Net Neutrality: They’re too mad, we’re too happy

The Net Neutrality vote is over and to some people the results suggest an end of America as we know it. To the net neutrality haters an un-elected body just voted on an impenetrable secret protocol whose true purpose is to enslave our minds with the Obamanet. Or, according to Mark Cuban, it’s little more than a vendetta against the cable companies because, I don’t know, a Jim Carey movie made us hate them or something.

On the other hand, the regulation = freedom crowd seems to think that this 300 pages of unseen but inspirational prose has finally secured the unicorn future we’re due. We’ll graze on an equal access commons of high-rez candy corn planted by anyone with a network connection, and flitted to us at light speed without regard to its maker’s race, creed, or ability to pay. But to me, it’s mostly disappointment with how policy gets made and some agita about when and how the inevitable unintended consequences will reveal themselves. Even now it’s really hard to know what we’re cheering for, or angry about, and whether the policy we haven’t seen but still manage to love or hate will come even close to achieving its lofty goals.

I count myself as part of the “we’re” on the happy side because I’ve been generally for doing something to improve net neutrality in the face of increasingly obvious monopoly power at the telecom layer of the Internet. Prices are high, speeds are low, and the network innovation the haters are afraid of choking off isn’t happening anyway. Unless you count what Google is doing. But they’re doing it as a defense, and they aren’t doing it in enough places to matter.

Besides, this proposal doesn’t do much to address the last mile, excepting for it’s support of municipal networks. From what I can tell this set of regulation mostly addresses upstream problems of access and equality of traffic and will do little to address existing structural problems in our local markets.

Let me caveat my apparent certainty in the previous paragraphs though by saying that it has been extraordinarily difficult for concerned citizens (including me) to understand the issues and advocate for sensible policy in the midst of a debate consisting mostly of over simplifications and false equivalences. The debate, as it played out in public, was far from informative and tended to serve as little more than a Rorschach test of political ideology, a proxy for our voter registration cards, and the low-entropy implications of our political leanings. Right says free markets! Left says regulation!

The cable company and telecom’s lobbyists, while spewing money from a firehose, have teamed up with some members of the right to stoke this unfortunate dichotomy hard. Where we could have used proposals, too many of them resorted to demagoguery. This was their moment to engage in meaningful policy debate because frankly, a reasonable opposition might have had some useful things to say, but they have become so reflexively bombastic, and so reliant on the harangue as the oratorial technique du jour, that it never seemed to occur to them to treat this seriously. “Obamanet” this, “Obamanet” that.

Even Darrell Issa, the supposed tech guy in Congress, filled his twitter feed with nothing but predictable nonsense designed to stoke fires of uninformed rage-grumbling. I guess I’m not surprised. Habits once formed are hard to break and CPAC was just around the corner, so maybe he just go excited. I’m just even more disappointed in him than usual though because this seemed like an area where he might know better and could have contributed reasoned counterpoint to a proposed policy that was both secret and probably wanting.

Mark Cuban, always more than a little bit of a mad hatter, started to say some important things but then managed to go off the rails with ill-timed Ayn Rand references (are there any other kind?) and the unfortunate reveal of his credibility-straining Glenn Beck bro crush. His other argument that the Internet is just fine and needs no fixing is misleading at best and probably shows just how out of touch he is with what a $200 Internet bill means to most people. Ted Cruz? Too ridiculous for comment.

Meanwhile the left (or more accurately the pro- net neutrality true believers of whatever party) act as though we’ve never regulated competition-challenged markets before and have nothing to learn from our previous mistakes. Railroads, utilities, defense contracting, desktop software, airlines … all offer lessons in unintended consequences, all of which I guess we’d rather ignore as being off message. Some of these folks are already waking up to realize that maybe they aren’t as happy as they thought they were because the FCC didn’t create a pricing commission to regulate price. I think they should be happy that the relatively light touch of this regulation doesn’t set the stage for some future Reagan to overturn it, but they’re all like “Damn, there’s barely any Comcast schadenfreude to be had in this.”

