Patterico's Pontifications


“Net Communism” — A “Net Neutrality” Rant

Filed under: General — Patterico @ 7:41 am

It seems to me that the Net Neutrality proponents are trying to repeal the laws of supply and demand through legislation. Such efforts always end badly. We should re-label the effort “Net Communism.” Let me explain.

The Internet promotes this illusion of a Shangri-La world of unlimited access to unlimited data for free. Of course, we all realize (if we think about it) that this isn’t quite the case. You have to pay at both ends of Al Gore’s information superhighway.

On the receiving end, whether you access the Internet through your phone or your computer, you typically have to pay an ISP for access. You could go to a Starbucks and grab their free WiFi, but somebody has to pay for that access (hint: it’s Starbucks). They pay for it, and provide it to you for free, to lure you there and sell you overpriced coffee-style drinks and pastries. But someone has to pay.

On the serving end, you must pay as well. As you have probably noticed (since you’re here) I have a Web site. I pay to maintain the URL, and I pay hosting fees to a company that hosts the site on a server. Because I don’t pay thousands of dollars every month, the server capacity I can purchase is limited. I share a server with several other sites that also typically do not need a dedicated, gold-plated server. This arrangement typically suits my needs, but the site is not necessarily able to sustain a link from Matt Drudge. (I have found this out before.)

If I am dissatisfied with this state of affairs, and wish to have a site that can easily withstand a Drudge link, I will have to pay more. There is good reason for this: bandwidth, like most resources, is scarce. If a Drudge link hits my site while my site is on a shared server, it slows down traffic for all the other sites. If I pay more money to the hosting company, they can now afford to invest in capital (a new server) that can help them better satisfy my needs. If I don’t pay them more money, they are typically going to choke off some of my traffic, to ensure that all the other sites don’t go down.

But what if I could somehow convince the government to order the ISP to treat my Web site “equally” — even though I don’t pay more? Then, instead of having an incentive to increase capacity (you pay us more and we’ll give you more bandwidth), the hosting company would have no choice but to allow that Drudge link to pound the shared server, melting every site on it.

That’s because the government’s order to the hosting company would be a price control. In effect, the government would be ordering the hosting company to provide $10,000 a month worth of access for $80.

And what happens when price controls are instituted? If you answered: “shortages” you get the gold star.

Without the ability to charge higher hosting fees, our hosting company has no incentive to produce more bandwidth, and the Internet will slow to a crawl for any company (or other Web site) on that server.

Then, if history holds, all the Web sites on that server harmed by the government’s actions would . . . complain to the government, which would announce New Regulations to Solve the Problem.

My understanding of Net Neutrality, and you can correct me if I am wrong, is that ISPs would be disabled from doing exactly what the hosting companies are doing in my example. You have these companies like Google (which owns YouTube) or Netflix, which are cramming the tubes of the Internet with their bandwidth-hogging video content. But they don’t want to pay the ISPs the necessary fees to make sure their massive amounts of content get delivered. They want to have the government regulate the tubes, and tell the ISPs “you have to treat us equally, even though we are overwhelming your bandwidth.”

If Google and Netflix had to pay the ISPs fees that correspond to the degree that they are flooding the tubes with their high-bandwidth content, that would provide an incentive to the ISPs to provide more bandwidth. If these companies don’t pay extra . . .

. . . well, someone is still going to have to pay. Either this situation is going to result in 1) higher fees by users to access the Internet, or 2) less bandwidth, and slower service to everybody. If we’re lucky, maybe both!

And then, we will need to complain to the government, which will then announce a new round of regulations to address the problem.

And, if history holds, you’re gonna love those regulations. Mr. Glenn Reynolds, we have determined your Web site is too popular. In the interest of fairness, we need to make sure that these statist leftist bloggers over here will have the same “access” to the Internet that your site does — meaning we are going to order the ISPs to open up the pipes for those lefties, or subsidize their content, all in the interest of “fairness.”

The world has tried a system where government claimed to make everyone equal, and removed all market incentives in the process. It was called “communism,” and it failed. Communism created a political elite that was better off than the rabble, and a miserable rabble that suffered from socialism’s basic inability to calculate profit and loss and thus properly allocate resources. Black markets sprang up everywhere, but it wasn’t enough to alleviate the suffering, and the system collapsed — but not before millions died in the name of dictators like Stalin who claimed to pursue “equality.”

TANSTAAFL. (Google it, while you still can.)

To me, “Net Neutrality” is really “Net Communism.” I plan to start using that term to describe it, and I encourage readers to do the same.

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