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Before Net Neutrality Eats the World (Part 9): How to Expand Consumer Choice and Access to Content

(Note: On September 9, the U.S. Court of Appeals for the D.C. Circuit will hear oral arguments in Verizon’s challenge of the Federal Communications Commission’s December 2010 Order on “Preserving the Free and Open Internet.” This series explores fundamental issues at stake.)

The gravely flawed principles of the initial 2005 Policy Statement, now being promulgated by the Federal Communications Commission (FCC) as the 2010 Order on Preserving the Free and Open Internet, claimed to enshrine the open and interconnected public Internet and uphold individuals’ ability to access the lawful content of their choice …and…connect their choice of legal devices.

Statements like this have the effect (perhaps unintended, but likely not) of improperly conflating political freedoms and contractual/economic freedoms, while potentially undermining all.

Rights, of course, describe the relation of an individual to the state, not to a commercial vendor.

Be that as it may, commerce is not a threat to democracy or the free flow of ideas; it is the enabler.

Consumer choice is created by, not threatened by, the existence of the producer.

That consumer choice is made available by a vastly complex interplay between content providers and network owners, all seeking to offer, at any given moment, that which does not yet exist.

Despite FCC's adoption of a guardian posture, it’s often governments that impede consumers’ access to content (note the use of the words “lawful content” and “legal devices” in the Policy Statement) via censorship, filtering, prohibition of access to porn, online gambling, etc.

Or, governments -- as in the cable a la carte debate -- interfere with the structuring of content packages that firms would otherwise offer.

Or, further, governments force the sharing of information, as made painfully clear in the National Security Agency blanket surveillance, the extent of which we still do not know.

Governments undermine access to content and disallow privacy. Yet here we are behaving otherwise in the net neutrality proceeding.

As far as the attachment of devices is concerned, prior inability to attach them is rooted in a regime where monopoly was entrenched by the governmental entities now calling for the right to connect a device. Disallowing enhancing networks via the addition of peripherals is not a feature of the marketplace, but an artifact of prior regulation by entities that now want to regulate further. Naturally, a provider insists upon enough control to protect network assets from damage, and it’s normally a mere contractual matter; what the Order does is smuggle in the idea that government was the entity inherently responsible for the newfound freedom of using peripherals.

Interestingly, the FCC holds that “...consumers are entitled to competition among network providers....” If only regulators in fact believed this now, and if they had believed this a century ago when competition did exist and federal and state regulators stamped it out. Absence of competing infrastructure now is a result of its having been illegal.

Interesting in this regard was the urge to regulate and include wireless networks in proposed rules (p. 54, paragraph 154), perhaps the real, long-term aim of FCC. Note that wireless entities’ incentive is to automatically allow access to content -- otherwise why would anybody buy these services in an Apple iPhone and Google Android saturated world.

In any event, it’s a misleading use of language for regulators to say consumers are “entitled” to competition when regulators actually intend to stamp out competition via neutrality.

It’s also an improper use of language in that what consumers are actually entitled to is for government policies to not forbid their access to information or force them to relinquish it. “Entitlements” are not the language of competition. In a sense, this emphasis almost unselfconsciously embodies the essence of all that’s wrong with infrastructure socialism, and the regime destructive of consumer welfare that it heralds.

Again, as often noted in this "Before Net Neutrality Eats The World Series," with respect to networks, we’re at the infancy of property rights' theoretical development and practice. It’s crucial that agencies (not just FCC) focus solely on tearing down regulatory walls artificially erected between our network industries -- a task vastly more than full time job that leaves no time for pursuits such as "neutrality." Regulators must be prohibited from intervening in frontier applications like wireless while they ignore the real reasons consumers lack access and choice.

A seriously neglected consideration in this unfortunate, nearly decade-long campaign is what contenders expect to be the impact of net neutrality mandates on First Amendment protections for infrastructure companies and content companies alike.

Users have free speech rights in a political setting -- but so do the shareholder-owned providers who build infrastructure assets that others did not build.

The interface between providers and users is properly governed by contracts. But the Order seemingly seeks to govern and likely prevent future entrepreneurs from network experiments that only allows a certain type of content. Political freedom isn’t the relevant concept when it comes to a consumers’ relationship to any company with which it does business; those are contractual matters with which governments that intervene are more likely to undermine than enhance.

Properly, if one develops a network as an exercise of free speech, then, if free speech means anything at all, one also has a right to limit one’s speech or contractually limit that of those with whom one deals to mutual advantage.

What is one goes too far? Legacy monopoly power as a result of franchise monopoly regulation is a transitory phenomenon. Competitive pressures will harshly punish improper practices, as well as inspire network proliferation that leapfrogs bottlenecks. America doesn't need federal "infrastructure bank" campaigns to do this, it merely needs to fight off anti-Keystone Pipeline-style wealth-destruction philosophy in tomorrow's telecommunications world.

It’s a certainty that that content companies will ultimately regard energized federal involvement in content regulation, ushered in by net neutrality, as negative for their long-term interests and the proliferation of content.

Net neutrality is as much content regulation as it is access regulation. More on this next.

Next time: Who’s Discriminating Online?