How Net Neutrality Is Already Ruining the Internet

Young child holds sign at protest that reads Don't Neuter the Net

We’re trained to believe that government intervention automatically and always results in less expensive and more accessible service. That was the point of Obamacare, and before that Medicare and Medicaid. We see how well that worked out.

That was also the point of “Net Neutrality.” Yet here’s what’s already happening, according to facts reported by the U.S. Chamber of Commerce ( 5/14/15):

KWISP Internet will be scraping plans for new tower construction and capacity upgrades that would reduce existing congestion for existing Internet customers in northern rural Illinois. Why? Regulatory uncertainty and costs created by the FCC’s decision;

Wisper ISP Inc. serves 8,000 customers around St. Louis, Missouri. The company estimates that compliance costs will constitute 10% of its operating revenue.  As a result, it has already cut investment, resulting in “slower broadband speeds, less dense coverage, and absence of expansion into new areas”;

SCS Broadband serves 800 customers in rural Virginia.  SCS Broadband has already stopped investing in new rural areas because of the FCC’s decision, and it won’t resume until it can “determine if the additional cost in legal fees warrant such investments”;

Joink LLC serves 2,500 customers in and around Terre Haute, Indiana.  Although Joink was exploring a fiber-to-the-home project in its community, newfound regulatory uncertainty “will cause us to slow this investment, or not make it at all”–and so, consumers “will be left with slower broadband speeds”;

Because of the regulatory uncertainty created by the Order, Aristotle Inc. has dialed back its plans to “triple” its customer base and “expand our service into unserved areas of rural Arkansas.”

Washington Broadband, Inc. serves 1,400 customers in Yakima County, Washington.  Because of the Net Neutrality order, it “has decided to scale back expansion to new, unserved or underserved areas and focus on more urban/suburban areas.”

Obama and other supporters of Net Neutrality promised that it would bring a “free and open” Internet. Their premise is that a free market cannot produce a free and open climate for business; only government can.

How free and open does the Internet sound now?

In effect, government has chosen winners and losers. The losers, so far, are the smaller companies who service more rural or otherwise underserved areas. The losers are also those who care about continually improving connectivity and Internet service. The more you tie the hands of business, the more difficult you make it for business to improve the products and services that only business can improve. What in the world is so hard to understand about this fact?

The winners of Net Neutrality? Certain larger companies who benefit from the regulation. One of the companies hit by the ruling, Joink LLC, worries that “those with deeper pockets can use broadly applied subjective standards to drag entities such as Joink into litigation or to force us to forego profitable business practices that can benefit our customers to avoid potentially crippling litigation expenses.”

Precisely. Subjective and arbitrary rules shift the focus from satisfying customers to beating government regulations. The only companies who can afford that are the politically connected, and the ones with the lawyers who can deal with the crazy and contradictory rules. Smaller and up-and-coming companies cannot afford this; so we never get to see the full benefit of what they might have done for the ISP industry.

We keep regulating the economy and expecting it to improve things — and it never does. It only makes things worse. The damage of Net Neutrality has already been done. Efforts are underway to block the order by a court order, but these distortions of the marketplace have already happened; they cannot be undone, and there will undoubtedly be many more.

There’s nothing inherently right or wrong about either larger companies, or smaller ones. The marketplace is supposed to figure that out. The “marketplace” refers to millions of customers seeking the best possible service at the best possible price. When businesses fail to deliver, they lose money or go out of business; when they succeed, and even grow huge, this indicates they’re delivering what a lot of people want. You cannot improve upon this process by getting the government involved, outside of the obvious cases where fraud must be punished and contracts must be upheld.

Government is like a nagging, intrusive relative (with the power of jails and guns) entering the picture and saying, “No, no, I have a better solution.” In a family or personal context, most of us would reject that nagging, intrusive relative, and see the intervention for what it is. When it’s government, we blindly go along, assume with naiveté that it must “somehow” be a good thing, and then ignore the results when they suggest exactly the opposite. Yes, this is the definition of insanity.

With the Internet, we had a real-life and here-and-now, twenty-first century example of how a free marketplace can and should work. Most of us took it for granted, and out of sheer ignorance supported Obama and other politicians who sought to ruin it, for their own nefarious motives or perhaps out of sheer ignorance themselves.

The great crime of government regulation is that it suffocates and prevents good and great things from happening, things that we’ll never know about — because they never get a chance to happen. Net Neutrality, even in its early stages, is a tragic case in point.

And just think. Net Neutrality, by turning the Internet into a government utility, sets the stage for content regulations as well. Keep an eye out for the Internet equivalent of the “Fairness Doctrine” and who knows what other horrors yet to come.

Thank you for that, Obama. And thank you for that, all you who mindlessly and ignorantly support the policy of letting the government do whatever the hell it wishes to do.


Be sure to “friend” Dr. Hurd on Facebook. Search under “Michael  Hurd” (Rehoboth Beach DE). Get up-to-the-minute postings, recommended articles and links, and engage in back-and-forth discussion with Dr. Hurd on topics of interest. Also follow Dr. Hurd on Twitter at @MichaelJHurd1