What Ajit Pai Should Have Said About Killing Net Neutrality... And Why It Still Would Have Been Wrong
from the but-he-didn't,-which-says-it-all dept
As you've probably heard, today's the day that the fairly straightforward and non-onerous net neutrality rules put in place in place by Tom Wheeler back in 2015 are officially taken off the books. We've posted a ton about net neutrality and will post a lot more, but I've been thinking about a few things related to how all of this went down that seem worth discussing. As background reading, it might help to first read why I changed my mind about net neutrality -- from originally being against the FCC setting any rules to eventually being for a fairly limited set of rules. However, what really inspired this post was the podcast conversation I had with Barry Eisler back in December about the lost art of productive debate. One of the points that Barry made was that it's especially easy in these crazy social media-driven times to argue against someone by taking the absolute worst or most extreme version of their argument and then destroying that. As he notes, as a former practicing lawyer, it's the kind of thing he was trained to do. However, he suggested that the more intellectually honest way of holding a debate is to actually reframe the argument and present back to the person what their best argument appears to be, and then debate that.
That can be difficult to do -- but let's take a shot. Because the arguments that Pai and his supporters have given so far for wiping net neutrality off the books really don't make any sense.
The core of Pai's argument to date has been that the net neutrality rules that were put in place in 2015 created a massive regulatory burden on broadband access providers, leading them to decrease their investment. In a new interview he suggests that decreasing the regulatory burden on broadband access providers will have some sort of trickle down effect on everyone else: "I think ultimately it’s going to mean better, faster, cheaper Internet access and more competition."
But if that's actually the case, it seems that Pai should back up that statement with a further explanation. The broadband market is about infrastructure, and if you understand the economics of infrastructure there are a number of different factors at play. For example, it seems quite reasonable to point out that both the net neutrality rules and the lack of net neutrality rules create some winners and losers. And it would be reasonable to point out that the FCC shouldn't be the ones picking those winners and losers (though, that would be a tough sell, given the FCC's entire charter is basically to be doing that). An intellectually honest description of the net neutrality rules would note that there are multiple competing interests at play: the interests of broadband infrastructure players (big telcos/cablecos), the interests of upstart competitors (smaller ISPs), the interests of big services on the internet, the interests of small services on the internet, and the interests of the public. And you could (and perhaps should) look at the impact on each of those and note who is likely to benefit and who is not.
And then, if we were having an honest debate, Pai could note that he believes, strongly, that empowering the biggest broadband infrastructure players with leverage to create differentiated services on their network would provide benefits that outweigh the damage that might do to others. Pai sort of tries to make that argument with his statement about "better, faster, cheaper Internet access and more competition", but he fails to describe any real mechanism for that to actually happen -- other than suggesting that merely removing the regulations will magically lead to it. So, let's try to create the mechanism by which this might happen. You could say that... due to a lack of regulations, it will allow the big broadband providers more leeway to experiment with alternative business models and new technologies, which will create a faster and better internet, including different types of access and different levels of service for different users. And maybe you could then argue that this would also somehow allow for new entrants, because they could attack the market in disruptive ways.
Another argument Pai could have -- and perhaps should have -- made would be looking into questions about how the market for broadband works. Last year, in posting the free market case for net neutrality, we noted that there are cases where even the staunchest free market economists out there have recognized that government intervention can make some sense, mainly in getting uncompetitive markets unstuck. Pai could have tried to rebut the various assumptions in that piece as well. For example, he could argue that broadband is not, in fact, a natural monopoly, and present some evidence for why the market was increasingly competitive -- and even argue that knocking out net neutrality rules would enable brand new broadband infrastructure investment to occur by enabling brand new competitive forms of internet access.
If he said all of that, then we could be having an honest debate about getting rid of the net neutrality rules. So, now, let's point out why even if he said all of the above, he'd still be incorrect (this may be why he didn't say all of the above, because he understands these arguments don't hold up to much scrutiny, and it's much easier to stick with a voodoo trickle-down "broadband regulation bad!" form of argument -- but that's getting away from the intent of this post). So, first let's tackle the "get rid of regulation to help everyone" argument.
As we've discussed at length, the one argument that Pai has made strongly -- that broadband investment is down because of net neutrality -- is not even remotely close to true. Just looking at broadband companies and their Wall Street statements (in which they face serious penalties for lying), you find that there is no decline in broadband investment due to the net neutrality regulations, at all. So the idea that removing these "barriers" will somehow lead to an increase in investment doesn't make any sense.
