Net Neutrality

November 28, 2014 Mike Wolf

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From Wikipedia: Net neutrality (also network neutrality or Internet neutrality) is the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, or mode of communication. (Read the full Wikipedia article here)

Those who favor net neutrality argue that it’s in the public’s interest to require equal treatment of internet data. Those who oppose it argue that it’s in the public interest to let the companies that deliver Internet data to decide how best to deliver it. It’s a coincidence that the corporations that favor net neutrality would economically benefit from net neutrality and the corporations that are against net neutrality would benefit from not having net neutrality.

Really. It’s just a coincidence. Their arguments are really about the public interest. Honest.

And it’s not surprising that usual conservative suspects are opposed to net neutrality and the usual liberal suspects are for it and for the usual reasons. Conservatives argue that net neutrality requires governmental regulation that will disrupt market mechanisms that tend toward optimality; and liberals argue that without net neutrality large corporations that have gained dominant, market-distorting positions will exploit those advantages and further distort the market.

Against neutrality

Those who oppose net neutrality argue that mandating equal treatment of internet data will poorer service or higher prices. Internet Service Providers (ISPs) like Comcast have invested billions of dollars in the infrastructure that brings the Internet to the public. At any moment, the bandwidth that is available is limited. ISPs are economically motivated to optimize network bandwidth so that they can deliver as much data to as many users as possible with the bandwidth they have. They can do that best by setting rates so that price signals will tell them how to allocate bandwidth optimally and tell them where and how to invest to provide the best service.

Greedy companies like Netflix, Facebook, and Google make huge profits by delivering their content over networks that they did not pay a penny to build. In most markets Netflix and YouTube (part of Google) use half of the available bandwidth and pay not one extra penny for it. They are not motivated to use bandwidth move efficiently. Even if ISPS like Comcast really were greedy, the invisible hand of an unregulated market will ensure maximal public good.

For neutrality

Those who favor net neutrality argue that no customer wants to pay an ISP a single penny to get data. They pay to get content: movies from Netflix, search results from Google, information from Wikipedia, video from YouTube. Content providers invest billions of dollars to create the content that users want and more billions to build the infrastructure needed to create and deliver their content, in the form of data, to ISPS so that they can deliver data to their customers. Without that content, for which ISPs pay not one penny, the ISPs, most of whom are extremely profitable, would not make a single cent.

Even if you assume that the content companies that support net neutrality are greedy (with they say they are not) letting ISPs charge them extra money to get their content delivered means that content providers will have less money to spend creating the content that customers want and less money to build the infrastructure they need to deliver that content to the ISPs.