The Net Neutrality Scam: Government Control is NOT the Solution

LFTAs a writer of an Internet-based newsletter that rails against the government, my worst fears could be coming true…

The government is quickly becoming the thermostat of the Internet.

And it wants to put the Internet under the jurisdiction of one of the most useless government agencies ever created…

With the ultimate goal of complete control over Interwebs, which will, ultimately, KILL everything we know and love about this beautiful creation.

You see, the Internet has gone through an unprecedented evolution. We are light-years from dial-up, which was the norm only a decade ago. Never in history have we seen such a massive technological leap.

Why did this happen? Because there was little to no regulation to speak of. But, if the FCC gets their way, the Internet will be a much different beast in ten years.

In today’s episode, you’re going to hear all the horrific details.

Let me back up a bit and start at the beginning.

LFTIt all started with one inane question…

And a stupid answer.

Who should run the internet GIF

(Haven’t you seen it? All the hipster kids are sharing it.)

What you see above is the latest en vogue graphic in regards to what’s called “Net Neutrality.”

We wrote about Net Neutrality last September in response to a protest called “Internet Slowdown Day.”

Internet Slowdown Day

We wrote:

“The open Internet rules, adopted in 2010, were created by the FCC to prevent Internet service providers (ISPs) from blocking or slowing users’ connections to online content and apps.

“On Jan. 14, 2014, though, the U.S. Court of Appeals in DC struck down the FCC’s Open Internet Order.

“And on May 15 2014, the FCC proposed a new “open Internet” rule. This rule would allow ISPs to charge online companies for preferential treatment.

“The argument, according to the protesters, is this…

“Your Internet Service Provider (ISP), if allowed to create ‘fast lanes,’ would essentially wield the power to pick what websites are accessible on the Internet.

“They would be able to block content and rhetoric they don’t like. And reject websites and applications that may compete with their business models…

“The Internet would be corporatized. And have the power of full censorship.”

LFTLooking back, we wonder if it was the FCC itself who manufactured this whole “Net Neutrality” scare…

Seriously.

Because the FCC’s “solution” to this “problem” stands to benefit no one… except the FCC.

It’s the same sordid story: There’s an outcry (oftentimes manufactured). And then the government swoops in like Spiderman and shoots webs of regulation all over everything.

And ruins it for everyone.

In this case, the net neutrality advocates want the government to protect the Internet from the corporations. The corporations, you see, might censor our Internet usage.

In the past few years, protesters have been spoon fed the solution to this (non-existent) problem by FCC chairman Tom Wheeler and friends:

Get the FCC to reclassify Internet Service Providers (ISPs) as “common carriers.” This will allow ISPs to fall under the FCC’s jurisdiction (as opposed to their current status as “information services,” which fall outside of the FCC’s power).

Yay!

‘With the government regulating the Internet,’ the typical net neutrality advocate will say, ‘we’ll be safe from corporate spying and censorshi…

‘…. wait,’ he’ll realize too late…

[His face shifts from enthusiasm to dread]

“Oh, dear lord…,” he’ll moan as he falls to his knees.

What have I done GIF

LFTThere’s a formula here: Problem. Reaction. Solution.

“Fast lanes” were the perceived problem (which they’re not a problem at all… and haven’t been since the public started using the Internet).

And the massive protests on Internet Slowdown Day were the reaction.

So the FCC and Obama figured out a handy solution: a new 322-page report detailing a new set of Internet rules.

If it isn’t broken, so goes their philosophy, let’s fix it with a dictionary of directions.

And we suspect blocking “fast lanes” are only a small part of this plan. But we have no idea what’s inside. Because, conveniently, it won’t be released to the public until after the FCC casts its vote on February 26.

One FCC Commissioner, Ajit Pai, has seen the plan. And he’s horrified. He’s even gone public about what he read. (If he’s not blowing hot air… we’re in deep trouble, dear LFT reader.)

But before we get too ahead of ourselves, here’s what we do know about Obama’s so-called “solution.”

LFTThe Obama Administration — in the name of ‘leveling the playing field’ — wants to create a “one size fits all” solution for a marketplace that’s anything but.

His argument is that “an entrepreneur’s fledgling company should have the same chance to succeed as established corporations, and that access to a high school student’s blog shouldn’t be unfairly slowed down to make way for advertisers with more money.”