Second, even going beyond the pure "less regulation means more investment" argument, if the market is not at all competitive (and it is not), then what incentive do the broadband players really have to invest and innovate here? As we've seen time and time again, the real incentive for innovation is greater competition. But we're actually seeing less and less competition in the broadband market, which means that broadband providers have greater and greater incentive to just protect their own monopolistic position and cheap out on customer service and innovation.
Third, if we look at the various players in the market, it's disturbing that Pai only seems to take into account the interests of the largest broadband providers. The smaller broadband providers have made it clear that net neutrality actually improves competition because, without it, the largest broadband providers are better positioned to cut the necessary deals with Netflix, Amazon, Google, Apple, Facebook and others, while the smaller players won't be able to do so. That means that the bigger players will be able to contractually make smaller broadband companies provide a worse overall experience to their users, again further cementing the lack of competition. And while Pai claims that net neutrality harms smaller ISPs, the FCC's own data shows the opposite.
Fourth, so much of the argument that we have to focus on broadband infrastructure investment of the largest players is a broken windows fallacy. As I pointed out in a post last year, if broadband infrastructure investment is the only metric we're using here, the FCC's best plan would be to physically destroy the internet. After all, that would stimulate an awful lot of new investment. You just have to ignore all the costs it would create for everyone else.
And that's the part that's most disturbing here. Pai seems to be deliberately focusing only on the big broadband players and what this means for them -- without caring about what it means for everyone else. Having clear and simple net neutrality rules in place helps lots and lots of internet services, because it means they get to compete on a level playing field against the Googles, Facebooks, Amazons and Netflixes of the world. Those companies can pay to get preferential treatment. The startups cannot -- and Pai has yet to explain how this state of affairs helps those startups. Just saying, "well you'll have more internet," isn't an answer.
Indeed, a strong argument can be made that harming the ability of smaller companies on the network to compete, in favor of granting much greater discriminatory power to the large networks themselves, does much more harm to competition and a free market than having a set of very limited net neutrality rules in place that give all of the internet companies and entrepreneurs certainty that they can actually build their own businesses.
As for the argument that the market is more and more competitive -- that is clearly not at all true. Pai himself telegraphed this fact by trying to downgrade the definition of broadband to make the market look more competitive.
So, what are we left with? Pai's key argument appears to rest on the broken windows fallacy, by only focusing on broadband infrastructure investment and ignoring all of the investment a layer up on the network and how much that will be harmed by this move. He also is misrepresenting what is happening with infrastructure investment and the level of competition in the market.
In the end, we're left with no real argument at all for why we've just wiped out net neutrality, other than a blind faith that "regulation is bad." That may get some people excited, but hardly seems like a real exploration of the topic. And that's going to matter, because one of the key things that Pai is going to need to defend in court during the various challenges is what material change had happened that required this repeal. And simply falsely claiming that broadband infrastructure spending had dropped is hardly convincing.
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Filed Under: ajit pai, broken windows, competition, fcc, investment, net neutrality, regulations
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Like when everyone here constantly accuses those like me of advocating total deregulation and anarchy just because they did not like NN under Wheelervision? I don't think I have seen you once come to the rescue of any poster being deluged by that tripe.
Heck this is in fact the goto argument always made in favor of regulation in general, is that capitalism is going to %100 create a monopoly and that is a real fear so instead of letting the capitalist make one, lets let government bless their creation instead and then regulate them as such.
"That can be difficult to do -- but let's take a shot. Because the arguments that Pai and his supporters have given so far for wiping net neutrality off the books really don't make any sense."
I agree, they don't make any sense, but neither do the arguments FOR NN either? The entire NN debate is nothing more than two monolithing ideology fighting over how the internet should run. Both HATE the free-market with a menacing passion and battle for anti-free market monopolistic capitalism or anti-free market government regulatory capture. Those are the only two "end-result" choices.
"If he said all of that, then we could be having an honest debate about getting rid of the net neutrality rules."
Honest debate is never possible when humans are involved and double so if any human involved participates in or supports a political party of any kind.
I told you guys that you were going to lose no matter what happened to NN.
"Having clear and simple net neutrality rules in place helps lots and lots of internet services, because it means they get to compete on a level playing field against the Googles, Facebooks, Amazons and Netflixes of the world."
