March 9, 2015

Please Don't Protect Me From Me

In the town where I live, if I want to have electricity in my house, I have only one choice: I must obtain my service from Southern California Edison. If I want land-line phone service, it must be Verizon, and no one else. If I want natural gas for my stove and furnace, it must be from Southern California Gas Company. This has been so, for close to a hundred years.

In our capitalist economy, this is counter-intuitive. Ordinarily we want competition, and discourage monopolies. For if two or more companies have to compete for your business, it fosters innovation and keeps prices low. This is why the government broke up Standard Oil and AT & T. And indeed, these trustbusting actions worked as expected.
But as for local electrical service? It’s simply not practical to string up two or five or ten sets of unsightly poles and wires across town. And even then, there just wouldn’t be enough business to go around, for everyone to make a profit. Likewise for phone cables, or gas pipelines. For this reason we make then exempt from antitrust laws, and allow them to enjoy local monopolies. In return the vendors agree to accept additional regulations, including must-serve rules and price controls. As a group we call them “public utilities,” because they provide essential services to the population.

Recently the FCC imposed new rules of “fairness” for the Internet, under the moniker Net Neutrality. Basically, this means that Internet service providers should not be allowed to sell faster service at a premium price, to a fortunate few. They claimed this authority by calling the Internet a "public utility," and therefore subject to their oversight.


With a five-minute search on Google, I found that I can obtain Internet service from at least 18 vendors: Antelecom, A T & T, AV Radionet, Cricket, DirecTV, Dish Network, DSL Extreme, EarthLink, Exede, Hughes Net, Net Zero, Qnet, RPM Wireless, Sprint, Time Warner, T-Mobile, Verizon, and Virgin Mobile. Probably more, if I kept looking.

Within a ten-minute drive from my home, I can find free wi-fi service at dozens of locations. No computer? Every public library in town will let you use theirs. Looking for a job? Two state unemployment offices will let you use their computers for free. No car? We have a bus.

As for that “neutrality:” For at least the twenty years that I’ve been using the Internet, the speed of my connection has always depended on the price I pay. Pick dialup, ISDN, DSL, cable, satellite, cellular, on and on. Pay more, surf faster. Pay less, surf slower. Indeed, even my current cable connection has four levels of speed with commensurate pricing. It’s a choice I make, and I don’t need anyone to protect me from me.  

The FCC is concerned that (say) Comcast might give preferred treatment to (perhaps) Netflix customers (to assure smoother video streaming), in exchange for an extra fee. After all, the broadest of all broadbands is still a finite resource, and the rest of us might end up with slower service. I get it.

And therein lies the beauty of free markets: I have 18 choices, and I can vote with my feet at any time. If enough subscribers bolt from Comcast, it will force the company into a decision: either keep the fast lanes and accept the losses, or ditch them and speed up everyone else.

Or how about this? In even a worst-case scenario, maybe a local ISP will rise to the occasion and give the people what they want.

Everybody wins.

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