Net Neutrality is Obamacare for the Internet
Both bureaucratic expansions are doing exactly the damage their opponents predicted
Obamacare and network neutrality share remarkable number of similarities — aside from both being large expansions of government.
Like with all huge new government power grabs, there are a few very predictable post-grab outcomes. Let’s look at a few through the prisms of relatively new grab net neutrality — and Obamacare, a more vintage grab doing even more predicted damage.
Except government may rule it to be a net neutrality violation. Which means the wireless companies and the content companies — all have to play “Mother May I” with the government.
And as we know, and will see — past is prologue. Net neutrality will age just as poorly as Obamacare.
Obamacare and net neutrality opponents both warned of loss of private sector investment and participation in the respective sectors. Government is toxic — and for the private sector, coming into contact with it is lethal. As government expands, the private sector retracts — to get out of government’s way, and to limit as much as possible its exposure.
Has that happened? It has with Obamacare.
“Aetna’s Obamacare Shock,” read a headline in The Wall Street Journal Wednesday. “Health insurers have been taking a financial beating for the ages on Obamacare, but Aetna was always more bullish than the rest of the industry — until now.”
And net neutrality? The government has imposed on the internet a 1934 law written to regulate a landline telephone monopoly. Of course, if you regulate an uber-vibrant, multiprovider sector under monopoly law, you’ll end up with a monopoly. Killing off one provider after another — until but one remains. And for net neutrality proponents, that provider isn’t even a private company — it’s government.
More government regulations inherently means less private sector investment.
“They said it wouldn’t happen. They offered assurances from three Wall Street analysts, who insisted that internet service providers (ISPs) would continue to invest at the same levels regardless of the regulatory climate,” said an August 2015 column in Forbes from Hal Singer. “The average decline across all wireline ISPs was 12 percent. Including wireless ISPs Sprint and T-Mobile in the sample reduces the average decline to 8 percent. This capital flight is remarkable considering there have been only two occasions in the history of the broadband industry when capex declined relative to the prior year: In 2001, after the dot.com meltdown, and in 2009, after the Great Recession.”
Investment leaves when government grabs — for a myriad of reasons. One of them is: Government imposes too many mandates and restrictions on how companies may invest. Creating a vacuum — which government bloats further to fill.
Has that happened? It has with Obamacare.
There’s the employer mandate. The individual mandate. Mandated birth control coverage. Mandated maternity and pap smear coverage. And on, and on.
Mandate explosion — causes cost explosion.
Because nothing the government gives you for “free” is actually free.
“Free” government broadband isn’t free either. And as government’s new regulations regime chokes out private Internet providers, government is ramping up government broadband.
President Obama’s stimulus package included $7.2 billion for broadband.
“The just-released draft of the Democratic party platform … supports net neutrality and expansion of high-speed broadband networks,” reads a July 5 piece in ComputerWorld. “It seeks ‘a major federal jobs program’ centered on infrastructure investment for … (amongst other things) broadband.”
After the government grabs, there is also less private sector innovation. More and more government means the private sector knows less and less what it is permitted to do. Thus we are forced to play “Mother May I” with government. Begging for permission to do anything different than what we are already doing — otherwise known as innovation.
Has it happened? It has with Obamacare.
And net neutrality? There was plenty of advanced warning that the uber-stupid regulations would create a “Mother May I” mandate.
"The FCC [Federal Communications Commission] reminds us all that 'Mother, may I innovate?' is now the law of the land," said Berin Szoka, president of TechFreedom, in a July 2015 release. "Advisory opinions were supposed to reduce the uncertainty created by the FCC's radical reinterpretation of the Communications Act. But today's 'guidance' indicates just how disinclined the FCC is to offer any clarity that might reduce the agency's vast discretion over the Internet. It's sadly ironic that, for all the FCC's talk about the need to protect permissionless innovation, it's done the very opposite. The FCC should be embarrassed by this — and the fact that they tried to bury this by releasing it right before a holiday weekend suggests that they probably are, at least a little."
One recent Internet innovation is "zero rating," in which wireless companies negotiate deals with content companies — the content companies pay for the data for their content, so we users don't have to. We get free, unlimited data for that content — which frees up our metered data to be used for other content. Everyone wins.
Except government may rule it to be a net neutrality violation. Which means the wireless companies and the content companies all have to play "Mother May I" with the government. Just as (very easily) predicted.
Seton Motley is the president of LessGovernment.org