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Libertarians Should See Net Neutrality as a (lack of) Competition Issue

April 19, 2006 Blog Posts , Broadband , Network Neutrality , Policy Blog

I'm the token republican at PK. My wife says I'm further right than a conservative republican, and she's probably correct. I've embraced some libertarian tendencies–and although many call it "libertarian," I think it's really the principles to which "republicans" used to adhere. But that's a philosophical discussion for another time.

I prescribe to the notion that "less is more" when it comes to government involvement in pretty much anything except for the "common defense" and promoting the "general welfare."

I think that the cause of much of the grief surrounding social issues is derived from the government's involvement in those issues.

But I've often butted heads with my fellow conservatives when it comes to the government and market involvement. Yes, I think the government should stay out of the way of the free market. (You're waiting for the "but," so here it comes…) BUT, I do think the government does have a role to play when it comes to broken markets–meaning, those markets that have effectively zero natural competition.

So, let's look at what we've said in the realm of telecom–the issue of mandating an "open end-to-end principle" or "net neutrality" (NN). The broadband market consists of only a few gigantic players: two major telcos and a few major cable providers. Just shy of 50% of consumers and businesses in the US have just one provider for broadband, and 40% of that group have no broadband access at all (thanks to FreePress for their great digesting of the numbers(PDF)).

Granted, that means that just over half of the market has a choice of two broadband providers, and two is better than no choice and no access at all. But is two really the robust competition we're looking for our great nation? And where there is competition between two players, will that competition be enough to prevent both from developing their own kind of Internet access discrimination?

If AT&T signs a deal with Yahoo! and Comcast with Google to provide each, respectively, with better speeds to the consumer, consumers will not have real competition, because neither broadband provider actually provides what the consumer wants–fast access to both.

So to claim that you could just threaten your ISP to switch providers, and they'll give you a lower price for your monthly service is missing the point. It's not just about price, it's about equal access to whatever you want on the network.

What we may see is that each broadband provider may actually be providing you their own limited versions of the Internet. The choice between two providers (for the 53% of consumers that even have the "choice") may actually be the choice between two different, and limited, versions of the Internet.

Of course, the part of my mind that argues on behalf of libertarian principles asks, "Is government involvement really the way to maintain competition in this market?" This is something I fight with often. The thing is, this "market" was born out of government granted monopoly. The government allowed for competitive services on the monopoly network by mandating that the pipes had to be non-discriminatory. The effect of that common-carrier principle is clearly evidenced by the amazing engine of commerce and innovation Internet has become–everyone had equal access to the two-way pipes–business and consumer alike. And perhaps a reason private cable broadband providers have maintained an open Internet is because their telco competitors offered it. Maybe it's because it takes effort to discriminate? Regardless, it's clear that cable doesn't have to maintain this openness anymore, and we're about to find out if telcos have to either.

So, the zillion dollar question is, in a marketplace of "competition" between two companies–neither of which is required to offer an open Internet to their customers, and both even have an economic incentive not to keep it open–will consumers and businesses have equal broadband access to the Internet as we know it?

From another point of view, will the small innovator get a chance to sell its goods or services to the general public over the Internet, or will it have to pay the gate keeper ISPs for access to consumer (on top of its own access to the general Internet)?

And if this is the version of the Internet that we're going to get, who's going to want it? After all, isn't the goal of telecom reform to promote broadband roll-out?

I don't know, but you can tell by my tone that I'm weary of the results of not maintaining the NN principles. And I understand why the term "regulation," makes the hair on the back of your neck stand up. I don't think you can paint all regulation with that broad of a brush. Is all anti-trust regulation bad? Aren't we talking about limiting anti-competitive monopolies in an effort to maintain an open market?

If a consumer can find a technological means to bypass the gatekeepers, that's great. If a consumer can switch broadband providers so that your bits aren't filtered, that's even better. Unfortunately, the CEOs of these companies have already said they essentially plan to act as gatekeepers in order to extort revenues from those who want to pass through the gate. Why should we the people allow that kind of anti-competitive behavior?

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