The Federal Communications Commission (FCC) has repealed President Obama’s net neutrality regulations from 2015. Good for FCC. I’m not a fan of it, or of any other government regulatory agency, but repealing regulation is always welcome.
I was hesitating to write about the topic, as it already has received a plenty of media commentary, most of it vehemently opposed to the deregulation, in the name of preserving equality of all traffic and data on the internet, a.k.a. net neutrality. But many people seem confused about the concept of net neutrality and support the idea of “open internet” without realizing what it actually means. So let’s clarify what net neutrality means and why repealing the regulation should be cheered, not protested. You can also read Terence Corcoran’s illuminating Financial Post editorial about the topic.
By imposing net neutrality, the government treats the internet as a public utility. Under the repealed regulations, internet service providers (ISPs), such as Comcast, AT&T, Verizon, and a number of smaller players, had to provide equal services (such as equal broadband width) to all customers at the same regulated rates. As Corcoran observes, this principle is the same that applies to all public utilities, from postal services to electricity to roads—with the same consequences. Regulating public utilities to be “neutral” has led to ever-escalating prices and poor service (think of postal services and roads), due to inefficient operations and the lack of incentives—competition—to lower costs and to improve service.
After two years of Obama’s net neutrality regulations, the members of the FCC saw the light and repealed them. Had they not done that, investment in internet services (broadband access) would have continued to decline, as would have competition among the ISPs. This would have meant fewer choices of ISPs, poorer service, and higher prices for consumers and businesses (as we know from the evidence of other government-regulated utilities).
So why is the reaction to ending net neutrality regulations condemnation in most of the media and among those who unthinkingly believe its message?
The scary scenarios painted by the proponents of a regulated internet include the large ISPs colluding to “control” the internet. They would end competition, stop innovation, and jack up the prices to a level that only the wealthy could afford. Sound familiar? This is the same argument always presented by the proponents of government regulation to restrict individual freedom and free markets.
Such an argument is based on the moral code of egalitarianism that holds equality as the supreme value. While this may sound good, you should note that egalitarianism does not advocate equal individual rights for all, or equality before the law. Instead, it upholds equality of outcomes for everyone—regardless of merit, effort or productivity.
What this moral code of equal outcomes ignores is the fact people, and businesses, make different choices. They develop different levels of knowledge and skills and exert different amounts of effort, and achieve different levels of productivity. Proponents of forced equality—such as the advocates of net neutrality—ignore the fundamental truth that freedom is a requirement of human flourishing. If people and businesses are not free to develop their knowledge and skills and to produce—and to benefit from their own efforts—they will lack the incentive that comes from being able to seek their own success and to further their own lives.
Only when people and businesses are free does open competition thrive and fuel innovation, which leads to lower prices and better quality. No government regulation has ever promoted competition and innovation (regardless claims to the contrary). As for colluding to jack up prices: that only happens when government artificially restricts competition. It is not in the interest of businesses, ISPs or others, to limit their customers only to the wealthy (although some may legitimately choose to serve that segment only). That would be missing profit opportunities derived from low-cost, low-price strategies.
If you care about thriving, innovative internet services with a plenty of choices for providers and and a variety of prices, you should oppose net neutrality regulations—through which the government violates the ISPs’ and consumers’ individual rights—and advocate free competition on the internet.