Rather, the solution to this non-problem is to get rid of paid prioritization by cutting out competition even further and pricing everything the same.

It’s essentially a socialization of the Internet.

So the hospital down the street that wants to download your MRI scan file to save your life will download it at the exact same speed as Joe Schmoe gets while he downloads his porn… in the name of “equality.”

“[W]hy should this be the case,” Richard Epstein wrote in an article titled Net Neutrality: A Solution in Search of a Problem, “when paid prioritization is the norm in virtually all highly competitive markets? A quick trip to the Federal Express website, for example, reveals a wide range of “fast and full of options” like “FedEx Priority Overnight and FedEx Standard Overnight.” There is also two- or three-day shipping and Saturday service for those who want it.

“The different tiers of services are offered, not surprisingly, at different rates. These differential services are available to all customers.

“It is simply wrong for the President to assume that any system of paid prioritization entrenches established companies at the expense of new entrants, or greedy advertisers at the expense of high-school bloggers.

“As is so often the case,” Richard concludes, “the White House would be better off to sit back and wait for evidence of actual problems rather than rushing headlong into a new regulatory policy that will surely cramp investment and innovation.”

But a “one size fits all” solution is just one part of the new Internet plan.

In order to understand what this Act — and the FCC itself — is really all about, we need to rewind back to Jan. 16, 1917…

Back when Mr. E. J. Nally, vice-president and general manager of the Marconi Wireless Telegraph Company, fired back at the government in The Magazine of Wall Street.

LFT“Government control will tend to hamper the art of radio communication,” Nally told reporters.

“For the government,” he said, “has not the stimulus of commercial competition, and the hope of individual reward, and it is prone to take present accomplishments as finalities.”

It was precisely a century ago when a similar debate raged on: the one for “radio wave neutrality.”

It really heated up when, in 1917, President Wilson proposed to nationalize all the airwaves. Nally was clearly a staunch opponent. And in the end, lucky for Nally, Wilson’s proposal fell flat.

A few years later, while serving as Secretary of Commerce, Herbert Hoover took a crack at it. But he too had trouble getting the necessary support.

Unlike Wilson, though, Hoover didn’t give up.

LFTInstead, Hoover did the equivalent of flipping the Monopoly board over and scattering all the pieces so nobody could play:

He let go of the reins completely and allowed anyone and their mother grab a space of the waves with no regards to time, duration or frequency.

Thousands of aspiring broadcasters rushed in. It was the equivalent to 150 chess players — all with their own pieces — trying to play on a single board all at the same time.

And it was an act of evil genius.

Hoover purposefully evoked the “tragedy of commons,” causing complete chaos on the radio.

He did this to prove a crybaby (and completely false) point: that without a tight federal leash, the radio industry would remain in complete upheaval and disorder.

(Of course, we know that this matter would’ve been easily solved with the price system. As long as the property rights of the airwaves were clearly defined — as they should be with physical property rights — then there would’ve been no problem. The price system would’ve kept the chaos at bay.)

In the end, Hoover got his way.

LFTWith government officials pleading for an end to the chaos, the Federal Radio Act of 1927 was implemented.

And this Act established the Federal Radio Commission (FRC).

The FRC was given the authority to issue temp licenses to those who would broadcast “in the public interest.” Meaning, they could give licenses to whoever the hell they wanted.

(This is the same type of rhetoric, mind you, that is sure to litter the Internet plan.)

The FCC was given the power to shut out the competition it didn’t want in the marketplace. And that’s precisely what it did.

Later, as the TV hit the market, the FRC couldn’t help but see all the things that needed regulating.

So it changed its name…

It became the Federal Communications Commission (FCC). And thus begins its unproductive marker in the U.S. history books.

LFT“When FM was invented,” B.K. Marcus writes in his article The Spectrum Should be Private Property,“the established AM broadcasters had the FCC suppress it, delaying its widespread use by decades.

These same corporations, with the FCC’s help, “made sure cable TV was a non-starter for yet more decades.”

Also, Marcus writes, “AM and FM broadcasters lobbied to block Satellite Radio, claiming that the public interest demanded “localism,” but National Public Radio lobbied to blow the most “localist” radio option around: lower-powered FM micro broadcasters.”

