Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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A Libertarian Take on Net Neutrality

The cool, hip techno-pundits are usually reliably Obama-liberal/libertarian-lite types. A bit California-smug, engineer-scientistic, anti-principle, anti-"extreme." But okay overall. A soft, tolerant, whitebread bunch.

On the last This Week in Tech, I was pleasantly surprised to hear the always interesting Jason Calacanis voice support for nuclear power; and even more surprised to hear soft-liberal host Leo Laporte echo mild agreement with this. Good for them!

But then they had to revert to form when they, along with Natali Del Conte and Patrick Norton expressed unanimous disapproval of McCain's Internet Freedom Act, since they are all--"of course"--in favor of net neutrality rules imposed by the FCC. McCain's proposed statute would block the FCC's proposed net neutrality rules, which would forbid network providers (e.g. cable companies, telcos, and wireless carriers) from selectively blocking certain types of Internet use.

Got that? The techno-pundits are against regulation (by cable companies) ... so they favor regulation (by the FCC) of the cable companies ... so they oppose government legislation regulating a government agency. They sit there fuming about how disgusting McCain's draft legislation is. So they see that the state is terrible. Yet it doesn't occur to them that it might be a bad idea to trust the government to oversee the Internet. They are against regulation of the Internet, so they support ceding power to the government to ... decide how and whether the Internet should be regulated. It doesn't occur to them that we should simply favor property rights, individual freedom, and the free market. The closest any of them come to this position is John Dvorak, who has a libertarian and contrarian streak, and who often observes on TWIT that there's nothing wrong with tiered pricing--charging more for a fatter pipe, etc.

Is "no regulation of network providers" the libertarian position? It clearly would be if the network providers were purely private. In the libertarian view private property owners determine how their property may be used. There is no "right" to access the Internet. A private network provider ought to be able to offer service on whatever terms he wants; and consumers to accept or reject it. Tiered services, deep packet inspection, prohibition of certain types of uses or even certain types of content--that's up to the providers and customers and whatever deal they agree to. We libertarians believe in "capitalist acts between consenting adults," to use Nozick's phrase (see Rothbard's earlier formulation).

But because of various degrees of corporatism--state favors and protectionism, tax funding of infrastructure, etc.--the service providers are arguably not 100% private. But the solution is not to regard them as essentially part of the state and thus fair game for regulation, but to pair our call for no state regulation of the Internet (no net neutrality regulations) with a call for the abolition of all forms of corporatism, such as various laws that work out protecting larger companies (tax funded subsidies, IP law, wage and hour legislation, mandatory worker benefits, labor union legislation, minimum wage, incorporation statutes [note: this does not mean I think that limited liability is a privilege conferred by the state on corporations], and so on).

This is my take, anyway. I am not aware of much informed libertarian analysis on the net neutrality issue. Kevin Carson pointed me to Jim Lippard as "one of the better libertarian writers on net neutrality"--I'll have to take a deeper look, but from a quick glance I'm not sure he's a libertarian; here he writes, e.g., "providers shouldn't be able to block access to competitors' services"--should be able? This seems to presuppose the legitimacy of an overarching state regulation, which is certainly not libertarian.

Update: Leo Laporte must have gotten a lot of flak in the past week for supporting the FCC imposing net neutrality rules on Internet network providers. In TWIT 220, he expresses genuine concern with this. And he seems to get that the issue is not what rules the FCC should impose--which most of his technocratic guests in that episode focus on--but the issue of the danger of empowering the state itself to regulate at all. Most of the panelists at least seem leery of state regulation, but are concerned there is not enough competition in the network provider industry to ensure self-regulation. This concern is understandable, but the pundits should pause to ask: what is the state's role in causing the industry to be the way it is? In addition to being leery of state regulation of the Internet, they should oppose state policies that subsidize and prop up large companies or reduce competition; one of them even brings up the issue of how utilities are given monopoly status by municipalities. So they are almost there. It might help if we libertarians could elaborate the various state regulations and laws that have given current network providers more market power than they would have on a truly free market--taxes, minimum wage laws, implicit and explicit subsidies, the legacy of government-granted monopolies, pro-union legislation, and various other regulations that disproportionately shackle and hamper smaller companies and potential competitors; regulations that help the existing, larger companies by increasing barriers to entry into that field; state taxes, IP laws, and regulations that stifle dynamic change, innovation, and competition.

