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Coffee and Markets got it wrong on Net Neutrality

DC Circuit Court of Appeals

In Monday’s Coffee and Markets, Brad Jackson really went off in favor of Net Neutrality, the policy that twice has been struck down by the courts as an illegal power grab by the FCC, and is being promoted a third time by the Obama FCC at the behest of the radical socialist wing of his party.

Francis Cianfrocca I thought put in a good effort trying to be even handed about the whole thing, but I wanted to respond to a message like that making it to the front page of RedState. I understand where both of them are coming from, and I think it’s important to explain why Net Neutrality really is a terrible idea.

My earliest writings on Net Neutrality here at RedState were a lot like Francis’s. He, like Brad, is really coming at this from a more technocratic point of view, looking at the theory of how the Internet works, and the history of how data flows from one provider to another. That’s great, but it’s also completely irrelevant to the policy debate we’re faced with.

The fact is, Net Neutrality is a sham. The only time there’s been an actual alleged “Net Neutrality violation” was when Comcast went after people breaking the law by running Bittorrent peers engaged in large scale copyright infringement. If it’s going to be illegal for ISPs to say you can’t abuse their services to break the law then well, we might as well close up shop and go home. The Internet’s doomed.

But anyway, there’s never been an instance of what Net Neutrality violations are supposed to be: ISPs blocking sites, charging you more for sites, that sort of thing. The FCC can’t tell of any complaints, which we all know from the Obamacare numbers massaging means there aren’t any. Net Neutrality is a non-extistent, theoretical problem.

But competition, Brad would say! What about competition! This merger is coming that will crush competition, giving Comcast a overwhelming market position! Horse hockey. This merger won’t move Comcast’s market position because of two magic words: Franchise Agreements. Francis even went in this direction on the show, pointing out that in most places, state and local governments are handing out monopolies to cable providers. Wherever you are, there already is a cable monopoly, and a telephony monopoly. This is truly a case where government is not the solution to our problem. Government is the problem.

And the idea that we’re going to dig out of having too much government, by having even more government save the day, is governance Mayor Quimby style, in which Matt Groening’s Springfield fixes a pigeon infestation with lizards, then fixes the lizard infestation with snakes, then fixes the snake infestation with gorillas, and finally hopes winter will make the gorilla problem simply go away. I say no more gorillas. It’s time to try less government instead.

Another claim Brad and Francis make is that American Internet is slow. Again, that’s just wrong by any meaningful comparison. Every listener of Coffee and Markets knows by now that the limiting factor of last mile connections is capital investment, which means when you compare a huge, diverse country like ours, with places like Sweden, Japan, and North Korea, you’re ignoring the factors that change the economics of Internet access. A town with a tiny population simply can’t support the kind investment needed for high speed Internet. No amount of government regulation can fix that. Further, income matters. America has huge cost of living gaps from one place to another, and that also changes the economics of a national firm building out Internet access. Gizmodo of all sites, a Gawker property, has two great charts that show how American Internet speeds vary with income and population density. Note that this also completely ignores wireless access, which not coincidentally is the kind of access where our service is world-class, with more investment, competition, and speed than anywhere.

Wireless is also the kind of service which has most enforced the notion that we should pay for what we use. Just how the heck are you going to fund all that last mile capital investment with an all-you-can-eat model, in which the heavy users get subsidized by the lesser users? Isn’t that what’s already failing Obamacare? Do we really want Obamanet?

Contrary to what Brad was saying, most Internet users don’t need that much bandwidth. Email, pictures, Youtube clips, and podcasts are pittances, using negligible data by modern standards. Even SD video isn’t a big deal. It’s only those of us who are watching HD videos who are using up meaningful amounts of data, and guess what? A lot of Americans aren’t doing that.

A lot of Americans don’t even want to pay for connections that support that. They already get cable and watch Redbox, they don’t need multi-megabit Internet connections to watch House of Cards. Comcast offers me 3Mbit Internet for $29.95, versus the 105MBit I’m getting for $63.95 (a bitrate that doubled recently thanks to competition from FiOS). Some people don’t want to spend the double to stream 1080p60. That’s a luxury.

Lastly, Brad got it 100% backwards on the whole Weather Channel thing. The fact is, it’s cable providers who get the regulatory short end of the stick on negotiations for channels. If you’re Comcast in New York, and you reach an impasse with a New York broadcast station, you don’t get to go to New Jersey and negotiate with them. The law prohibits that. The law is skewed to give the channels (overpaid, underworked middlemen) all the power. That’s why I support the video reforms first promoted when Jim DeMint was in the Senate, which he backed with Steve Scalise who in the House continues to push Retransmission Consent reform.

And what exactly is Comcast supposed to do if they disagree with even a cable channel like The Weather Channel? Just say fine, whatever, we’ll pay what you want? This is America. We have a right to say no. Even the smallest cable company has that right, and I don’t see why Comcast should be coerced into taking whatever extortionate prices are demanded by TWC, without negotiations, just because they’re bigger.

So in conclusion: No, things aren’t as bad as what Brad and Francis want you to think. We have good Internet in this country, we have more options than you think (most competition surveys arbitrarily exclude DSL in order to make it sound worse than it is), and there’s never been a Net Neutrality violation. Heck, even if there were, Comcast is already bound to Net Neutrality rules by a consent decree reached with the government as a condition of the NBC Universal deal.

But sure, we could always stand more investment into our Internet access in this country. It’d be great if copper wired Internet got the kind of investment wireless, fiber to the home, and satellite get. But the reason we don’t get that isn’t because we don’t have enough regulation. It’s because we already have too much in the form of government-granted monopolies.

So we can either keep regulating until Comcast becomes the new AT&T long distance, the horrible, entrenched monopoly; or we can actually try deregulating, and getting government out of the way. I know where I sit.

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