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Understanding the bright line where consensus breaks down over net neutrality

Its highly instructive to see the bright line where consensus behind net neutrality breaks down and why.

There is very strong consensus behind the non-binding net neutrality principles enuciated in the August 5, 2005 FCC Policy Statement. In short, the commission unanimously agreed that the FCC has the jurisdiction necessary to ensure that "IP-enabled services are operated in a neutral manner." 

Specifically, the Commission adopted the following four principles:

"To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to:

  • Access the lawful content of their choice...
  • Run applications and use services of their choice, subject to the needs of law enforcement...
  • Connect their choice of legal devices that do not harm the network...
  • Competition among network providers, application and service providers, and content providers." 

There is very strong consensus around these principles because they are all focused on consumers!

Why the consensus has broken down so badly is because net neutrality has morphed:

  • From protecting consumers from bad commercial practices to protecting companies from competition;
  • From informing industry what commercial practices will clearly get them in trouble, to preemptively restricting an arbitrary Internet segment from a variety of legal commercial practices beneficial to consumers;
  • From encouraging broadband deployment, to effectively mandating Silicon Valley's favored network design;  
  • From protecting consumers' freedom to choose, to mandatng an average broadband price, and pre-determining universal terms and conditions; 
  • From promoting an open Internet, to promoting de facto wealth redistribution; and
  • From favoring competition, to favoring competitors.

Peel away the rhetoric and what the online giants and bloggers are really saying is what is good for them is good for consumers. This "what's good for General Motors is good for America" is a common special interest trick, because a whole lot of folks fall for it.  Â 

We also seen the economic havoc and distortion that this kind of approach can wreak. The Hundt FCC fell into this trap and systematically tilted the playing field and subsidized competitors: the CLECs, fiber companies and the dot.coms. Read Mr. Hundt's book "So You Say You Want a Revolution" in which he was unabashed about tilting the playing field to transfer wealth.

Unfortunately, for the rest of us, only months after he published his book touting his industrial-policy, and the market-engineering that he did, the market bubble burst.  Have we forgotten that the CLEC and fiber companies that Mr. Hundt artifically favored went bankrupt and lost over one trillion dollars in value? Mr. Hundt's hubris was that he thought he could  "manage competition" and pick market winners and losers and that it would all work out right. What Mr Hundt discovered is that supplanting the market's "invisible hand" with a regulatory hand setting prices, terms and conditions was an unmitigated disaster for consumers, investors and pensioners. Have we forgotten the folly of equating competitors' interests with consumers's interests?

Have net neutrality proponents thought this one through? Isn't one dotcom bubble burst enough? Does history really have to repeat itself? 

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