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Source link: http://archive.mises.org/11733/opening-the-internet-with-an-axe/

Opening the Internet — with an Axe

February 25, 2010 by

As always, governments want citizens to believe that private enterprises have some kind of power over them. But the reality is just the contrary: it is the operator who is at the mercy of the customer. FULL ARTICLE by Fernando Herrera-Gonzalez


htran February 25, 2010 at 9:53 am

I don’t think it’s fair to downplay the possibility of collusion between ISPs, if their profitability isn’t affected by limiting access to certain content and no one else but the govt will stop them. I hate the govt on a lot of things, but protecting consumers is usually the least objectionable.

But you are right that net nuetrality is a non-issue so far. These new laws are probably laws for the sake of making more laws that aren’t currently necessary. If ISPs ever do get to colluding, the govt already has sufficient power to do away with it. No need to preemptively demand rights that users already possess.

Curt Howland February 25, 2010 at 12:31 pm

The best defense against collaboration is competition.

Back in 1994 when I worked at my first ISP, there was one service provider who refused to “play fair” and peer with my company. I can only imagine someone there didn’t like the fact that we’d gotten some nice hosting contracts.

By the hundreds, THEIR customers called us to say, “why can’t I reach xxx”, one of our customers.

So we told them the truth. “Your ISP refuses to let you reach us.”

And then there were the occasional MBA graduates who looked at peering as an “untapped revenue stream” and wanted to charge us for turning up peering. After all, they said, packets to our network would have to cross theirs.

To which I replied, it’s your packets that cross OUR network. Pay us.

It took a while, but eventually those MBAs must have caught a clue, because they stopped asking and just turned up peering.

Competition, even just the threat of competition, keeps the MBA types from getting out of hand.

Rick February 25, 2010 at 1:36 pm

I’ve been trying to understand “net neutrality” better. My initial thoughts were that it’s well intended but self-contradictory, i.e. “keep the Internet open and free… by bringing in more government.” That’s a Trojan Horse.

As for possible collusion among providers, I think it’s far more likely to happen if the government intervenes… even if it “appears” to be against the interests of providers.

Perhaps a good analogy is the government management of roads. The traffic is often unbearable because people use it without knowing – or paying – the real cost. “Peak traffic” times are slow going. The state DOT’s are slow to upgrade and improve anything… if they really do. Anytime they do try to make improvements, the proposal has to go through one review process after another. Then there are pot holes, unnecessary accidents, etc., all leading to a sometimes dreary experience for something that should be a pleasure.

That said, the Internet isn’t as limited so it would be hard to completely choke off innovation… unless the government and network providers colluded to erect extreme barriers to entry.

Steve R. February 25, 2010 at 2:39 pm

My polite response is that this article is nothing more than pro-industry propaganda that mindless regurgitates the mantra that regulation by definition is bad.

Sure its easy to tear down a proposal using FUD but it is something else to debunk a proposal based on real logic. I don’t believe that Mr. Herrera-Gonzalez has even come close to using real logic to make his case.

Let me first ask this question of Mr. Herrera-Gonzalez. If regulation is bad, has he opposed any industry sponsored regulations? Can he direct us to any such posts? I see too many pundits who profess an opposition to regulations that benefit the consumer turn around and claim that regulation is suddenly good when it is designed to protect a business model.

What is missing from Mr. Herrera-Gonzalez article. Missing is any analysis, statement, or even recognition that the ISPs would act in an ethical manner if allowed to roam free. I find arguments “give me freedom” to be bad when there is no corresponding commitment to operate in an ethical manner and responsible manner. Isn’t one aspect of the free market being responsible? So if someone opposes regulation but at the same time fails to make a commitment to act ethically or responsibly, why should I believe him or her?

Concerning transparency, has Mr. Herrera-Gonzalez heard of Comcast? To go a step further, has anyone ever heard of any company willingly operate in transparent manner. Can you imagine this hypothetical press release from AT&T: “To promote the sale of our new XYCG phone we are degrading the bandwidth of our obsolete phones and disabling features.”

Many may view regulation as “bad”, but I find that we live in a complex world. The common consumer simply does not have time or technical resources to assure that he/she is not being abused. Regulations, at times, are necessary to define the rules of the road to assure the orderly flow of traffic. These common rules are actually highly beneficial to the free-market system!!!!

Jacob Steelman February 25, 2010 at 2:47 pm

There is one certainty in the FCC’s actions. When government intervenes it is for the purpose of protecting the interests of the ruling elites – NOT THE CONSUMERS. Government (and the FCC is part of the US government) is an instrument of power used to circumvent and alter the consumer driven functions of the free market. Its purpose is to limit choices and create cartels and monopolies thereby limiting the opportunities offered by new entrants to the marketplace. Agencies such as the FCC are used to perpetuate and continue the functioning of the cartel. They are the centralized management of the cartel.

