February 25, 2015

619 words 3 mins read

The tangled web of net neutrality

A friend asked my thoughts on net neutrality.

I hemmed and hawed and told her a story she probably didn’t want to hear. The best I could come up with was:

  • I don’t trust the FCC or the Obama Administration to do anything honest
  • I don’t trust the Republican establishment to do anything right

First, the Obama Administration would love to get control of internet content. They can already read every message, every keystroke anyone types anywhere. The next step is to “protect” us from error. And the Gods of Washington believe only they can judge error. The internet is full of error, but it’s also the greatest source of truth-sharing in human history.

Next, the Republican Congress. The GOP establishment does the bidding of huge corporations. If huge corporations have no position on an issue, the GOP will mostly agree with you and me. But on most issue, corporations have a position and the Republican establishment makes the corporate position their own. That means crony capitalism wins out over free markets. Incumbents get to dominate insurgents. Might makes right.

On February 26, the FCC will make a decree. The internet will become a telephone line, subject to massive federal regulation. In Mark Cuban’s words, the FCC “will fuck everything up.”

Here’s what you can expect:

  • All innovation that touches the internet will have be dumb enough for a political appointee to understand. That means the iPhone, the iPad, and most cat videos on YouTube are done evolving. What’s there now is all there ever will be.

  • The incumbents (ATT, Comcast, Verizon, etc) will get federal protection on pricing. The government will also protect the giants from innovation. The way it works is so New Deal. The government will force the incumbents to provide some level of service for some low price. In exchange, the incumbents will be granted monopoly status. So new inventions can’t be sold into existing markets. The incumbents might lose money for a few years, but they can eliminate R&D altogether. (Have you wondered why the big incumbents haven’t been jumping up and down over net neutrality? Who do you think is funding the “grass roots” movement?)

  • About every 10 years, the incumbents will release some marginal improvement to the existing internet. Like when the phone company introduced telephones with dials so you didn’t have to ask an operator to patch you through. Or, later, when they introduced the push-button phone (with awesome marketing name “touch-tone”) so you didn’t have to dial. Maybe Ma Bell will give us an iPhone you have to dial. Wouldn’t that be dandy?

  • People my age will go to their graves cursing the day that innovation stopped. Younger folks will be less concerned. They won’t have the innovation history to compare. They don’t remember going from no computers to Apple IIe to Windows 95 to iPhone to . . . whatever. The incremental upgrades of Mountain Lion to Yosemite will seem like the way it’s always been.

The biggest hit will happen to innovation centers. St. Louis has been trying to become the Silicon Valley of the Midwest (just like every other city in the Midwest). Missouri’s slave-like non-compete employment laws thwarted St. Louis’s dream for years. Now, net neutrality will kill it for good. But for those who like pain spread evenly, the Silicon Valley of Silicon Valley will die a painful death, too.

The good news: 40 years from now, you’ll still be able to buy replacement parts for the very device you’re reading this on right now. Because nothing will change ever, ever again.

Perhaps after Obama’s gone, Congress can reclassify the internet as an information service, not a phone line. Until then, sell your tech stocks.