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Net Neutrality Advocates Are Modern-Day Snake Oil Salesmen | Stock News & Stock Market Analysis

Regulations: When FCC Chairman Ajit Pai announced plans to repeal the Obama administration’s heavy-handed “net neutrality” regulations, critics acted as if the world were coming to an end. Actual consumers, however, aren’t likely to notice any difference, because the “problem” those rules were supposed to solve has always been wildly exaggerated.

XAutoplay: On | Off Net neutrality sounds at first blush like a noble goal. Internet service providers shouldn’t, the argument goes, be allowed to favor some traffic over others, either by throttling speeds, charging more or taking any other action that discriminates against bits of data crossing their network.

But to enforce the rules, the Obama administration had to treat ISPs as if they were monopoly phone providers, which let the government not only impose net neutrality requirements, but gave it sweeping authority to regulate everything the ISPs did.

Never mind that, unlike Ma Bell of the 1930s, the internet is highly competitive, with cable, fiber, fixed wireless, satellite and mobile carriers all offering broadband services. Or that the decade before the Obama rules went into effect provided no justification for the rules.

Between 2005 and 2015, average broadband speeds increased by more than 1,150%, FCC data show. Over those same years, average broadband prices remained flat, after adjusting for inflation.

Meanwhile, household broadband penetration went from 30% to almost 80%, according to the Pew Research Center. And this figure doesn’t include households that rely on mobile for their high-speed internet access, a share that has also exploded in recent years.

Where is the consumer harm in any of this?

Yet multiple headlines warned that going back to the world before 2015 would amount to “destroying the internet as we know it.” CNET, for example, warned ominously that “net neutrality repeal means your internet may never be the same.”

But the warnings always are about what ISPs “might do,” not what they’ve actually done, or would have any business justification for doing, or that wouldn’t hurt consumers.

One big fear cited, for example, is that would start charging tiered prices for different services, rather than a flat rate for all of them. Even if they did, so what?

For years, these same consumer advocates were blasting cable companies for not offering a-la-cart cable programming, forcing consumers to buy access to channels they didn’t want.

What’s more, big content providers pushing to keep net neutrality rules use tiered pricing. Netflix, for example, charges almost twice as much for a plan that includes Ultra HD videos as it does for its basic non-HD service.

And tiered pricing is arguably more fair to consumers than bulk pricing. Why should someone who doesn’t use the internet to stream videos have to pay the same price as someone who streams ultra-HD programming 24/7?

While net neutrality advocates can’t provide specifics on how consumers benefit from the rules, we know for certain what the net neutrality regime would produce if left in place — stifling government regulations.

The first big regulation to come out of the FCC had nothing to do with net neutrality, but was a costly privacy rule imposed on cable companies. And the first “blatant” net neutrality violation cited by advocates was against T-Mobile (TMUS) for offering … wait for it … unlimited streaming video.

Why? Because T-Mobile offered a cheaper rate to customers willing to watch videos on their phones in 480p, instead of higher quality HD that hogs far more bandwidth.

The horror!

The net neut crowd also claims that the regulations haven’t impinged on the industry’s investment in their networks. There’s disagreement about this. One side suggests that investment dropped 5% after the rules went into effect, the other says it’s had no impact.

This debate is  pointless at the moment, since the rules haven’t been in effect long enough. But even advocates admit that the rules could be a problem.

TechCrunch, a snarky tech trends website, tried to debunk all the “myths” about net neutrality regulations. But the author says it “is certainly possible” that the regulatory costs pose a burden for small ISPs. And all he could muster was to say he was “skeptical” about industry complaints that no-blocking and no-throttling rules would prevent useful services from being rolled out.

Given the FCC’s history, the only thing to be skeptical about is reassurances that its rules and mandates wouldn’t ultimately hamper innovation and hurt consumers. As we have pointed out in detail in this space, that has been the main outcome of the FCC’s 80 years of regulating the telecommunication industry. It stalled the growth of TV, tied the cable industry in regulatory knots for years, blocked phone companies from providing video services, and delayed the introduction of cellphones by at least a decade.

The idea that letting the FCC put its regulatory boot on ISPs would somehow spur growth and innovation is pure fantasy.

FCC Commissioner Ajit Pai said it best when he called net neutrality “a solution that won’t work to a problem that doesn’t exist.”

Consumers should be glad that someone with that much common sense is calling the shots there.

RELATED:

A Tale Of Two Decisions: Trump Administration Got Antitrust Wrong, But Net Neutrality Right

After Choking Telecom Innovation For 80 Years, FCC Plans To Take On The Internet

Net Neutrality’s Days Are Numbered, And That’s A Good Thing


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