Laporte also mentions some kind of split on this issue among EFF board members. I looked at the EFF site and can't find much explicit about net neutrality--no categories, etc. They seem to be trying to keep a low profile on this issue, maybe because they have some pro-state-regulation board members. I did find this recent EFF article by Corynne Mcsherry, "Is Net Neutrality a FCC Trojan Horse?," which expresses the concern that if the FCC just grabs "ancillary jursidiction" to impose net neutrality regulations, who knows what other regulatory powers it might just unilaterally decide to assme the power to impose regulations pursuant to an "Internet Decency Statement." But though McSherry here seems to display healthy skepticism of state regulation, she is obviously trying to leave open the door that some state regulation of network providers might be favored by EFF: e.g., McSherry writes, "If 'ancillary jurisdiction' is enough for net neutrality regulations (something we might like) today, it could just as easily be invoked tomorrow for any other Internet regulation that the FCC dreams up (including things we won't like)." Note the bolded language. And she notes that one possible solution to the FCC's "ancillary jurisdiction" power grab is: "Congress could limit the FCC's power by authorizing to regulate only to ensure network neutrality."

The EFF, if it is to remain principled and a proponent of individual, Internet-related freedoms and "digital rights," must be clear on the enemy of such rights: the state. The moment EFF supports any state agency's regulation of private companies or the Internet, they have succumbed to their leftist confusions and statist sympathies and become worthless as principled defenders of individual freedom.

[Mises blog cross-post; SK cross-post]


Well I agree with you Stephan, though where do you stand on the need for antitrust law to prevent ISPs operating as a cartel or monopoly to prevent customers having any choice except to suffer unnecessarily inferior and biased service?

I agree that regulation is the last thing to ask for, but people perceive and fear cartel control. Just take a look at ACTA (that part of it that has been leaked).

Anyway, just as nature renders unnatural monopolies ineffective, so it will render unnatural government regulation ineffective, although I guess it'll manifest as ebb and flow, sometimes the state regulators and corporate cartels are in the ascendant, sometimes the free market of free individuals is.

It is depressing that the free market is getting a bad name, along with individual freedom. The UK is even spreading FUD about how terrible the ECHR is. And that's probably it. It's fear that drives people to laws and regulation to constrain that which they fear to lose control of.

The net-neutrality debate, like the health care debate, is totally partisan. Basically, you don't know who is telling the "truth". As a follow-up to Crosbie. David Boaz (at the Cato Institute) writes: "Libertarian thought emphasizes the dignity of each individual, which entails both rights and responsibility."

While no one likes regulation, those (libertarians) opposed to net neutrality seem to have lost the moral "brake" espoused by Boaz. Whatever corporations wish to do, despite the damage it may cause to an individual, is "right". Basically, we have a corporate "entitlement society" of rights without any corresponding sense of responsibility.

To me, like UPS, FEDEX, or the USPS, the ISPS have been hired to deliver packets, not to inspect them and not to toss them in the trash if they supposedly violate some undefined standard as capriciously determined by the ISP.

It's easy to keep ISPs honest, in principle, in a very libertarian way: encrypt all your traffic. And ISPs don't dare block encrypted traffic, or there goes their customers' e-banking, Amazon order-forms, gmail logins, and what-have-you that all use SSL.

The long-term solution to the problems with broadband in this country are clear, though: more competition. Fortunately, it's (slowly) coming. Some companies are finally rolling out fibre and mobile is slowly coming down in price. In another five years, there might be four+ options (cable, DSL, fibre, and wireless -- possibly wireless from multiple providers) instead of two (cable and DSL) in major urban areas, with wireless and sometimes DSL in rural areas.

Crosbie, the only antitrust law I favor is archicide: the state breaking up its own monopoly. All antitrust law is completely immoral and illegitimate, of course.
Net Neutrality is an important issue.

The Internet is defined as an inter-connected network of networks. Whether those networks are privately owned, such as Comcast in the States, or Bell Canada up here in the Great White North, is irrelevant to how the Internet works from a technical perspective.

From a purely technical viewpoint, the problem lies in something called the TCP fairness algorithm. When a computer opens multiple TCP sessions, it will get the lion's share of the available bandwidth in the pipe because bandwidth is shared equally between the sessions regardless of endpoint. That means that a bittorrent client can suck 99% of the bandwidth out of a pipe. What really needs to change is this fundamental fairness algorithm. That will take a community effort, which includes commercial ISPs, as well as every Operating System manufacturer. This is difficult but not impossible, and it has happened before.

What gets my goat, frankly, is that taxpayer money has been used to establish a telephone system in Canada, and then we (read the government) gave all the last mile gear, including the telephone poles to Bell Canada, which now uses this last mile to enforce its monopoly position. We have one of the slowest, most expensive commercial Internet services in the world.

@Nostromo: Bell is throttling P2P traffic using deep packet inspection. Yes, they're looking inside all those packets to determine fairness as per their rules. In recent CRTC (that's like your FCC) hearings, Bell readily admits that they will throttle your bandwidth to 1 to 3% of what they promised to sell you. Further, they throttle _all_ encrypted traffic to about 30KB/s because bittorrent allows you to encrypt your traffic, and they can't tell what's "legit" or not.

Bell is also a content provider, as is Rogers cable, the other large ISP up here. They are positioning themselves to become the only providers of content, turning the internet into some large cable network where they can tell you what you can and can't watch.