Seattle February 25, 2010 at 2:53 pm

Steve, you must be new here. In case you hadn’t noticed, we aren’t Republicans. Please don’t confuse us with them if you want to keep your vital organs.

Anyway the article is fairly solid… If we lived in a fantasy world where ISPs are perfectly clean of state tampering. The fact is, most of these “fears” the FCC has are very real, PRECISELY because most ISPs have a locally-granted monopoly. You either continuously pay more for less service, or you don’t connect at all. Don’t even get me started on the antics Comcast and AT&T have managed to get away with thanks to this.

mpolzkill February 25, 2010 at 2:54 pm

My polite response is that Steve’s post is nothing more than pro-government propaganda that mindlessly regurgitates the mantra that government regulation by definition is good.

Steve R. February 25, 2010 at 3:57 pm

Yes, one can say that the purpose of government is to protect the interest of the elite. After all they have the most to loose in an anarchistic society. But, I will also say, that given an idyllic society government will at least have some consumer friendly laws, such as the definition of a “gallon”. How many of you bring your own “gallon” jug to the gas station when you fill-up your car? If you don’t that, wink wink wink, it must mean you support this governmental role.

I fully realize that government and private industry can collude. Cite away, you won’t have any objections from me.

But, to allege that I am espousing pro-government misses my point, fails to document how I am wrong, and fails to prove your point. Your point being that unfettered competition will lead to a true free-market system.

As much as I would like to believe that an unfettered free-market would be “honest” in operation, Mr. Herrera-Gonzalez speaks of ideals that simply don’t exist. In a sense, I also have ideals that don’t exist. But given an idyllic situation, both of us could be said to be correct.

mpolzkill February 25, 2010 at 4:18 pm

Steve, I don’t even know what you’re getting at exactly. You’re saying if the government didn’t make sure that a gas station was giving you a gallon, you’d have to check with your own can every time? If that is what you’re saying, do you think that maybe there could be consumer protection businesses that nailed idiot businessmen like that to the wall? You’ve already admitted that government consumer protection doesn’t work as advertised (the government is making sure poor public school stunted proles get their whole gallon and then they sell them lotto tickets? I feel the love), how about exploring the ideas that are all over this site?

Please, what ever subjects you’re interested in, type the key words into the search engine above, I’m sure you’ll find most problems covered. Read the articles, and then any questions you have, ask them in those forums and some nice and not-so-nice people will try to answer them.

BioTube February 25, 2010 at 4:29 pm

Currently, most consumers have at most two options for broadband: cable and DSL(satellite doesn’t count). Instead of heaping rules upon the duopoly, the proper method is to get rid of rules that prevent entry of other competitors, such as exclusive franchises award by cities.

DW February 25, 2010 at 4:38 pm

“How many of you bring your own “gallon” jug to the gas station when you fill-up your car? If you don’t that, wink wink wink, it must mean you support this governmental role.”

This is what’s called a “Natural 1″.

“Your point being that unfettered competition will lead to a true free-market system.”

Let me see. Hmmm. Freedom to enter into any market, and to do business with anyone concerning your own property. Yup, that’s a free market alright. What’s the problem?

Steve R. February 25, 2010 at 5:03 pm

@ mpolzkill, As a summary my belief that large corporations can’t be trusted equals your belief belief that government can’t be trusted. With that in mind we can respectfully agree to disagree.

mpolzkill February 25, 2010 at 5:08 pm

And my belief that large corporations can’t be trusted matches your belief, because the vast majority of large corporations never would have become as large and powerful as they have become without being junior partners of the government. So what are we disagreeing about?

mpolzkill February 25, 2010 at 5:32 pm

In addition (there’s so much to unbundle there), it’s not a matter of trust. If you could prove to me that everyone in the government was a saint and everyone in the private sector were mustache twirling villians, I would still prefer the private sector in every matter. There is no way in the world I’m going to be able to tell you why that is on this forum (it has to do with profit and loss, information and calculation). But it looks like you’re not too interested, anyway. You may wish to find greener pastures for the delivery of your mantra.

Steve R. February 25, 2010 at 5:53 pm

I think our disagreement would be on the most appropriate approach for a solution. Mine tending to favor government regulation, yours letting the private sector duke it out without government interference.

