Tuesday, April 6, 2010

Liberty: 1 - FCC: 0

In a country where we are supposedly free to speak our minds in whatever context and through whichever medium we so choose, the mere existence of a "Federal Communication's Commission" is an insult to the First Amendment.

One would think it would be obvious to anyone reading the Bill of Rights for the first time that an agency that is dedicated to dictating and regulating what is acceptable speech in the US would be patently unconstitutional as it is, but somehow our government managed to find ways to weasel it in anyway. Sadly, with each new mass communications technology that's been invented, the FCC attempts to insert itself between the producers & consumers to control communication even more... Always - of course - for the consumers "own good".

However... In a shocking twist of events, for once, liberty scored a victory over the FCC!

Today, New York Times reported on a recent ruling by the Washington D.C. district Court of Appeals which shut down the Federal Communication Commission's attempts to impose "Network Neutrality" laws.

As Edward Wyatt writes:
"WASHINGTON — A federal appeals court ruled on Tuesday that regulators had limited power over Web traffic under current law. The decision will allow Internet service companies to block or slow specific sites and charge video sites like YouTube to deliver their content faster to users.

The court decision was a setback to efforts by the Federal Communications Commission to require companies to give Web users equal access to all content, even if some of that content is clogging the network.

The court ruling, which came after Comcast asserted that it had the right to slow its cable customers’ access to a file-sharing service called BitTorrent, could prompt efforts in Congress to change the law in order to give the F.C.C. explicit authority to regulate Internet service.

That could prove difficult politically, however, since some conservative Republicans philosophically oppose giving the agency more power, on the grounds that Internet providers should be able to decide what services they offer and at what price."
First off... In spite of all the deja vu bleating about how this gives more power to the evil "corporations", this is amazingly good news!

For once, a Federal Appeals Court has actually limited the powers of government to regulate and control the single greatest mass communication tool ever invented.  I cannot stress enough precisely how important it is that the internet remains free from political control if we wish to continue to enjoy continual improvements in service and bandwidth across the board...

But there's a lot to talk about just from the passage above... Starting with this idea that Mr. Wyatt apparently believes that the only people interested in limiting the scope of government's power in this area AND the only folks who seem to believe that businesses should be allowed to decide for themselves what services to offer and at what prices are "conservative Republicans".


There's no one else out there who thinks that a business should be able to decide in what way their own resources are best utilized?

If "conservative Republicans" are the last line of defense between the citizens of the United States and a more politically-controlled internet, we're boned.

For that matter, why is this even couched as a political issue at all!?  Surely any business owner understands what happens when they are no longer free to set their own prices and decide for themselves what services to offer to their customers...


Well let's do a thought experiment then, shall we...

Imagine for a moment that you own a business - let's say, a beauty salon, for this example. Each month you have 30 regular customers who come in like clockwork every single week purchasing your top-of-the-line package... These ladies get the full treatment - peticures, manicures, new hairstyles, dye-jobs, etc... The works.

Now... It's a lot of work for you, and it takes up a good deal of your available supply of resources - from shampoos, dyes & conditioners to chair space in your limited studio - and of course, all of your time.  Since these sessions are so resource intensive, you charge $150 for the privilege, and naturally these women expect to be pampered...

Of course... The trade off is that you know that these 30 customers account for $18,000 in sales every month, so you commit most of your resources to them, and unfortunately have to occasionally turn away walk-ins, and on very rare occasions have to let other customers know that you're out of their favorite color of hair-dye because your regulars cleaned you out.

The regulars are the core of your business, and they are putting your kids through college and paying your mortgage right now, so focusing on them makes perfect sense.  And that's great, right?

Now imagine that some government official decides that it's not fair for you to turn away walk-ins... And it's not fair for you to deny them the full treatment that you're providing for those 30 regulars, and it's WAY not fair for you to charge $150 for the service since a lot of people can't afford that every week.

So they pass a law which restricts your ability to set your own prices, and restricts your ability to decide for yourself who gets first crack at your finite supply of beauty products on any given day... Instead, it becomes a political issue... It must be "equal".  Now whoever walks in off the street can demand the best service, and they can take up the bulk of your time, but since it's unfair to charge so much - they'll also get discounted rates.