It’s worth pointing out that the pro-net neutrality camp won this round mostly because of their successful grass roots effort to mobilize something like four million calls to Congress and the FCC. This is in itself an amazing and important part of the story, but even that success leaves me feeling like I just ate a tablespoon of saccharine. While the anti’s were falling hard for the “Obamanet” scare, much of pro’s grass roots tsunami was based on an understanding of the situation about equal in nuance. “Hey you, website visitor, yeah you. Want the internet to stay free?” “Hell yes!” “Well, then click here!” “Ok, I will! I tweeted it too!”

I’ll just add here that the cable companies need not point at the little guys who posted these calls for action when they count up what they spent and trundle about looking for someone to blame. They need look no further than their best frenemy Verizon who taught us all what to be afraid of when they replaced the latest episode of House of Cards with a little spinning “network busy” thingy during their war with Netflix. Net Neutrality was a nice little abstraction for most people right up until Verizon conducted their very public experiment in consciousness raising. This was PSA performance art done at scale, and a strategic blunder that annoyed me when my movies wouldn’t load but that I’m grateful for now.

Unless you refer to yourself as an “Austrian” (in the economic sense) you probably agree that natural monopoly left to its own devices is not in the public interest. On the other hand, unless you still have a picture of FDR over your kitchen table, you probably agree that over-regulation that accidentally or otherwise creates chartered monopoly in its stead isn’t any better. I would have loved to hear the pro-net neutrality side acknowledging the dangers of over regulation while the anti-net neutrality groups acknowledged the trouble with unconstrained monopoly. Common ground in at least the blindingly obvious would have made room for maybe a bit more actual policy discussion in the rest of the public debate.

Maybe. I’m probably being optimistic though given that this fight was really a three way fight between two kinds of monopoly interests (network layer, based on wire and application layer, based on network effects) and the public. Given the money at stake this was probably a fight destined to be dirty regardless, and while the public interest can represent itself in tweets, it rarely has the money to buy the podium pounders.

Anyway, I’m not a centrist, I’m an empiricist, and we know this from experience: regulating non-competitive markets is hard, and the choice isn’t a regulate / don’t regulate binary despite what the two camps might have us believe. Regulation happens along a continuum and no matter what choices we make, fixing one thing will often break another. Want small farms to have equal access to railroads? Check. Oh, you also get crappy infrastructure and obsolete locomotives when WWI breaks out. Want telephone service everywhere, even in the country? Check. Oh, you also get high business telecom costs in your major cities. Want cheap electricity? Check. Oh, you also get a system that is more cheap than robust and solar and wind will make it even less so. Want effective and inexpensive weapon systems? Let’s just pretend I didn’t include that one ok? Plus, in every case we also got whole new classes of special interests dependent on those regulations for power, market position, and patronage.

This isn’t a good vs. evil story (well, at least not only that). This is a conversation about “what compromises are we willing to make, in this time and circumstance, to better serve the public interest, and how can we craft policy that will allow a shift later when circumstances (most certainly) change?” Put another way, can we keep access to the Internet open and unfettered while also establishing conditions that are conducive to high rates of network innovation while maintaining reasonable prices?

My guess is, no, we can’t. Not in the absolute sense that both sides of this argument would have us believe. History tells this is a “choose two of the three” kind of game if we insist on perfect outcomes. However, good policy can do a reasonable job of balancing these conflicting desires if we’re willing to accept good enough. While some are wont to admit it, this regulation is a really light touch by historical standards and maybe it will turn out to be well-crafted. I’m hopeful. We aren’t (explicitly) controlling pricing or regional licensing for example. No rates commissions (like utilities) or additional network charters (like airlines back in the day). As far as I can tell we aren’t doing anything to break up already existing monopoly or duopoly conditions at the last mile. We’re just giving them the side eye and saying “don’t abuse your pricing power so much that I’ll be forced to do something.”

The gist of what I’m saying here is that monopoly is one of those unfortunate natural conditions of our economic world. 200 years ago it was primarily a political problem (i.e. chartered monopolies) but it has become, in our modern age, something of a mathematical side effect of our free market economic system. Left alone it hurts the public interest, managed clumsily it hurts the public interest differently (and sometimes more). Can we please, on both sides, acknowledge that the world is complex and approach our interventions thoughtfully?

Perhaps serious people were thinking deep thoughts behind the scenes, but if they were they forgot to share them with the public and they certainly didn’t contribute much to the low brow debate and absurd debate that arrived in most of our inboxes.

