Net Neutrality

Net neutrality is a scam. It’s a horrible, horrible scam, an instance of crony capitalism at its very worst, and millions of people across America have fallen for it. Ajit Pai is right, Tom Wheeler is wrong: “net neutrality” regulations need to go.

Sorry to put that so bluntly. I’m sure many people disagree. But most people haven’t heard the other side of the story. Ted Cruz, Ron Johnson, and Mike Lee put out an OpEd in the Washington Post attacking net neutrality that was entirely underwhelming. They rested their case on the idea that these net neutrality regulations are new and, therefore… bad? The argument isn’t very logical.

Now, I understand why they might frame things in that way. Cruz, Johnson, and Lee are trying to dispel a (common?) misperception that net neutrality is something that was taken away and that needs to be restored. But if you aren’t trying to explain what net neutrality regulations are and why they have only recently been adopted, you aren’t telling the real story.

What is the internet? Just a series of tubes, Ted Stevens told us. And while that’s obviously a silly thing for a silly old man to say, he’s very right about one thing. The internet requires physical infrastructure. Wifi hotspots, fiber optic cable, the servers that we connect through… all of it. Someone has to build that, and that’s what the cable companies do. They are not content-creators; they lay the pipes. Remember all those Verizon commercials, “Can you hear me now?” with the huge army of people in hardhats behind him? That’s Verizon. They’re the network. Same for all the other cable companies.

Being in the cable business is a good business to be in. Everyone needs to use the internet. I’m sure that you have an internet connection in your home. You pay money for that internet connection. How much do you pay? I’m sure that, when you first installed your cable, you were offered a number of different packages, each promising different speeds at a different price. 50 bucks a month for the basic connection, but if you’re going to be doing things like uploading videos, you should really go for one of those $100+ deals. You need the bandwidth.

We accept this practice. It makes sense. And it is important to remember WHY it makes sense. Verizon or Time Warner or whoever is laying a lot of cable, and we need that cable in order to have internet. Everyone uses the same big network of cable, so we all need to pay for that network’s maintenance and growth. We each pay a small amount, relative to our use of that network. If we only use the network a little, we only need to pay a small share of the total costs. If we use the network a lot, we need to pay more. One of those $100+ packages.

Think about how much you use the internet. Think about how much you pay.

Now think about how much Netflix uses the internet.

Not, like, your Netflix account. Netflix, the company. Every time you stream video from Netflix, you are streaming it from their servers. How much do you think THEY pay for their internet bill? I bet they can’t get by on a $50 plan.

The extent to which Netflix uses the internet is simply mind-boggling. In the United States, during peak hours, 37% of all internet traffic is video streaming from Netflix. The other major tech giant content providers also gobble up a massive percentage of internet traffic.

In our minds, we have this lovely image of the internet as a kind of spiderweb, with everyone equally connected to everyone else. In reality, the internet works on a hub and spokes system. A few major sites (Netflix, Google [YouTube], Facebook, etc.) are responsible for a huge portion of internet traffic. So, again… how much do you think they pay?

The actual amount is irrelevant. The point is that when it comes to Netflix’s internet bill, they’re not buying a plan like the kind of plan that you or I would buy. They’re not really buying “a plan” at all. With 37% of internet traffic directed its way, there’s a very real sense in which Verizon is building this massive network FOR NETFLIX and the other major content providers. Now, every connection is two-sided, so when we say that 37% of all internet traffic is going to Netflix, we’re really saying that they are responsible for only half of 37% of internet usage. So Netflix is, as a company, during peak hours, using 18.5% of all of the network capacity in the country.

The cable companies would like Netflix to pay 18.5% of all of their costs. Plus a little more, of course, so the cable company can make its profit. Netflix does not, in any way, want to do this.

But the two are stuck with one another. Netflix needs the cable companies to connect to their subscribers, and the cable companies need Netflix because a network is only as good as the content you can get on it. So neither one can walk away from the negotiating table, but BILLIONS of dollars are at stake in how these negotiations turn out.

So Netflix and the other big content providers got together, made up a story, and told it to John Oliver. And he bought it so hard.

Watch the John Oliver bit on net neutrality. It’s what got everyone up in arms on this issue in the first place. What’s insane is that it’s all right there. I don’t really have to rebut anything that Oliver is saying. He is describing, in the most diabolical terms ever, the common practice of paying more money in order to have access to larger amounts of bandwidth. He avers that this practice is so transparently evil and unfair that no one with good conscience could possibly support it. Why, look at all of these major content providers who have openly declared that “Net Neutrality” regulations are a good thing! That infographic over Oliver’s shoulder when Oliver talks about the companies that support Net Neutrality is the whole story right there.

The simple fact of the matter is that the free market already provides ISPs with sufficient incentive to provide fast connections. The internet did not

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in 2014, so why would cable companies throttle the internet now? Customers value high speeds. If your internet connection is too slow, you’ll switch providers. I’ve done that before. So if the cable companies want to keep your business, they won’t slow your speed down. That’s true if you are a customer or if you are a content creator.

This isn’t to say that there is no potential for abuse here. The problem is that cable companies function like monopolies in far too many markets. That needs to change. Market mechanisms  that ensure quality of service break down when there is no competition. But we don’t need NetNeut regulations for that. We need more competent anti-trust regulations and lowered regulatory barriers to entry for upstart ISPs.

I hope you support a free and neutral internet. I certainly do. That’s why I’m opposed to “Net Neutrality.” It’s an Orwellian name for a crony capitalist scheme to help Netflix, Facebook, and the other major content providers pay as little as possible for their internet connections while giving the government the power to regulate the internet. At best, “net neutrality” will just mean higher prices for regular internet users. At worst,  it means the FCC picking winners and losers on the internet. It’s bad policy. I’m glad it seems to be going away.

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