What happens to your business? What happens to you?

Naturally you realize that the answer to both of those questions involves loss, pain and eventual bankruptcy.

But this is precisely the nature of the economics involved with "Network Neutrality". Fears of Comcast & Time Warner slowing down the access for certain clients and providing higher tiered services to those willing to pay more have led a great number of people to throw out logic, common sense and even the simplest principles of sound economic reasoning and pretend that this time it's different... THIS time, price controls will be a solution, rather than a problem.

And yet... That's idiotic.

But somehow, things like this get twisted around in people's minds and they wind up believing that for some reason rational, easy-to-understand principles of economics only apply to certain human interactions, and not to others.  Usually, if you're paying attention you'll notice that the things that we're supposed to believe don't behave in predictable ways are the things that are hot-button political issues and areas where some people are seeking control over others.  That's also predictable, but I suppose that's another blog entirely...

What's more asinine about all this is that we already allow multiple tiers for other mass-media (as we should).  You don't have to buy cable TV at all, but if you do, you have a number of options from the basic service all the way through to the ultimate premium version that gets you access to 1000s of channels and all the bad movies, sports & porn you want to watch.

So why would we want to mandate a price control on internet service providers?  One completely baffling reason is that many governments are beginning to consider access to the internet a "basic human right".  Much like other so-called "rights" which require the theft of other people's property and enslavement of human effort to provide, this is a bastardization of the essence of the term.  However... This underlying (and really god-awful) philosophy is largely what's driving the FCC's push.

Back to the NY Times piece on the subject, Wyatt notes:
"The F.C.C. will now have to reconsider its strategy for mandating “net neutrality,” the principle that all Internet content should be treated equally by network providers. One option would be to reclassify broadband service as a sort of basic utility subject to strict regulation, like telephone service. Telephone companies and broadband providers have already indicated that they would vigorously oppose such a move."
Do you want your internet run like a public utility?

Really?  Rolling blackouts in major urban areas... Complete lack of any form of customer service... No updates to the infrastructure in decades.


That's what we need, right? Ugh.

But fools and other economic ignoramuses still manage to believe that giving the government more power to control such a crucial product is a good idea.
"After the ruling on Tuesday, consumer advocates voiced similar concerns about Comcast’s potential power over the Internet, saying that the company could, for example, give priority to transmission of video services of NBC channels and restrict those owned by a competitor like CBS.

“Internet users now have no cop on the beat,” said Ben Scott, policy director for Free Press, a nonprofit organization that supported the F.C.C. in the case."
No cop on the beat??

The BASIC NATURE of the internet itself is entirely self-policing!  This has been demonstrated thousands of times over, and yet baseless fears of nonsensical corporate control ignores this fact entirely.

In the commencement speech Harvard's professor of Internet Law, Jonathan Zittrain, gave to his alma mater just last year, he talked of exactly this phenomenon in one of my favorite stories of all time regarding internet censorship:
"One day the government of Pakistan sought to filter out YouTube from its citizens. It told its Internet Service Providers to block access to YouTube. One small ISP carried out the order by sending a small lie to its subscribers and neighbors: it announced that it was in fact YouTube. Its subscribers’ packets were then drawn there like a magnet, where the ISP could throw them away, since the point was to block YouTube.

But it didn’t stop there. Within a few minutes word had ricocheted around the Internet that YouTube had moved, and if you were here in Pittsburgh trying to reach YouTube, your packets were going to Pakistan and not coming back – and there was nothing that YouTube, one of the most popular Web sites in the world, and its owner Google, the most powerful company in the world, were particularly privileged to do about it. So how was the problem solved? It’s as if the Bat Signal went up, and the call was answered by NANOG, the North American Network Operators Group, an informal mailing list of nerds, some of whom work for various ISPs. NANOG members diagnosed the issue and promulgated a fix. It’s as if your house were to catch on fire. The bad news is that there’s no fire department. The good news is that some of your neighbors promptly come over with garden hoses and put the fire out, expecting neither payment nor recognition for their help. It’s an extremely powerful civic defense system, powered in large part by goodwill."
Now you might be thinking... "But, Sean... This is about government censoring the internet, not a private ISP!"

