly/oligopoly, customers would be SOL [´╗┐Sadly Outta Luck].

It would become effectively illegal to start a new website, unless you bribed the ISPs. Right now, I can buy hosting cheap and get a fast website. If the phone/cable corporations have their way, that might cease.

Right now, it's effectively illegal for me to start a new TV channel. I'd have to arrange a deal with the cable companies, who don't want new competition. If the phone/cable corporations have their way, you'd have to pay each of them a bribe whenever you start a new website.

When I buy Internet access, I'm paying for X usage per month. I should be allowed to use that bandwidth however I please. The phone/cable corporations want to double-bill. Customers pay for service and websites pay for service. Websites that don't sign a deal with each phone/cable corporation would be SOL. Only a large corporation would have the resources to do that. Right now, a website vendor only purchases service from their ISP, just like users. The various ISPs agree to carry each other's traffic, and it evens out.

You can't have half-regulation. If phone/cable corporations want to repeal the "network neutrality" requirement, then they should also repeal the law that makes competition illegal. Phone/cable companies want competition to be illegal, while simultaneously having the freedom to offer lousy service.

The important point of the "network neutrality" debate is that competition is illegal. It's illegal for me to lay cable and start a new ISP. It's illegal for me to start a new cellular ISP business. The phone/cable corporation executives already receive massive State subsidies. They want more.

Most mainstream discussion of "network neutrality" doesn't mention that the ISPs have a State-backed monopoly. Competition is illegal. Customers would be SOL, if they decided to stop supporting network neutrality.

In a really free market, a "network neutrality" law is not needed. There is not a free market for selling Internet service. A small handful of providers were given the monopoly right to sell. The "network neutrality" law compensates for a non-free market. In a really free market, any ISP that didn't support network neutrality would lose customers. In the present, that wouldn't happen, because the ISPs have a monopoly.

Bill Totten


  • I don't understand why my family didn't just end their satellite subscription and began watching Netflix all of the time, but I'm happy as long as I can Watch it through my laptop.

    By Anonymous cable companies, at 10:38 PM, January 23, 2011  

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