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Net Neutrality Advocates are Asking the Wrong Questions

January 31, 2018 in Economics

By Adam De Gree

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By: Adam De Gree

The World Wide Web was born in Geneva, Switzerland, in December of 1990. It went live on (now Sir) Tim Berners-Lee’s desktop and promised to provide his organization, CERN, with a non-hierarchical information sharing system.

To Berners-Lee, the web serves as a space for unlimited communication with transformational potential. Yet according to him, it also should remain “open,” a term that has come to mean ‘regulated at the national level.’ Berners-Lee is active in writing and speaking about the dangers of leaving internet service providers free to conduct business as they see fit.

His worries concern the immense power that ISPs have over the web and its users. Many Americans share a fear of these corporations and their alleged plans to play favorites among websites.

Net neutrality advocates typically take the size of ISPs as a given and proceed to argue for their regulation as a way to limit their power. Yet no one questions how these mammoth companies came to be in the first place.

As with many American industries, a handful of ISPs dominate the market, so much so that 67% of American households have two or fewer options when it comes to purchasing internet service, and nearly a third only have one option.

How is it that a few corporations have gained such a high market share within 30 years of Tim Berners-Lee’s invention?

Startup ISPs face significant regulatory burdens. Any company that wants to install cable throughout a city or county has to deal with loads of red tape, construction permits, and even FCC regulations on the type of cabling used. ISPs also face reporting requirements that can burden small providers with costs amounting to $40,000 per year.

Most of the regulatory burden originates at the local level, though. ISPs have to negotiate access to public utilities and pay “pole attachment” fees before doing any construction. Local governments see this as a revenue stream, but the inevitable result is higher prices and less competition.

When Kansas City was chosen as the first location for Google Fiber, some scratched their heads. Why not Silicon Valley? The explanation came straight from Google’s Vice President of Access Services in his Congressional testimony: “It’s clear that investment flows into areas that are less affected by regulation than areas that are dominated by it.” Unlike their Californian counterparts, Kansas City officials simply got out of the way.

That’s not to …read more

Source: MISES INSTITUTE

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