True enough.  But the principle is the same.  The users of the internet are our defense against both government & corporate misdeeds.  WikiLeaks is proving this on a daily basis.

Markets respond to demand, and the internet is something many people are very picky about. The fear that Comcast will buy NBC Universal and then pump bandwidth to NBC properties at the expense of CBS ignores so many crucial aspects of economics it's not even funny...  For one thing, the consumer of the internet by and large demands unfettered access to the sites they want to visit.  Nothing (as I think NBC has proven lately) can make people want to watch NBC shows if the shows on CBS are better... *Cough, cough*.

So here's how this goes down:

First, people like you and me (especially me since I'm a regular user of web-TV and multimedia streaming online) decide what we want to watch.  Then, we go to our favorite sites, like (ironically NBC-owned) Hulu, or YouTube, or whatever it happens to be... And we click "Play", only to discover that for some damn reason, our favorite shows just aren't streaming as fast as they used to and we poke around the web to find out why...

Then we discover, to our dismay, that Comcast has downgraded that site in order to promote their less-demanded programming... Then "we" (by which I mean the great amoebic mob that is the interwebz' nerd population) select one of several options:
  1. Promptly tell Comcast to shove it, and find another ISP.
  2. Pirate media and starve the beast of undeserved revenue anyway.
  3. Hack Comcast
  4. Build a private network (like your friendly neighborhood porn-distributer in your dorm's local network)
  5. Abandon the internet for older forms of time-delayed media like... *Shudder...* TIVO.
There are other options as well, but if you'll note the common theme among each and every one of the above choices... Comcast loses money.

Comcast - apart from obtaining a government-granted monopoly (which is another, quite valid, concern in internet service provision) - simply cannot force me to buy their products.  As long as that is the case, they are subject to the competitive pressures of the market, and thus are subject working to supply for the desires of consumers. So for Comcast to stay in business, it actually must balance consumer demand with their greed to profit off of 100% their own content.

Thing is, I can't tell you how they'll accomplish this, because until companies start experimenting with different business models, there's no way for anyone to know which ones are going to work or not. I'd be willing to bet that the scenario posed by people in fits of anti-corporate hysterics would fail miserably, simply because I know hundreds of internet users and not a one of them would be ok with consistently lowered quality of service to their favorite sites... But what if the tiers offered only primarily effect content providers and not consumers?  For instance, if YouTube is still free to view, as always, but a larger chunk of the ad-revenue generated goes to the ISP instead of to Google...

Furthermore, what if Comcast uses the increased revenue to fund expansions and upgrades to their infrastructure which - like Google's plans to lay fiberoptics, or Verizon's FiOS - greatly improve the quality of internet service for all users?  In that situation, which I actually find relatively likely, not only will no one notice a decrease in their bandwidth, all consumers will benefit immensely.

At any rate, the internet itself - like all free associations of individual people (e.g. markets - is entirely self-regulating.  The internet is especially amazing at that because of it's unique position as a multi-directional mass-communication tool.  We all want the information we want, when we want it.  Comcast knows this... Time Warner got an earful from me about this very thing just last year right before I exercised my liberty to find a new ISP, so I know they know it too...

One way or another, mandates and demanding so-called "Net Neutrality" can only result in poorer quality of service and less freedom on the internet, not more.

So the ruling today is a fantastic thing that I'm really glad to be writing about right now and I cannot for the life of me understand why there are any people out there clamoring for increases in power to the FCC.  Many of these same people were loudly criticizing the FCC a couple years ago during an infamous "wardrobe malfunction" during the 2004 Super Bowl.  Of course now it's different, cause the FCC couldn't possibly use massive new regulatory powers over the internet to pick winners & losers or to censor certain online activities unfavorable to the government itself, right?


So yeah... Today was a win for liberty, a win for prosperity, a win for private property and businesses of all sizes - which is a win for jobs, and a win for consumers who actually want services to be available to them.  Today, the Federal Court of Appeals of Washington D.C. gets a big thumbs up from me.

Let's hope it stays that way.

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