Net Neutrality Kleptocrats

Where is the compelling collection of dashed consumer hopes that justifies transforming the US Internet into a 1930s style utility?  There is no such catalog of damage.  Instead there is a chorus of stylish but paranoid emotions over blocked content or “open and free” communications or fictional startups’ potential need for regulatory protection from competitors’ actions that might occur. There is competition, but predatory behavior is a fantasy.

There is no compelling history of consumer Internet service provider (ISP) problems for the FCC to address.  There are adequate choices of providers and speeds and the prices are reasonable.  There is wired Internet access almost everywhere, and wireless Internet everywhere.  At speeds of 10 megabits per second or higher, most people can choose among 5 ISPs – fixed and mobile.  In some areas, government networks compete against commercial ISPs who cannot subsidize their price by raising property taxes.  Speed upgrades by commercial ISPs are frequent.  Just 19% of Internet non-users, i.e. 3% of Americans are put off by the costs of smartphones, computers, or ISP service.

The problems that demand attention do not stem from the ISPs operation of the Internet.   Instead, the largest problem swells from the bruised egos of regulators. Their imagined justifications for net neutrality-style regulations have twice been tossed by the courts.

The courts said that the FCC cannot impose net neutrality regulation on companies regulated under the Information Services part of the Telecom Act.  To impose those strong arm regulations, the FCC would need to treat the ISPs like telephone companies regulated under Title II of the Communications Act, dusty rules almost entirely crafted in 1934.  Title II allows the federal and state regulators to invent new taxes, force firms to invest, control prices and limit competition.

Title II enables regulators to concoct new entitlements (possibly a forthcoming broadband entitlement) when pandering for votes.  Title II allows regulators to create mandatory subsidies that are funded by thick collections of taxes and fees on consumer bills.

About 85% of Americans use the Internet and 70% have broadband access from their home.  A study by two FCC experts reveals that in households without broadband, a price increase of 15% would deter 10% of them from buying.  That means if the FCC successfully imposes Title II on ISPs, the Universal Service tax of 16.1% will deter more than 10% of unserved households from getting broadband and it probably will cause some subscribers to unsubscribe.   The bad news will keep on coming because Title II is a kleptocrat’s regulatory toolkit.

The public relations coup of the Net Neutrality movement is the name itself.  That brilliant moniker hides a movement convinced of its own high tech, imaginary victimhood.  The movement demands buffet-pricing, even though that will overcharge the great majority of Internet consumers.  There is nothing neutral about the Net Neutrality movement’s demands that prices be dissociated from costs, and that Internet operators, be subjugated to Title II.

It is clear that within the Net Neutrality movement, customers who engage in unbridled streaming are “more equal” than any others and we must all chip in to subsidize their viewing habits.  The Internet is not broken and it doesn’t need fixes from regulators or politicians who are enchanted with the socialism of Title II regulation.

Alan Daley writes for The American Consumer Institute Center for Citizen Research