Why net neutrality is a daft idea...

And it's not because it hands governments control over the Internet (although that's cause enough to object to so-call net neutrality):

Except that it’s through prices and freely arrived at price signals that we achieve progress. Thank goodness for segregated pricing simply because this lack of neutrality is what will create the incentives among pipe owners to invest in wildly expensive advances that will only be offered to the big and rich. If so, great. As we know from cars, flat-screen tvs, air travel, along with everything else, what the rich enjoy is merely a preview of what we’ll all eventually enjoy if markets are free.

Yep. 

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The accountability of markets and governments - lessons from a Keighley cafe

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In positioning themselves in opposition to states, tech giants have taken on certain state-like characteristics. “If you look at Google and Microsoft, they don’t just have the power of states, they even organise themselves like states,” says Brown. “Microsoft has a foreign service that negotiates with foreign governments.” Facebook has its own internal counter-terrorism unit.

It seems that some people are getting hot and bothered about the way in which big tech firms are behaving. This is prompted, in part, by popular decisions such as Apple's refusal to crack an iPhone at the behest of the FBI. Now while some people - mostly from the populist left (the sorts who applaud at the wholesale theft of private property) - are agitated about big business taking on the sort of hegemonic role normally reserved for governments, I'm rather more interested in the extent to which this approach challenges our model of representative democracy by presenting accountability via customers and markets rather than via elections.

Democratic systems evolved because people demanded a say over the decisions affecting them - "no taxation without representation" absolutely captures the principle of democracy. But in accepting this model for government, we also accept its limits - limits beautifully captured by this little piece about a cafe in Keighley:

A STRUGGLING Keighley cafe owner has been threatened with prison if she does not hand over cash for the town’s new Business Improvement District.

BID bosses have demanded Janet Croden, who runs wartime-themed Forteas in North Street, pay £97 to a special fund for town centre promotion and improvements.

The BID, which is run by local businesses, also has the power to make Mrs Croden bankrupt or seize her property if she fails to pay up.

Mrs Croden said that last autumn when Keighley businesses were asked to vote for or against setting up the BID, she could not see how Forteas would benefit.

I'm not here arguing for or against the imposition of this additional tax on Ms Croden's cafe merely pointing out that it shows us the limitations of democracy as a system. Having voted for the additional tax, Keighley's businesses (or rather the local council on their behalf) are able to insist that all businesses pay up regardless of whether they supported the proposal.

I'm guessing that our tech progressives who believe Apple et al are too over-powerful are quite happy with Keighley's little business democracy. But what they're not asking is whether a system founded on decisions freely made in an open market makes authority (and for the sake of argument we'll say Facebook, Google and Apple are, in this context, authority) more or less accountable than is the case with a system based on representative democracy. This isn't a question about ownership but rather a question about market power and whether that is exercised by us as consumers or by the big businesses as big businesses. And, as the tech progressives make clear, the loser in all this is the state:

However, tech giants have something new: millions of loyal customers, many of whom choose to side with companies over their government. This is especially true in the dispute about privacy and encryption. In this light, Apple is protecting its citizens.

It's also true that these progressives are now likely to work with the state in attacking these large consumer-based powers - for example by scuppering free (or pretty near free) internet access for millions of poor people in India. The apparatus of government is used to prevent one of these new powers from acting positively essentially for reasons of protectionism (which is all so-called 'net neutrality' is really):

While it acknowledged some “positive effects” of differential pricing, TRAI said that “differential tariffs arguably disadvantage small content providers who may not be able to participate in such schemes.

“This may thus, create entry barriers and non-level playing field for these players, stifling innovation. In addition, TSPs may start promoting their own web sites/apps/services platforms by giving lower rates for accessing them.”

The beneficiaries here aren't India's consumers but a small group of Indians with the capability of offering ISP services. And, while the core context is the myth of net neutrality, the wider issue takes us back to government and it's capture by producer interests. What saddens me most in all of this is that those producer interests have persuaded a group of activists - I've dubbed them tech progressives - that a more expensive, industry-dominated web is better than a cheaper, consumer-focused web.

Returning to the theme we started with - is Apple more or less accountable than the US government - we can see an emerging discussion that places the exercise of consumer preference and power in direct competition to government and to a group in society who have historically seen themselves as champions of 'people power', the progressive left. It's pretty safe to say that neither the FBI nor Apple are especially accountable but Apple has one advantage - you and I don't have to be one of its customers. If you live and work in the USA, you've no choice as to whether you're the 'customer' of the US government and its agencies.

