Economics Made Economical

FCC Presents Congress With Net Neutrality Regulations

The FCC has outlined what it believes is a fair policy regarding Net Neutrality, and has presented its findings and recommendations to Congress for review. Congress is expected to pass a bill according to the FCC guidelines within the next couple months and President Obama has confirmed he intends to sign it.

Net Neutrality is the concept that all people should have equal access to the entire internet at all times. Enacting this policy would prevent internet providers from limiting customers’ access to only certain sites, interfering with downloads or streaming video speeds. The ISP’s would, obviously, still be entitled to offer different speed packages for different prices (think dial-up vs. DSL vs. cable line vs. fiber optic line) and would also retain the option of capping monthly bandwidth usage at a set limit.

However once the Net Neutrality regulation is passed, an ISP cannot purposely interfere with a customer’s speed. Therefore if you’re connected through a fiber optic line that promises a certain MB/s rate of download/upload, you can be assured you’ll be able to surf the entire web, send emails, upload pictures, download movies and software, and use any kind of internet programs–web browsers, email clients, VoIP, Netflix streaming, online video games, peer to peer sharing programs, and whatever else you choose–without your ISP altering your speeds according to their own biases.

My Economic Take:

Many laisse faire capitalists and economic right-wingers feel this is a government intrusion on citizens’ freedoms or on the freedoms of the ISP owners. Conversely many economic liberals support Net Neutrality because it ensures a level of equality throughout the net. Personally, I agree with the liberals here.

As I have mentioned before, the ISP market is a near-monopoly in the USA, especially the broadband ISP market. The anti-Net Neutrality rhetoric is an example of what I like to call “Ron Paul”-style capitalism/libertarianism, an ideology that I believe has more in common with anarchy than with liberal market capitalism. Ron Paul, and many of his supporters, don’t seem to grasp the simple concept that monopolies and oligopolies are not capitalistic; they’re communistic. When the government intervenes to regulate monopolies, it’s doing its capitalistic, efficient, free-market duty.

Overwhelming entry barriers, including hundreds of millions of dollars, access to the public’s underground phone and/or cable lines, marketing costs, and the enormous start-up costs are just a few of the extreme hurdles an Average Joe would have to overcome to start his own broadband ISP. Complicating the issue and fortifying the near-monopoly is the fact that those who own the phone lines and the cables are the same ones who own the ISP’s. Anyone who wanted to create their own ISP would probably need to install their own lines throughout the country as well–this would never realistically be possible. Because many of us are limited to one or two broadband options tops (some of us, none at all), Net Neutrality takes the near-monopoly of the industry and levels the playing field slightly, in the best interest of the consumer.




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