“Net Neutrality” – Corporate Welfare and Price Controls Have a New Name

Posted: Jan 17, 2007 8:35 AM

Do you trust government to regulate the Internet, which has flourished precisely because government has left it alone?

This is the pivotal question to consider now that Democratic Senators Byron Dorgan, John Kerry, Barbara Boxer, Tom Harkin, Patrick Leahy, Hillary Clinton and Barack Obama and Republican Senator Olympia Snow introduce “Net Neutrality” legislation in the Senate.

For those unfamiliar with the deceptively-named “Net Neutrality,” it is simply the federal government dictating price controls upon companies offering Internet access. Moreover, it constitutes corporate welfare on behalf of powerful behemoths such as Google and Amazon.com.

Don’t be fooled by “Net Neutrality” proponents. The fact that they selected such a deceptive name is the first red flag. Proponents contend that introducing government regulation to the Internet will somehow protect consumers. Can you think of the last time that increased bureaucratic regulation accomplished such a feat?

The reality is that “Net Neutrality” will only weaken incentives to launch next-generation broadband services and build new networks.

To illustrate the simple nature of “Net Neutrality,” imagine for a moment that you own a moving company. Naturally, you would charge different rates to truck different volumes to a new location. For instance, you would charge a customer moving six bedrooms more than you’d charge a customer moving one bedroom.

Makes sense, right?

Well, now imagine that the federal government suddenly decided that it would be a good idea to begin controlling rates that you charged different-sized customers. In other words, imagine that government mandated that you charge a five-bedroom customer the exact same rate that you charge to move a one-bedroom customer. Indeed, a thousand-employee office could now force you to charge the same rate as the one-bedroom resident.

“Net Neutrality” is no different. Powerful Internet-based companies like Google, Amazon.com and Yahoo! naturally consume dramatically more bandwidth than small blogs or websites of individuals sharing vacation photos with family and friends. But “Net Neutrality” would begin regulating Internet providers by forcing them to charge high-bandwidth sites such as Google the same that they can charge a low-bandwidth small website.

Simply put, “Net Neutrality” is anything but “neutral,” as it substitutes government-mandated business models and pricing structures for free-market prices. Never mind that private Internet service providers have invested hundreds of millions of dollars laying wires and establishing infrastructure, and might be unable to achieve a return on that enormous investment or receive incentive to build out even more.

Further, “Net Neutrality” constitutes corporate welfare of the worst order, resulting in handouts for establishment heavyweights while artificially increasing prices for smaller consumers and entrepreneurs.

The “Net Neutrality” movement began one year ago, when Amazon.com and a party of Internet behemoths lobbied Congress to impose it. Fortunately, the effort failed before both the full House of Representatives and the Senate.

Unable to prevail democratically through Congress, however, “Net Neutrality” proponents turned to the courts and the FCC, where they filibustered the AT&T/BellSouth merger.

“Net Neutrality” thus constitutes bureaucrats’ desperate attempt to introduce government regulation to the Internet. At a time when America trails other nations in terms of broadband distribution, it simply can’t afford to stifle market-based solutions, nor can it allow consumers to suffer inflated prices, limited choice and technological delay.

The Internet has flourished precisely because government has kept its proverbial camel’s nose out of the technological tent. “Net Neutrality” regulations, however, will prohibit free-market advances, stifle economic growth and hold the free flow of ideas captive to regulatory control.

Why take that risk?