Matt Yglesias takes my recent post gathering three links a little too seriously. Beyond their subject matter---the proposed merger of AT&T and T-Mobile---the theme running through the links was that they were all to the TechLiberationFront blog, not that "the federal government should not try to manage the development of the communications marketplace." My humor is a little odd. Not everyone gets to come along....
But it's true that the federal government should not try to manage the development of the communications marketplace. So I'll defend that, and first principles, which Yglesias claims to have reached their limits when it comes to communications.
First, I'll refine my thesis: the government should not manage the communications marketplace.
What is a "marketplace"? The handiest web dictionary has the following two relevant definitions: "1. An open area or square in a town where a public market or sale is set up. 2. The world of business and commerce."
To "manage" such a thing ["to take charge or care of: to manage my investments"] would be to have a hand in much or all of it---not just meta-rules about the terms of buying and selling, but what may be sold on what terms, often up to and including price and quality.
Given these ordinary meanings, I think "manage the communications marketplace" has a relatively broad connotation, and the argument that the government should not manage the communications marketplace is easy. The give-and-take of the market is a better way to discover consumers' true interests and to apportion resources to serve them. For all the effort and smarts they put into it, government regulators are at a serious disability compared to the market's manifold forces. More often than not, regulators serve the interests of the corporations that are well organized to win their succor, and they nurture their own interests in maintaining and growing power.
News that AT&T plans a purchase of T‑Mobile has brought out a lot of commentary.
On the TechLiberationFront blog, Larry Downes critiqued the emotional reaction of some advocates for government‐managed communications.
On the TechLiberationFront blog, Jerry Brito noted how the deal highlights the artificial spectrum scarcity created by the Federal Communications Commission.
And on the TechLiberationFront blog, Adam Thierer catalogued a series of thoughts on various aspects of the merger.
Picking up a theme? That’s right: the federal government should not try to manage the development of the communications marketplace.
Is there something special about December? Perhaps it’s the spirit of giving that had the Federal Communications Commission voting yesterday to regulate Internet service. At the beginning of the month — December 1st — the Federal Trade Commission issued a report signaling its willingness to regulate online businesses.
No, it’s not the fact that it’s December. It’s the fact that it’s after November.
November — that’s the month when we had the mid‐term election. The FCC and FTC appear to have held off coming out with their regulatory proposals ahead of the elections because the Obama administration couldn’t afford any more evidence that it heavily favors government control of the economy and society.
There was already plenty of evidence out there, of course, but the election is past now, and the administration has taken its lumps. It’s an open question whether there will be a second Obama term, so the heads of the FCC and FTC are swinging into action. They’ll get done what they can now, during the period between elections when the public pays less attention.
And that is a challenge to the Tea Party movement, which would be acting predictably if it lost interest in politics and public policy during the long year or more before the next election cycle gets into full swing. Politicians know — and the heads of independent agencies are no less political than anyone else — that the public loses focus after elections. That’s the time for agencies to quietly move the agenda — during the week before Christmas, for example.
So it’s not the spirit of giving — it’s the spirit of hiding — that has these independent agencies moving forward right now. It’s up to the public, if it cares about liberty and constitutionally limited government, to muster energy and outrage at the latest moves to put the society under the yoke of the ruling class. Both the FCC and the FTC lack the power to do what they want to do, but Congress will only rein them in if Congress senses that these are important issues to their active and aware constituents.
Larry Downes has depth of knowledge and a way with words, both of which he puts to good use in this C|Net opinion piece on the FCC’s vote today moving forward with public‐utility‐style regulation of Internet service.
If you’re interested in learning detail about the issues, it’s a good read. My favorite part is the conclusion:
The misplaced nostalgia for an Internet that has long since evolved to something much different and much more useful has led to the adoption today of rules that may have a similar effect. The FCC’s embrace of open‐Internet rules may indeed preserve the Internet — but preserve it in the same way amber preserves the bodies of prehistoric insects. That gloomy outcome isn’t certain, of course. Internet technology has a wonderful habit of routing around inefficiency and unnecessary obstacles. As between Moore’s Law and FCC law, I’m betting on the technology to prove the ultimate regulator — and the sensible one, at that.