This is called stumping for something that does not exist. The current NN would not create this possibility either, so why are you advancing the notion in this way?
The current NN rules by Wheeler vision are better than NOTHING, I hate them and I can admit that. The problem is squarely withing the confines of who the entire debate has been framed.
Those for NN have squarely accepted market defeat handed to them from the Capitalists so they now believe they can obtain recourse through that all caring efforts of persons that are not voted into office but somehow reasoned to be able to create laws!
Those against NN have squarely assumed that removing NN by Wheelervision will somehow activate the Free-Market controls while intentionally ignoring all the regulations that are anti-free market ensuring that these incumbents have monopolies in multiple ways that will keep new challengers completely side lined.
We need to stop fighting for/against NN and start fighting the Monopolies instead! As long as they can keep for fighting here... they don't even have to fight you there! That is how they have you all playing this game to the benefit of the telco's whether you support them or not!
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However you are correct (I think you stated this in one of your later posts) that the true problem is the monopolies themselves. If there was no monopolies we wouldn't need the regulation to preserve the interests of the public.
But the fight today is not about monopolies. It is about NN because if people do nothing then corporate shills like Pai will use the regulations to further fortify the large corporate monopolies.
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You mean its funny how TD keeps missing the points it makes? Like advancing the idea that only one side is being dishonest and that when the debate occurs one side always jumps to the worst possible conclusion in attempts to argue against them?
"But the fight today is not about monopolies."
That is the problem and why I am talking about it now. When will the fight be about the monopolies? Since the FCC founding it stated that it intended to regulate them as natural monopolies. It's been over 80 years for us to be "about the monopolies" so when will it be a good time? Right now, the telco has many you playing their game and I don't understand how it is I can clearly see it but the rest of you can't!
"It is about NN because if people do nothing then corporate shills like Pai will use the regulations to further fortify the large corporate monopolies."
NN is just a carrot on a stick. It still has zero rating and the FCC is still responsible for enforcement... the FCC does not have to enforce anything and I am betting Pai will be weak on that enforcement... you are fighting for literal crumbs!
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The reason that regulation in the US keeps on failing is because people like Pai are in a position of power in a regulatory agency for a short period of time, and so naturally have their eye on the next job. When you serve at the pleasure of the president, and are not an elected politician, what you will be doing next is always a top priority.
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And argument folks like you need to tell themselves to get to bed at night. That argument is more than bogus, but also a sign of how limited your thinking is. Just imagine if the State did not build roads and instead let private businesses own them? Hey, at least your taxes would not be used to build them... O wait... I forgot that logic is just as bankrupt as your logic.
Public infrastructure, be it roads, wires, or air waves should not be allowed to be owned by any company for the common good. Natural monopolies just like regular monopolies should not be allowed period. It just NEVER serves the public good... NEVER! Since you absolute morons require a government to be your saviors then lets make sure government does what it should be doing and that is regulating these things so that a monopoly can't!
"The reason that regulation in the US keeps on failing is because people like Pai..."
Let me stop you right there.
It is people like you that is the problem. As a voter you are easily fooled into playing for the enemy while thinking you are actually working against them.
This is not new trick, it is as old as time and is the 2nd oldest profession. Once the first hooker (oldest profession) sold herself for gain she quickly learned that she could stop hooking herself and instead manage her daughters hooking, well... for a part of the financial action of course!
Have you ever heard of diplomacy is being able to tell someone to go to hell in such a way that they look forward to the trip? Well regulation is the same thing. It is a way to tell citizens to go and fuck themeslve in such a way as to make them think they won a victory against those mean and nasty big bad business boogeymen that keeps you up at night... yes indeed, they are not only in your closet and under your bed... they are all up in your head as well.
You have been played, and to great effect I might add.
Next time you decide to vote... don't.
"When you serve at the pleasure of the president, and are not an elected politician, what you will be doing next is always a top priority."
Maybe instead of trying to fix a symptom you could put together the effort to fix the real problem eh? Psh... who are we kidding... you are just going to post your drivel here at TD and then you are going to go back and vote exactly how you have been voting all along with several others while expecting different results.
A nations government is a direct reflection of it's people... whether you like that fact or not. Trump won and you got pai because the Democrats are stupid and were dumb enough to run a total cunt like Hillary who thought she deserved the Presidency because she didn't have a penis.
It is a race to the bottom my friend and you are in the lead! Keep up the good work, I am sure you will be happy with the results when all is said and done! Next year you might be passed up... who knows!
