Net Neutrality: Hurtful Government Whims

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The notion of neutrality in general is a myth. Nations that claim to be neutral in inter-state conflicts are hardly impartial. If country A has a major advantage in its conflict with country B, the so-called non-aligned party is in effect supporting the former, and potentially leading to its winning the fight.

When the US government is pushing the notion of net neutrality, it is also a canard because corporations by definition are not neutral because they want to defeat their competitors and make money for their shareholders. Arbitrarily forcing them to provide bandwidth in ways that are not economical will only suppress new investments in technology – leading to even more constraints in networks.

The capricious nature of the US government to decide on policies can have beneficial results. The original breakup of AT&T in 1984 led to a massive fiber optic build-outs because MCI and Sprint had to catch up quickly to the original monopoly. On the other hand, the Telecommunications Act of 1996, which forced the incumbent carriers to unbundle their equipment had a stifling effect on investment. It is a big reason why the vast majority of the CLECs did not survive – an illustration of the law of unintended consequences, which bureaucrats in the government excel at tremendously.

With net neutrality, it goes back to the same premise, as was the case in 1996. If a private entity does not have complete ownership and control over its assets, then in effect, it has zero possession of its infrastructure. There is no middle ground that will be acceptable to corporate America.

If the federal government is that concerned about “fairness,” it would be a lot less destructive to the market to pay the service providers to maintain excess capacity or even build nationwide networks itself for this purpose.

[written by Mark Lutkowitz]

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