Gone are the days when the Internet was a collection of University and Defence Networks. Sure, they're still there, but as a consumer, your internet experience at home is nothing like what they have on campus.

Net Neutrality is important because without it, the way the Internet is used will change in a manner that does not serve the public good well. It probably won't even serve the commercial providers well either, because innovative services like Google, Youtube, Twitter, Facebook, etc are all at risk of being restricted if it doesn't suit your provider's corporate interest.

There are shareholders and stakeholders, and they're not always the same people.

Thanks, Stephan.

I didn't mean that Lippard was necessarily libertarian in a principled sense of adhering to the nonaggression principle, but that he's "libertarian" in the generic sense of someone like Milton Friedman or John Stossel with an affinity for free markets and a desire to reduce the net amount of taxes and regulation.

@Kevin: yes, but I'm increasingly disinclined to call such people libertarian. I mean even hardcore minarchists barely make the cut in my eyes. Not the sellout, kiss-ass, positivist, statist, mainstream types.
Re the hip, Obama liberal techno-pundits you criticize, I probably agree with all of your objections to their specific departures from libertarian principle.

I do think it's a quantum improvement in the political culture, though, to have a Left where people like Doctorow and the Pirate Party predominated, compared to the kinds of establishment liberals that control the "progressive" wing of the Democratic Party. Such people at least can be talked to as rational human beings, because they're not aesthetically predisposed to love the bureaucratic state and they don't use "free market" as a swear word. Compared to people like Michael Moore and Thomas Frank, who would probably love to live in the world of "Brazil" as long as everyone worked for GM and made $25/hr, that's pretty refreshing.

One reason I found Obama so refreshing was that he positioned himself as an alternative to Hillary's mix of establishment liberalism and DLC neoliberalism, and offered some hope of being an outside-the-box thinker like Jerry Brown who would at least throw some libertarian and decentralist ideas into the mix. With a few minor improvements, though, what we've got is the second advent of the Clintonoid establishment.

@Kevin: I agree w/ you, except for the Obama=refreshing part.
@Nostromo: You wrote: "It's easy to keep ISPs honest, in principle, in a very libertarian way: encrypt all your traffic." As a logical extreme, this is correct, ultimately everyone is responsible for protecting themselves. Nevertheless, I find this viewpoint to be short-sighted. Acting ethically should be a requirement of both parties. A society where one party never feels constrained to act ethically and where you are always on the "defense" would NOT be a society based on Libertarian concepts and would not be a society that I would want to live in.

Nothing about me is "short-sighted", Steve.

I was merely pointing out actions that can realistically be taken in the near-term to assert oneself w.r.t. net neutrality.

Hi all, my 2 cents to tell you that in Italy we have 4/5 companies for ADSL, mobile and fixed Telephony. thay all have many issues with our antitrust. No market, competition, no real choice. Try to wear our shoes and tell me that no-intervention is the right thing..
>But the solution is [...] to pair our call for no state regulation of the >Internet (no net neutrality regulations) with a call for the abolition of all >forms of corporatism, such as various laws that work out protecting larger >companies

So assume a can opener, then? While you're there maybe you could call McCain and add provisions to abolish the FCC, the Fed, and, why not, the Justice Dept and the Military too.

Also, net neutrality has nothing to do with paying more for faster connections or fatter pipes. It's about being content neutral, which has roots in free speech.

Kind of with the liberals on this one. If the bill on the table retains the favored regulated status of the cable/tele cos, then why should anyone be in favor of it. Calacanis was pretty much on the mark with his remark about how happy the cable/telcos would be to engage in discriminatory billing by content type.

The free market would drive the price per...whatever...DOWN.

Want proof...look at the price of ram after the GUNvernment monopoly expired.

GUNvernment is NEVER the solution and usually always the problem.

Smoke-filled back-room dirty-deals and insider-trading is what GUNvernment is best at.

To wit:

There are only two types of human beings

One type just wants to be left alone

The other type refuses to do so while they breath

At your core, you're either the one...or the other

Sure, you can change that...past errors don't require continuation.

Get your copy of Starving The Monkeys by Tom Baugh today, before the book is banned and the author is hunted down and Vince Fostered!

Sincerely, John and Dagny Galt Atlas Shrugged, Owner's Manual For The Universe!(tm)






Maybe the solution is simply to enforce a transparency requirement. If the company does deep-packet inspection to discriminate against certain types of content or certain content the company has to SAY you do this. Given the large and increasing supply of transmission capability this will result in the company losing the business of people who like to transmit that. There are lots of companies with a lot of cable to fill after all. Somebody will do what you want for a fair price.
There's a fascinating thread on this, from March 2008, here:


which I found by Googling "tcp fairness p2p".

One particularly amusing article in the thread is in the tone of "Mr. Roger's Neighborhood".


Watch out for Mr. Tinkles.

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