Tech at Night

So Zombie Net Neutrality keeps on chugging along. Leftist opposition to it is growing because it contains one small nod to reality, letting people in one narrow case pay for what they use. Of course this hurts the companies who want to use lots of bandwidth but want to have that cost subsidized by everyone else. It's funny how the left freaks out when some industries lobby, but for some reason Internet firms get a free pass.

Amusingly enough, these same leftys are going full Occutard and even getting FCC Democrats to waver. The goal of the radicals here is to eliminate any sort of idea that people should pay for what they use, making Internet investment unsustainable, and generate a pretext later for socialized Internet as a "human right." Sound familiar? This is the same playbook used in Obamacare.

Let's be clear, Zombie Net Neutrality by FCC Chairman Tom Wheeler is a power grab, and should be stopped.

Meanwhile on the propaganda front, Level 3 paints a misleading picture of peering. Unmetered peering makes sense between two businesses if both sides are gaining. Level 3 wants to service its customers, yes. But so do ISPs. If the connection between one ISP and another is entirely one sided, it doesn't make sense for the imbalance to be paid for equally. That's why we need deals like the ones Netflix has been making, as well as so-called Fast Lanes, and that's why Level 3 is wrong.

Darrell Issa is right that spectrum shouldn't be sold as short-term budget gimmickry. It should be sold as part of a plan to get the spectrum we need into private hands to fuel investment in wireless Internet infrastructure.

Once upon a time we had more railroads than we do now. We had to tear some down in order to make room for roads for people to drive cars on. Likewise, we need to get to a point in the future where we have fewer terrestrial television stations than we do now, making room for more wireless Internet bandwidth and competition. That's why we need to give them incentives to sell that spectrum they own licenses to, and why FCC is wrong to try to rig those auctions in a way that favors some companies over others, picking winners and losers even if it means the sellers get less out of it.

We shouldn't mourn those companies, either. Terrestrial broadcasters benefit from special regulations that rig the market in their favor, for example, cable companies are barred from a number of choices when it comes to negotiating for content, including talking directly to broadcast networks. Local broadcasters benefit from a contrived monopoly sustained only by government action. The result of this monopoly is higher prices for everyone, with those rents going straight into the pockets of the overpaid, underworked middlemen running those local TV broadcasters.

Owning a local network affiliate is a lot like owning a local beer distributorship. It's a great deal that puts you in a great situation, because legally there's no way around you.

If your industry thrives only because of government, you don't get to boobahoo when government takes it away. To paraphrase Bill Cosby, "If government brought you into this world, then government can take you out."

That said, while cable companies are at a disadvantage against broadcasters, they get their own advantages elsewhere. State and local governments give them local franchise monopolies, restricting competition. In fact that competition wouldn't exist at all if not for Internet-based video, and even then those franchise deals are limiting their need to invest in last mile connectivity. DSL pressure from the phone company helps some, but only some. It's markets where outside forces like fiber optic connections are being sold (like Verizon FiOS or Google Fiber), that really blow the market open as it should be.

This is the backdrop behind the STELA negotiation, and why it was such a hotly debated matter. Various related industries are all jockeying for advantages. Broadcasters want to keep theirs, while cable and satellite providers want to end them, and even get some more of their own. The result is that the compromise STELA is a grab bag of tweaks, checks, and changes to FCC power and policy.

I mean it sounds to me like the broadcasters won a check on FCC, which was seeking to act against stations banding together for certain kinds of deals. In exchange, the cable and satellite people got limits on other sorts of banding together TV stations can do, as well as gave cable companies a powerful weapon in negotiating with station providers: they now have the option to cut off a channel during important ratings periods.

But this is just my rough interpretation based on one news report. The bill is a mess to unpack. This is exactly the sort of situation that makes hate big, comprehensive bills. Once the lobbyists get into it, then the resulting bill is incomprehensible to the general public. It becomes 'pass it to find out what's in it' legislation, which isn't good for anybody but those who won secret jackpot deals inside the bill.

The answer is normally to deregulate, but even that would be hard here. After bill after bill like this, the balance between cable providers (who get franchise monopolies) and broadcasters (who get retransmission and spectrum monopolies) is like a giant Jenga game. How do you pull it apart without crashing the market in the meantime?

The next time someone asks for an industry to be regulated or more highly regulated, remember this. Once you regulate, it's hard to go back.