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Oh, and by making that demand you admit that infrastructure is a natural monopoly, because building it more than once is a waste of resources.
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You are a troll. You think that because your party- or guy- is in power that you can pitch ignorant arguments and automatically win. Why should anyone listen to your argument that government regulations are not always or even often beneficial to the public when you insinuate they are stupid losers?
Your comments about monopolies are incoherent. You mention private enterprise building roads, but then say private business should never own a public good. You say natural monopolies should never exist, indicating you have no idea what "natural" means. You are against any kind of monopoly, saying they should't be allowed, as though you think the government that you were just ripping into others for using, must step in to prevent (and even though a monopoly cannot exist without the government's support)
Regardless of this nonsense, the simple fact is that we cannot go back in time and prevent the the telecom industry from becoming what it is. We can't go back and change the federal law that allowed the cable companies to become entrenched in local governments. Net neutrality fixes the problem as it is currently manifested. The FCC should continue in it's role and enforce NN until the next innovative disruption. As much as I would prefer an accountable legislator making these rules, I think they have demonstrated that they don't understand even the most basic concepts of technology, thinking series of tubes, a neighborhood bridge, "Obamacare for the Internet" and the recent hearing with Facebook CEO.
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Substance- and/or fact-free posts made in pure bad faith is trolling.
That it also disagrees with Techdirt doesn't magically negate that it disagrees with reality.
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What makes you think it's in bad faith? It looks more to me like he actually believes his crap. Shouldn't we give him the benefit of the doubt? What harm is this doing? If it's nothing more than espousing incorrect ideas, then it's already being dealt with by responses. It doesn't need to be hidden.
Being wrong ("disagrees with reality") is not a reason to report a post. It's a reason to rebut it. I thought the Techdirt community was better than flagging posts just out of disagreement.
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If they wanted an honest debate, they wouldn't have submitted the rules right before Thanksgiving. They wouldn't have made those dumbass videos, and they wouldn't have tried to switch the debate to supposed "racist" comments at Ajit Pai. They wouldn't have fabricated a DOS attack on their website.
No, they don't want honest debate. They want to obscure and misrepresent the issue, and misdirect the public.
It's much easier because the public is too busy focusing on "fake news", mass shootings, and other things which ultimately affect few people.
It's also much easier because a good part of the electorate has been trained over the 50 years that regulation always hurts the free market and the corporations will milk this for all they can to the point that our federal agencies are now headed by people who openly and proudly refuse to do their jobs.
Honest debate? They're not that stupid.
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Neither side wants it, both want to obscure and misrepresent the issue! Why do you think the public is so easily misdirected? Truth is no where to be found!
"It's also much easier because a good part of the electorate has been trained over the 50 years that regulation always hurts the free market and the corporations will milk this for all they can to the point that our federal agencies are now headed by people who openly and proudly refuse to do their jobs."
This statement is entirely contradictory to history. Each year more and more regulations get on the books. Each year the wealth gap grows more disparate, each year regulators care less and less about consumers in direct correlation to the number of regulations they put on the books. Last I checked, and TD agrees, the results state that the vast majority of American regardless of party want NN regulations, which means you just simply do not know what your are talking about!
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How are the NN proponents misrepresenting the issue?
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This is a an accurate principle of basic economics and business. No one is "trained" to believe this; the average voter has a limited, at best, understanding of basic economics. The electorate is actually hostile towards free markets (as well as private freedoms. Everybody wants rules, necessary or not; Ds and Rs just have different rule making priorities)
Where the electorate is being fooled is the declaration that internet service is even a remotely a free market industry. It's not, hasn't been since the days of Prodigy and AOL. And back then, who was lobbying for regulations of this new industry? The incumbent phone service providers AT&T and Verizon, who ultimately took over as the service provider to the consumer.
Corporations don't lobby for free markets, that would require them to compete with each other based on their actual merits.
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If you're saying it's a fact that regulation always hurts the free market, then no, that's wrong. Regulation is necessary to preserve a free market, otherwise it tends to devolve into monopolies and trusts.
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Elected officials have more to gain by garnering favor of a businesses than they do by ensuring a level playing field for all. Politicians do this by setting regulations recommended by the incumbent business, making it more expensive to enter and participate in the market, limiting whom and how many businesses are allowed to participate.
This is restriction on freedom, not a promotion of freedom.