The FCC moves forward with a proposal to regulate Internet service today. It’s a bad idea.
The one thing that pleases me about the ongoing debate over Internet regulation is the durability of Tim Lee’s November, 2008 Cato Policy Analysis, “The Durable Internet: Preserving Network Neutrality without Regulation.” My introduction of it is a good synopsis.
The arguments against government regulation in the name of “net neutrality” have not changed: A good engineering principle is not made better if dogmatized and given to lawyers and bureaucrats to enforce as law. The FCC and its regulatory regime are almost sure to be captured by major ISPs and turned to their benefit, used to suppress competition and blunt innovation.
A premise of net neutrality regulation — and much other regulation — is that consumers can’t be relied on to defend their own interests. Taking that premise, which I don’t, it follows that regulators must step in. But that syllogism skips over an additional premise: that regulators can do a better job.
The Istituto Bruno Leoni (Italy) recently published a terrific paper by Slavisa Tasic (a former Cato intern) that applies the insights of behavioral economics to regulators. Academics have typically used behavioral economics to illustrate the fallibility of market actors, but Tasic turns the tables. The paper is called “Are Regulators Rational?”, and it examines the cognitive biases that are likely to produce flawed decision‐making on the part of regulators.
Yes, it’s tit‐for‐tat to the attack on markets implicit in behavioral economics, but it’s a sound and fair paper that opens new insights onto regulation. This is a good time to do that. Too many take it as an article of faith that the FCC will do better than consumers at protecting consumers’ interests.
This is also a good time to remember that the FCC is our national censor. The U.S. government’s censorious reaction to l’affaire WikiLeaks should serve as counsel to people who would subject Internet service providers to even greater federal regulation. Regulated ISPs will be more compliant with government speech controls.
It’s a point worth emphasizing: Regulated ISPs will be more compliant with government speech controls.
For these reasons, in addition to the ones that have come before, federal regulation of the Internet is a bad idea.
The Federal Communications Commission has established a new advisory group called the “Technological Advisory Council.” Among other things, it will advise the agency on “how broadband communications can be part of the solution for the delivery and cost containment of health care, for energy and environmental conservation, for education innovation and in the creation of jobs.”
This is an agency that is radically overspilling its bounds. It has established goals that it has no proper role in fulfilling and that it has no idea how to fulfill. As we look for cost‐cutting measures at the federal level, we could end the pretense that the communications industry should be regulated as a public utility. Shuttering the FCC would free up funds for better purposes such as lowering the national debt or reducing taxes.
The Washington Post editorializes this morning on the “Google‐Verizon” proposal for government regulation of the Internet:
For more than a decade, “net neutrality” — a commitment not to discriminate in the transmission of Internet content — has been a rule tacitly understood by Internet users and providers alike.
But in April, a court ruled that the Federal Communications Commission has no regulatory authority over Internet service providers. For many, this put the status quo in jeopardy. Without the threat of enforcement, might service providers start shaping the flow of traffic in ways that threaten the online meritocracy, in which new and established Web sites are equally accessible and sites rise or fall on the basis of their ability to attract viewers?
What a Washington‐centric view of the world, to think that net neutrality has been maintained all this time by the fear of an FCC clubbing. Deviations from net neutrality haven’t happened because neutrality is the best, most durable engineering principle for the Internet, and because neutral is the way consumers want their Internet service.
Should it be cast in stone by regulation, locking in the pro‐Google‐and‐Verizon status quo? No. The way the Internet works should continue to evolve, experiments with non‐neutrality failing one after another … until perhaps one comes along that serves consumers better! The FCC would be nothing but a drag on innovation and a bulwark protecting Google and Verizon’s currently happy competitive circumstances.
I’ll give the Post one thing: It represents Washington, D.C. eminently well. The Internet should be regulated because it’s not regulated.
“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”