In a recent NYU Stern class (Economics of Social and Other Networks), we covered the economics of net neutrality, “a principle that advocates no restrictions by Internet service providers or governments on consumers’ access to networks that participate in the internet” (wikipedia).
The idea here is that users should have the freedom to decide what information they view – this shouldn’t be decided by the government, the cable companies or the Internet Service Providers (ISPs): if service providers could charge a toll for access to content, then microblogging and other small scale sites would be unable to pay, and competition and innovation would dry up.
Further, it’s been argued that enabling a persistent net of neutrality would thus require FCC involvement and regulations. Consequently, opponents of net neutrality argue that government regulation of information distribution steps on 1st amendment rights, amongst many other points (all available on wikipedia).
From an Economic Perspective
In this class, however, we looked at the topic from an economic perspective. Sparing the specifics of the argument (it took 3 hours to work through – there’ll likely be some informed research papers on the economics here, such as this paper), the crux came to the fact that when the ISPs and not the consumers decide what content to consume, the overall “wealth” or utility of the system is less than if the ISPs stayed out of the game of content filtering, leaving those decisions to the consumers. Or in other words, the economic models support net neutrality. Or in other, other words, the economic models seek to maximize individual utility – selfishness – by suggesting individuals should have the freedom to pick and choose the content of their own choosings.
So, as a libertarian, this seems a bit of conundrum. On one hand is the fact that net neutrality seems to imply more government regulation; but on the other hand, net neutrality maximizes my selfish desire to pick-and-choose content of my own choosing, rather than letting corporations decide on my behalf.
Would unregulated capital markets result in enough ISPs to permit easy access to all the content floating in the ethers, or would things like network effects, and barriers to entry (due to limited bandwidth) restrict in absolute terms the set of content available for consumption. The Ayn Rand Center argues that if ISPs have technological innovations that can distribute information faster or more efficiently, they have a right to charge more for that service. In contrast, as noted in the Economist, with limited bandwidth, if a few wealthy folks (dare I say the 1%?) are able to pay those premiums, it could hog the digital road, leaving the rest of us with slow downloads and limited access.
Bandwidth as a Limited Resource
As important as I think unhindered access to the web is, if bandwidth is in fact a limited resource, like oil or gold, it seems unfair to price it like a limitless commodity. Unfortunately, I can’t imagine what would happen if content providers started having to pay for the right to distribute content, or if consumers had to pay on a per-site-visited basis. I think I might be one of the cool techno-pundits (that’s right, I said cool), so labeled by the Ludwig von Mises Institute: I strongly believe the government should not be regulating the Internet – it’d be just the first step down a libertarian’s nightmare road that leads to book banning and 1984-style Big Brother televisions; but I don’t believe corporatism as it stands will lead us in a much better direction, especially given the economics around staying competitive in the digital distribution world.
I think for now, I’m not sure on this one. If there was a premium to publish or view the content on this micro-blog, I’d probably be watching Weeds instead of typing up this post.