Regulations are the precise reason there is little to no competition in the cable industry- each state has a licensing scheme that only allows one or two cable providers per region instead of letting any provider that could get customers and was willing to invest the costs be allowed lay cable line.
Larger forms of infrastructure, like electricity and water lines, sewers, roads and bridges require significant investment up front and are logistically nearly impossible to have competing structures. These sorts of things are natural monopolies and need regulation. Telecoms and cable might have blossomed on their own, but they were never given the chance; they are cost prohibitive markets to enter even without government interference and need NN rules.
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Markets don't need government to step in and set the rules so that businesses will serve the public- the public are customers and the customer is always right, right? Businesses must satisfy the customer and their evolving demands better than the competition or go out of business. Unhappy consumers will seek out new solutions and providers.
I'm not even talking regulatory capture- there are innocuous reasons that result in regulation which ultimately serve to limit how business is done, who can do business and putting up financial barriers to participate. Look into "occupational licensing", the Institute for Justice. Consider the emerging cannabis industry, every government is issuing a limited number of licenses to do business in their state; even though they have no idea how many businesses will satisfy the market demand- could be more, could be less, could be a huge difference either way depending on the quality and innovation (or lack of) of those businesses lucky enough or connected enough to get a license. And if doing business is dependent on having a license, and not meeting genuine market demand, what incentive is there to serve consumer over the government?
And as far as devolving into monopolies, can you name any monopolies that didn't get that way with the help of the government? (Companies like Google and Facebook are not monopolies- they have competitors and alternatives and are subject to crashing with an innovative disruption)
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Anti-trust generally - more than just price fixing.
As long as there's plenty of competition, yes.
I'm using monopoly as shorthand for monopoly and oligopoly. A very small number of providers who don't feel the need to compete with each other is not materially better than monopoly.
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In my opinion, the increasing income inequality in this country is due to the lobbying power of corporations and their ownership of the media. These naturally want to use their power to structure the economy to their benefit with NN being a perfect case in point.
When is NN ever mentioned in the mainstream media? It's never mentioned once in the HBO show "Silicon Valley" where Season 5 is all about the main characters attempt to create a free internet. Only Jon Stewart, who has demanded and received journalistic freedom, has made a stink about it.
The majority of TD readers and others who know about NN support it. However, many Americans don't yet know about it or realize its importance. ISPs want to keep it that way.
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As of the moment I'm writing this, it's currently the second story on Google News.
There is coverage from tech sites, such as Ars and The Verge (YouTube video link), but also from mainstream outlets including the New York Times and USA Today.
The coverage isn't just from today, either; here's an NPR story from last month and a Washington Post one from 6 months ago.
You seem to be confusing John Oliver with his former boss.
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My mistake
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Anyone notice??
Many laws and regulations for the OLD Wired phone system..FOR ALLOT OF REASONS..
When the OLD Ma Bell system was broken up Other Companies took over and created LINES between the different areas, restricting WHO could supply services in those areas.. I think it was 4-6 areas the USA was broken up into..
Where are those regulations?? They are using the SAME BACKBONE.. that has been there for Years..It is now updated and Better then it USED to be.. WE STILL have those Territories that WERE THERE BEFORE.. But its asif they FORGOT the old regulations.
They are changing the Market from the OLD wired system, to EVERYTHING works on the internet. From Cellphones to Wired/Wireless internet.
If you REALLY want to Mix/change things GET RID of those old territories..OPEN up all the areas to ANY competitor.. Break it all up. Make contracts with those willing to UPDATE their part of the system.
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How's that saying go?
“It is difficult to get a man to understand something, when his (future) salary depends on his not understanding it.” ― Upton Sinclair, modified for accuracy in this case.
Pai's problem(one of them anyway) is that he cannot argue honestly on the subject, because the facts simply aren't what he wants them to be.
He can't honestly argue that the rules negatively impacted development, because they didn't.
He can't honestly claim that there's a plethora of competition and therefore no need for regulation, because there isn't and is respectively.
He can't honestly claim that most people are in favor of repealing the rules, because they aren't.
So long as he's determined to stick with his position of giving the major ISP's a huge gift in gutting any and all oversight over them he must lie, because the facts simply don't support his position and claims, and honesty would require him to acknowledge this and back down.
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REALLY..
If the facts dont fit, DONT give a rats ding-dong about facts??
Which religion do you believe in??
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