This is an uncomfortable admission, but I didn’t, and still don’t, know exactly where I stand on the issue. I couldn’t figure it out because the proposal was secret and the available public discourse was so stupid. As the inevitable unintended consequences unfold I hope we’ll do a better job next time debating the necessary policy course corrections. The Internet is too damned important to resort to policy-by-ideological-trope.

 

Coda: a few things that make me go hmmm…

Why wasn’t the pro- net neutrality camp hollering about not seeing the proposal before the vote? The FAA released their (flawed) proposal about drones after all. This is the norm right?

There are people that don’t believe natural monopolies even exist. They just ignore that the life of a natural monopoly is often longer than a human generation and suggest that “eventually something will displace it.” Or, maybe they are saying “Na na, at least they’re not as bad as government chartered monopolies.” These don’t strike me as practical or particularly reasonable people. On the other hand, they are probably the source of the argument Silicon Valley uses for not regulating monopoly derived from network effects.

And on that note, maybe Google and Amazon mostly stayed on the sidelines of this fight so we wouldn’t notice the apparent inconsistency of regulating monopoly based on physical plant while mostly ignoring the kind based on network effects. If you’re in a fight over the other guy’s monopoly privilege, that probably isn’t the best time to bring attention to your own, even if most people seem to accept that your kind of monopoly is more ephemeral, and thus less monopoly’ish. Which, I think is doubly odd, given how much network effect monopoly rent Microsoft extracts still from Windows and Office. Just do what I do, think of Windows as the So Bill Gates Can Do Good Tax and it will make you feel better.

This FCC Chairman, who just compared net neutrality regulation to the First Amendment, is the same FCC chairman who just a few months ago was arguing for pay to play fast lanes? How did that turnaround happen? Should we care if the independent FCC was “got to?”

 
And finally, with apologies. Q: “If the internet ain’t broke, why fix it?” A: “Because the damn rent is too high.”

Comments

  1. Perry McDowell - March 4, 2015 @ 12:47 pm

    Jim –

    Great post. It completely sums up my feelings about the issue. While I’m normally against government regulations, I am pro-net neutrality. Yet, I still worry that the camel’s nose is now in the tent, and today’s promises to regulate with a light hand will be forgotten in the coming years. I heard one caller on NPR ask if this will lead to regulation that would prevent his teenager from accessing objectionable material.

    One point I would add, and two of yours that I would expand upon:

    1) The providers brought this upon themselves, since it was their suit that overturned the FCC’s previous regulations for net neutrality. The court ruled that, since internet service wasn’t defined as a Title II service, the FCC didn’t have the authority to regulate it. Thus, the FCC was left with three choices: a) hope Congress would do something (ha, ha); b) do nothing, and allow net neutrality to die; or c) redefine internet service as a Title II service, which would allow them to regulate it. a) was never going to happen, but I can’t help but think that it was the four million comments the FCC received that moved them from b) to c).

    2) I’m very worried about what this, and many other issues, means for the future of our political system. You hit the nail on the head that this is a complex issue and there was no complex debate regarding it. Average people used to travel long distances to stand and listen to politicians like Lincoln or Douglas speak for hours on the issues of the day. Today, a sound bite longer than 20 seconds gets lost. “TL;DR” might be the bane of our society. It would be interesting to see what percentage of people spent more time contemplating this issue than they did Kim Kardashian’s butt, even though this is more likely to “break the internet.” I can’t tell if things just appear better in the past since I wasn’t there to experience them, or there has been a real shift.

    3) Finally, I think that your last sentence was one of the reasons that they’re were even the four million people galvanized enough to comment to the FCC. On that same NPR program, there was an industry shill who made the comment about how great the current system was working because of all the improvements companies have made to the internet since the 1990’s making it much faster. I was hoping that someone would call him on it by asking him, “If that’s the case, why does the US consistently rank in the bottom percentile among developed countries for internet speed, but in the top percentile for consumer cost?”, but no one did. I think that the other reason people responded is the customer service that these companies provide – I think that people are willing to accept what is effectively a monopoly if they are not routinely reminded that they have no other options. Having, or hearing about, customer service experiences which would make the customer change companies but they can’t is a constant irritant that creates an inherent bias against the company.

    Thanks for such insight.

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