The 20th century is littered with stories about the FCC discriminating, blocking innovation, and flat out denying basic rights:

“In the late 1960s,” B.K. Marcus goes on, “the FCC threatened a major radio station in Hawaii with non-renewal of their license. KTRG had been broadcasting libertarian programs for several hours a day for approximately two years. The legal costs for fighting the FCC’s decision forced the owners to shut down the station permanently in 1970.”

It’s also the same organization, you might recall, that made the “Seven Dirty Words” illegal to use in mass media (ironically inspired by George Carlin’s satire piece called “Seven Words You Can’t Say On Television.”)

LFT“The FCC, the Federal Communications Commission,” George Carlin said during a stand-up show in 1988, “decided all by itself that radio and television were the only two parts of American life not protected by the free speech provisions of the first amendment of the Constitution.

“I’d like to repeat that, because it sounds… vaguely important!

“The FCC, an appointed body, not elected, answerable only to the president, decided on its own that radio and television were the only two parts of American life not protected by the first amendment to the Constitution.”

And we can’t forget…

The FCC is also what “protected” us from Janet Jackson’s nipple-shielded breast during Super Bowl XXXVIII’s halftime show.

Wardrobe Malfunction

It did so, of course, by fining CBS $550,000.

(CBS fought the fine in Supreme Court and it was appealed.)

Tax dollars hard at work.

Yes, that’s why the award for the most petty and useless government body must go to… the FCC. And today, this is the same organization that’s reaching out to become the “Department of the Internet.”

It’s all in the plan…

LFT“I have studied the 332-page plan in detail,” FCC commissioner Ajit Pai recently told reporters, “and it is worse than I had imagined.”

“The American people are being misled about President Obama’s plan to regulate the Internet.”

The plan, Pai says, is a “massive intrusion on the Internet economy.” It will hand the FCC “broad and unprecedented discretion to micro-manage the Internet.”

And though the current plan doesn’t include any new rates or taxes, it leaves the door wide open for exorbitant ones in the future.

It will also, Pai’s statement reads, “mean slower broadband for American consumers.”

It contains a host of new regulations that will reduce investment in broadband networks. And, Pai writes, it will saddle “small, independent businesses and entrepreneurs with heavy-handed regulations that will push them out of the market.”

LFT“President Obama’s plan,” Pai’s statement goes on, “marks a monumental shift toward governmental control of the Internet.

“It’s an overreach that let a Washington bureaucracy, and not the American people, decide the future of the online world.

“It’s no wonder that net neutrality proponents are already bragging that it will turn the FCC into the “Department of the Internet.”

“For that reason, if you like dealing with the IRS, you are going to love the President’s plan.”

Let’s dig into the mailbag…

LFT“As a dedicated Dear Reader for 11 years,” one reader, Laurie F. writes, “I feel it is my duty to report a major ‘snowflake indicator’ on my own financial prediction scale.

“My method is unknown, unexplainable, but has been quite consistent for 15 years that I’ve noticed it.

“I am a musician who teaches at a nice music store (actual thriving Mom and Pop bricks and mortar even); mostly fiddle, but other stringed instruments as well.

“My first banjo student appeared around the time of the Dot-Com bubble burst… and then hardly any until 2008 when they started showing up all over and remained so for a year or two.

“I’ve had only one banjo student since then.

“I’m here to report a SURGE of new banjo students in the past three weeks… I’ve had to schedule extra days at my home just to accommodate them all… perhaps the dreaded snowflake has started to fall somewhere!…

A banjo is sometimes referred to as ‘the poor man’s piano.’

“Tune up fellow dear readers! Get yer snowshoes, and banjos!”

LFT: Haha! Thanks, Laurie.

If your “banjo radar” is correct, we’re in deep bump-ditty.

LFT“C’mon Chris,” Kosta V. writes in response to my yoga challenge, “since you’re on this path, go full board.

“Try naked yoga.

“Surely you’ve heard of it.

“Do you think an industry that came up with naked yoga is perhaps an industry you want to stay away from?

“Not to mention plenty of evidence that yoga is not all it’s cracked up to be (ie. Accelerates aging).”

LFT: Challenge accepted. And where’s this evidence against yoga? I’m interested.

Email it: Chris@lfb.org.

Until tomorrow,

Chris Campbell

Chris Campbell

Written By Chris Campbell

Chris Campbell is the Managing editor of Laissez Faire Today. Before joining Agora Financial, he was a researcher and contributor to SilverDoctors.com.