One example from Forbes:
President Barack Obama took the time this week to pressure the Federal Communication Commission (a technically independent government agency) to issue a set of net neutrality rules that he favors. Many others with a vested interest in equal internet access for all are also joining in the game of lobbying the FCC for their preferred solution. However, all the noise and poor analogies being used cannot make the proposed net neutrality rules a good idea. Rather, it is just another attempt at government control and enforced equality in a realm where that makes little sense.
Net neutrality seems like a simple concept: the company that links your computer/tablet/smartphone to the internet should not be able to discriminate among users and providers in the level of connectivity service provided. That is, we should all be able to send and receive the same number of bits of data per second.
This is a bad idea for the same reason that only having vanilla ice cream for sale is a bad idea: some people want, and are willing to pay for, something different. Forcing a one-size-fits-all solution on the Internet stifles innovation by blocking some companies from turning new ideas or business models into successful products.
President Obama was quoted in his statement as saying that We cannot allow Internet service providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas. Yet, oddly enough, President Obama is happy to pick winners and losers in the marketplace for energy services and ideas where he is working hard to make offshore drilling, coal, and shale oil losers while attempting to turn solar, wind, and other renewables into winners. He has similarly interfered in the auto market, both by spending billions to avoid Chrysler and GM from becoming losers and by forcing auto manufacturers to meet gas mileage standards which eliminate many possible car choices from the marketplace.
The last thing we should want is President Obama or a government agency picking winners and losers on the Internet. And enforcing net neutrality is picking winners and losers even if it looks like it is just leveling the playing field. He may think it is not, but it completely blocks certain business models and stops any possible innovation that might emerge if given the option of seeking differential access to bandwidth.
The key point that President Obama has missed along with all the rabid supporters of net neutrality is that ISPs and the companies that control the Internet backbone infrastructure that knits everything together do not have the power to pick winners and losers either. Consumers decide what products and services are successful because we adopt them. If an ISP blocks Netflix NFLX +0.97% because of the bandwidth it requires, consumers who want Netflix will take their business elsewhere. If enough people do so, the ISP will have to change policies or go out of business.
As the former chief economist for the FCC, Thomas Hazlett, pointed out this week in Time, Facebook, Instagram, Twitter TWTR +1.77%, LinkedIn LNKD +0.65% (and many, many more success stories of innovation) all emerged without the benefit of net neutrality. In the time when the government might have been ensuring a level playing field for the Internet pipe into our homes, smartphones and mobile devices completely changed how most people connect to and use the Internet.
The problem with government regulation of the Internet is that by the time the government studies how it works and what is needed, technology has moved on. Who believes that the government can write a regulation that will still fit the bill in three years when none of us know what the dominant formats, companies, and technology will be that far in advance? Given that the FCC has been proposing net neutrality rules for a decade with little success, why would we expect a change anytime soon?
Also, we need to stop the poor analogies about net neutrality. Neil Irwin, in The New York Times, says it is like deciding whether Internet connections should be like electricity or cable television. His idea is that we all get the same electric service (net neutrality), but can pay for different levels of cable tv. Yet, in many places people pay for different electric service. In California (and other places), customers can get a lower rate if they agree to let the electric utility turn off their air conditioner during peak usage hours.
