A note on “net neutrality”

I don’t know much about the ongoing net neutrality debate (which I gather is to end when the FCC passes new rules this month), but it appears to me that a major reason behind the FCC’s push for “net neutrality” is a general complaint that internet service providers (ISPs), which often face little competition in the regions where they operate, treat customers poorly and charge too much. That ISPs have “natural monopolies” that allow them to rake in profits without improving service to customers.

(For those who don’t know, “net neutrality” basically turns the internet into a public utility by regulating ISPs like providers of other utilities (like electricity, water, etc.)

But by what standard are we judging the way ISPs treat customers? Who is to say that they are making too much or offering too little? If we’re paying too much for internet service now, then what should we be paying? How are we to know a fair price for internet service without a market for internet service?

I understand that ISPs may have gained certain privileges in the past from the government that may have given them unfair advantages. But is the solution to end the market for internet service altogether?

This reminds me of one aspect of the socialist calculation debate, whereby Austrian economists (among others) revealed the self-destructive nature of socialism. One pillar of their argument (and I’m simplifying here) is that without a market to study and observe, central planners will not know what prices to mandate for what goods. The result will be the production of too much or too little of regulated goods–distortive resource misallocations that result in excess supply and/or demand.

Again, I don’t know much about net neutrality. Read my comments in light of better analyses, like this one featuring Tech Freedom president Berin Szoka.

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