A Further Comment on Net Neutrality

My post on Net Neutrality has generated more than the usual number of emails. The below comment from a reader reflects fairly well the sentiment of most of the emailers, my response is in blue.

I have a comment regarding your most recent article net neutrality.

I am libertarian (thanks to Ron Paul), and an engineer/programmer in the computer hardware industry.  I'm all for true free markets.

I don't think we have anything close to free markets in ISPs.  We have fascist/crony-capitalist ISPs, government sanctioned public utilities at best.   I don't trust the ISPs, as they embrace this fascist system.  So, I don't think it's right to characterize removing net-neutrality as allowing the free market to function. 

I wrote a follow-up to my initial post, which deals with this: 

 Judging from the comments, I need to expand my thoughts here. As  commenter Jack Weil correctly observes, I thought it would be clear to all that when I wrote, "Government should keep its hands off ISPs and allow them to operate any way they want." This implies that, well, "government should keep its hands off," which would mean that there would be no government protected cartel.

 It will allow the ISPs to use new technology to charge money based on who I'm talking to and what I saying.  That doesn't sound so great to me.

There is nothing wrong with new technologies and there is nothing wrong with allocating scarce resources by the charging of different prices. Again, I am looking at this from a free market perspective and the way to get to a free market is to remove regulations, not add regulations on top of regulations.

In you article you make this statement "Well yeah, but what web site is going to use the service of an ISP that blocks content that user wants?"

There are a few problems with this statement. 

   * First my ISP and that of the website I use, almost always have different ISPs, and in between our immediate ISPs there are still other providers.  Any one of them could detect packets, and demand fees("protection money") to keep those packets flowing.

The technological ability to detect packets and the ability to "demand fees" are to very different things. Intermediate ISPs can't simply charge any fees they choose. Why would an initial ISP hand off to someone that is going to charge a huge fee? It makes no sense.

I happened to have been a consultant on an acquisition that was being made of a floor at One Wilshire in Los Angeles,one of the key communication points in the country. Part of the business done on this floor is voice communication handoff work, when major carriers are near their own capacity, they handoff some of their communications. The majors look for the cheapest handoffs. No major carrier would have any incentive to use an intermediate provider if they demanded "protection money."  The same goes for ISPs.

   * A website I use, has no control over what ISP I use, so there is no choice as to what ISP a website "uses", as your statement implies.

Web sites and users both use ISPs. Individuals determine what ISPs they use (assuming a free market) and web site owners determine their ISPs. Just like in a phone call, wher each party to the call uses its own carrier. 

   * Medium sized and larger companies can choose what ISP they use based on picking what company/geographic region they have servers in.  But small startups and private sites are stuck with whatever ISP they have locally, just like individuals.

"Stuck" because of government regulation. Again, the solution is not to add more regulations on top of regulations but to eliminate the current regulations.

Everyone already pays for however much bandwidth they want.  Quantity and speed are already accounted for, just like shipping a box via ups/fedex, etc.  The only reason to allow the ISPs to charge based on packet contents and sender (not speed/size like is already done) is because the ISPs desire to rent-seek.

Rent seeking can only occur because of  government edicts, not in a free market. For the third time, the solution is not to add regulations on top of regulations, but to eliminate the current regulations. The attempt to further regulate the sector, via net neutrality laws, should come as no surprise to students of economics. As Ludwig von Mises put it, interventionism begets more interventionism: 

Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps.

 Finally, Holman Jenkins, in an article I earlier linked to explains why in a free market, we need not fear "protection money" charges. It is just not the way the free market works: 

 What the net-neut obsessives refuse to recognize is that anticompetitive intent isn't worth worrying about if an anticompetitive result isn't possible. If AT&T were "double-dipping," or charging sender and recipient for the same data, as some allege, its rivals would quickly copy its innovation and compete away any excess revenues. If AT&T were to degrade websites that don't pay up, its rivals would pounce and steal AT&T's dissatisfied customers.