It's the difference between the Keighley cafe owner freely agreeing to pay into a marketing agreement to promote the town and her being coerced into paying because she was outvoted in a referendum.

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Why you mustn’t let the Government regulate the Internet – some thoughts on net neutrality

I mean, what do I know? Surely Simon you should steer away from those geek subjects like ‘net neutrality’! But it’s important – very important – because…

…the advocates of ‘net neutrality’ are asking for the Internet to be regulated by Government.

And, you are quite right dear reader; this is not a good thing at all.

But first the argument. Here’s Ed Vaizey upsetting the net neutrality wonks by saying no:

Internet service providers such as BT should be allowed to abandon net neutrality and prioritise users' access to certain content providers, the communications minister Ed Vaizey said in a speech today.

The move away from net neutrality in the UK will prove controversial as it opens the door for ISPs to favour some websites in terms of the volume and speed of the delivery of their content to users, while others given lower priority could see their internet traffic suffer.

This is a bad thing say those wonks (and some vested interests like the search engine providers and the BBC):

In this case the baby they'll eat is the open internet. If ISPs can say to firms, "nice data you've got here. It'd be a shame if anything happened to it" they can ensure that the next YouTube, the next iPlayer never takes off.

Bear in mind that many ISPs aren't just carriers: they're also in the media business, so for example ISPs such as BT, Sky and Virgin have services that could be seen as competitors to, er, YouTube and iPlayer. That should be reason enough to worry about net neutrality.

The problem is that the solution offered by the supporters of ‘net neutrality’ is more Government. Because we think that corporations eat babies, we hand control over to the biggest baby eater of them all – our Government? Now that seems a really good idea! What do you think that Government will do with its regulatory powers? Allow us really free access to the Internet? Any Internet? Who are you trying to kid!

Of course statist apologists like to play games with words – here’s the estimable Left Foot Forward demonstrating how he doesn’t understand what makes a free market:

What does net neutrality actually mean? Net neutrality can be hard to define because of technical issues involved. But according to one of the world’s experts on it, Professor Tim Wu of Columbia Law School in New York, it is a principle that advocates no restrictions by internet service providers, infrastructure providers or the government on content, sites or different ways of using the ’net. It is an online ‘free market’ in its purest sense.

Not really since net neutrality requires enforcement, regulation and controls that are designed externally to the market. But that’s not the big deal here. The big problem is that there are no constitutional protections in the UK – government, that rapacious, lying hobgoblin, can do as it pleases. And it will – even the waving of a tiny stick by Ed Vaizey shows a willingness to order and direct the operation of the market.

In a more considered and less frothing piece on Wired three concerns are raised about ‘net neutrality’ arguments:

First is that bandwidth is not, in fact, unlimited, especially in the wireless world. One reason ISPs are averse to neutrality regulation, they say, is that they need the flexibility to ban or mitigate high-bandwidth uses of their network, like BitTorrent and Hulu.com, which would otherwise run amok. Take away their ability to prioritize traffic, the ISPs say, and overall service will suffer.

Second, enforcement of neutrality regulations is going to be difficult. Comcast may not be able to block Skype traffic altogether, but what’s to prevent the company from slowing it down relative to other traffic it carries? Such preferential “packet shaping” is easy to turn off and on, as network demands ebb and flow. By contrast, proving such infractions of neutrality will be complex, slow and difficult.

Third, the new regulations create an additional layer of government bureaucracy where the free market has already proven its effectiveness. The reason you’re not using AOL to read this right now isn’t because the government mandated AOL’s closed network out of existence: It’s because free and open networks triumphed, and that’s because they were good business.

Now the FCC is proposing taking a free market that works, and adding another layer of innovation-stifling regulations on top of that? This may please the net neutrality advocates…but it doesn’t add up.

I’m somewhat equivocal about this but my instinct is that we should be more concerned with core market constraints - access, oligopolistic power, cartelization – than with introducing new regulations. Especially when Government has already taken to itself the power to act on such anti-competitive actions.


Finally I do not really subscribe to the ‘corporations eat babies’ principle that drives much of the ‘net neutrality’ support. In the main corporations operating in a free market have cause to provide for their customers what those customers want – and not just fifty percent plus one as is the case with government. Government’s duty is not to punish Virgin and News Corp for being successful businesses with strong brands but to ensure that those businesses do not prevent market entry or stifle competition. And we need no new laws to do that.

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