However, the Justice Department weighed in on the net neutrality debate, stating in part:
The Department also noted that differentiating service levels and pricing is a common and often efficient way of allocating scarce resources and satisfying consumer demand. The U.S. Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery. These differentiated services respond to market demand and expand consumer choice.
This sounds similar to an argument I made in “Network Nationalization: Net Neutrality In Action“:
Arguably, the inherent value of price discrimination based upon bandwidth scarcity is no different than the various postage rates used to deliver mail. While the packages are all the same, the speed and quality at which they are delivered is continually affected by the supply and demand of the provider’s capacity. Thus, a multi-level price structure based upon ever-changing variables ensures that both land and wireless providers’ resources are allocated in the most efficient, productive and profitable manner.
Perhaps one of the most ironic rejoinders to the DoJ announcement comes from Cynthia Brumfield, who suggests that,
the inherently free-market thinkers that typically populate the antitrust division find the imposition of regulations in the absence of any evidence of market harm so loathsome that DOJ feels it necessary to skip all the tedious intellectual back-and-forth. That’s understandable, but somewhat disappointing.
Not only is anti-trust legislation inherently anti-free trade, the anti-trust division does not have any tradition or track record of being pro-free market. Its sole purpose in life is to interfere with markets. [See also Dominick Armentano, "Antitrust: The Case for Repeal" and "Antitrust and Monopoly"]
A bigger picture
This entire issue is muddled for one reason, government intervention. If the government hadn’t constructed geographic monopolies for the telecom industry, the current incumbents would probably not exist in the form they do today. In addition, contrary to popular wisdom, the telecom industry was not deregulated in 1996 as there are still numerous legal barriers to entry; thus outside competition is stifled (it was reregulation).
To top that off, many of the incumbents have received billions of dollars in taxpayer-financed subsidies through endeavors like the criminal National Information Initiative, propping up their backwards business models and stymieing innovation.
In addition, passing net neutrality legislation would set a deleterious precedent, as it would interfere with the freedom of contract, eroding the little power it still has.
If anything, the one solution that gets plenty of lip service, but zero implementation is the politically unpopular free-market route: decriminalize competition, abolish the FCC, remove all subsidies for the industry. It is the only viable long-term solution.