You may be interested in my first post on the Mises forum here: Confronting the “Unconfrontable” in the LvMI Forum. Also I have some comments concerning Krugman Agrees With Tom Woods. You will see that I bring a different perspective. I hope that some will listen.

mpolzkill February 25, 2010 at 6:57 pm


I apologize for thinking this was your first time here. What with your intimating that we are quasi-religious corporatists, I would not have guessed you’ve been hanging around for three months. I read most of the threads, it seems you picked almost nothing up, sad to say. Well, anyway, we won’t just agree to disagree, you’ll continue to support the corporatists in sheep’s clothing you’ve been duped by and who have us all by the short and curlies. Why anyone thinks anybody but the ultra wealthy would ever control the mechanism of the State, I will never understand.

Steve R. February 25, 2010 at 7:46 pm


Think Don Quixote, I may be advocating what you consider an unachievable dream but I am peeking in here to read what you have to say. Believe me, I don’t support the corporatists. You may want to read my support of Ron Paul: Change We Can Believe In.

mpolzkill February 25, 2010 at 8:10 pm

Yeah, I saw that. I don’t think you’re a bad guy, I didn’t say you support what they support, you just don’t understand that you have no say in the matter. Good luck on those windmills, hope you shrink the government more than Dr. Paul has. Unless you’ve figured out how to get rid of the Supreme Court, yeah, I’m thinking whatever you’re thinking is impossible.

DW February 25, 2010 at 8:26 pm

I see nothing “Don Quixote” about advocating for threats of violence/force via the State in order to ensure one’s idea of “fairness” in the marketplace.

EIS February 25, 2010 at 10:18 pm

Steve R.

“mpolzkill, As a summary my belief that large corporations can’t be trusted equals your belief belief that government can’t be trusted. With that in mind we can respectfully agree to disagree.”

Your belief is precisely that–it’s not grounded in reality and cannot be logically supported. Corporations, first and foremost, attempt to maximize profits, and they do this by maximizing revenue (the ability to satiate consumer desires), and minimizing costs (producing efficiently–using the lowest degree of scarce resources as possible). This is one way to maximize profits, then you have the more modern way, the fascist way: form a partnership with the government, lobby for regulations which benefit you, seek legal protection, and shout “unfair competition” whenever you’re losing.

Either way, a major virtue of the market is that there is accountability. Toyota has recently produced a flawed product. It issued a recall, fired those who failed to do their jobs, and is running a massive public relations campaign aimed at restoring trust. Toyota does not want to end up like Audi, which faced similar problems some decades ago (which nearly destroyed them). But when the government makes catastrophic mistakes (which happens on a daily basis) who gets fired? Where is the accountability? Has George Bush ever apologized for his deficits, the war in Iraq, and Katrina? Do we expect George Bush and Barack Obama to publicly apologize for their mistakes? Of course not.

There’s no need to mention government inefficiency.

Inquisitor February 25, 2010 at 11:46 pm

“I think our disagreement would be on the most appropriate approach for a solution. Mine tending to favor government regulation, yours letting the private sector duke it out without government interference.”

Terminate taxation and subsidisation so as to avoid disadvantaging private sector provision via theft, and deal.

kmeisthax February 27, 2010 at 10:45 pm

>But the reality is just the contrary: it is the operator who is at the mercy of the customer

Uh, only in a free market, LvMI. And last-mile internet service is nowhere near a free market. Private industry does have power over consumers so long as private industry is allowed to use the government in pursuit of it’s ends.

James R March 1, 2010 at 3:58 am

Steve R, I think you misunderstand what free markets offer us.

Free markets do not promise that they will be free of incompetence, corruption, or mustache-twirling villains.

Rather, free markets enable the participants therein to identify the mustache-twirling villains and attack them.

In contrast, in a market that is managed/controlled by government, the government not only protects the mustache-twirling villains from competition, but blames their very presence on the free market!

Take Comcast, for example. Despite your assertions to the contrary, it was Comcast customers who discovered that Comcast was discriminating against certain types of Internet traffic (e.g., BitTorrent). Since Comcast enjoys government-granted monopolies on “last mile” cable infrastructure in many markets, it’s been more difficult for consumers to punish Comcast by seeking alternatives.

But competition is coming nonetheless. My brother, for example, has Internet service via Verizon FIOS. He has never had any problems running BitTorrent or any other Internet application. He is extremely satisfied with FIOS and has absolutely no plans to switch to Comcast.

Tellingly, Comcast has gone on the offensive against FIOS, running a series of ads attacking their cost, quality of service, etc. But FIOS continues to erode Comcast’s customer base despite the attack ads.

I know you mean well. But if people are incapable of stamping mustache-twirling villains out of a market, it is precisely because government is supporting the mustache-twirling villains. Asking the government to get rid of the villains is like asking an arsonist to help put out the fire that he himself started.

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