Monday, April 5, 2010

Another Obama takeover of the private sector?

Under the Obama administration, the Federal Communications Commission (FCC) is pushing forward with their calls for "Net neutrality." This policy agenda aims to restrict and regulate internet service providers (ISPs) from making business decisions on how to control their private sector communications networks.

The FCC would like to limit ISPs from making sound business decisions that balance consumer access with product quality considerations. One example is how ISPs, in particular wireless companies, have different service plans that vary in price given the amount of a consumer's data usage. Under Net neutrality, the FCC wants to prohibit this "discrimination." Instead, the FCC argues that all plans are created equal, thus people should pay a single rate for unlimited access. Does this philosophy sound eerily familiar to the health care movement of the Obama administration?

Although, the reality of the matter is that the FCC and the Obama administration have it all wrong. Broadband and other wireless access are limited resources in the sense that at any point in time there is a maximal usage capacity that is defined by the infrastructure that these private ISPs have spent their own capital to create. Therefore, because the network capacity is limited, these ISPs have marketed a product where the consumer pays only for what he uses and not for what everyone else is using. This fair policy based on stratified usage/cost plans is not corporate greed, rather a consumer benefit aimed at maintaining product quality. The principle for this is that as more people pay for higher usage plans, ISPs have more capital to invest in infrastructure improvements.

If the FCC and the Obama administration get their way, private telecommunications, wireless and cable companies may soon find that these new regulations become too costly and or decrease the product quality to an extent that consumer satisfaction is compromised. What happens then? The market self adjusts as consumers bail on sub-par plans, thus leading ISPs to increase prices in order to cover pre-existing network infrastructure costs. At that point you will most likely hear people say "look, the private ISPs can't provide cost effective free press access to the internet so the government should start to provide these services. Because after all, access to information is a right for all Americans." That's when we wake up one day with government controlled internet or state-run free press.

Before we get to this worrisome state of affairs, let's acknowledge how the status quo has been quite beneficial. Specifically, it has grown industries, made jobs and spawned new technologies. These FCC Net neutrality policies are nothing but another governmental intrusion that is simply a domestic form of industrial and economic sabotage. Let's face it, you can't stack the deck against industries and expect them to keep our economic engine going. In order to protect the prosperity of our nation, we have to fight government encroachment into sectors that freely respond to market, i.e. consumer driven forces.

If you want to stop this insult into our nation's economy, share this article and visit before April 8th to petition these policies.

1 comment:

  1. The true argument underlying net neutrality is not about bandwidth scarcity, it's about freedom of choice and freedom of information. If we lose net neutrality, we lose our choice of content, applications, and services. Instead, the internet provider chooses what content is available, and users can only select from the ISP's limited offerings. It's like subscribing to a cable company that just doesn't offer major channels. (For example, if Comcast stopped carrying CNN or Fox, you wouldn't be able to watch it.) ISPs want to create different access packages which include different content, charging you more for the ability to access popular sites. Promoting such tiered access also creates artificial scarcity and gives ISPs incentive to form contracts to promote certain websites over others. This means what you see--your access to content--is sold to the highest bidder and in addition to stifling free speech and innovation, could also promote unfair competition. More importantly, allowing ISPs unfettered discretion to create such plans erodes one of the major foundations of the internet: free access to information. In the past, only those who created the sites have charged for access, and then only rarely (i.e., major newspapers charge for access to older articles), but without net neutrality, your ISP can charge you just to access their website. Net neutrality is a principle that has underscored the internet since its inception. Period. To characterize it as something other than it is a gross misstatement.