Does this help the majority in the long run, or just a select lucky few?
As we all may have heard the past few days, President Obama is conducting a full-court press for the FCC to reclassify broadband ISPs as “common carriers” in the Net Neutrality Title II. This designation would establish clear rules to prevent ISP’s (Internet Service Providers) from auctioning the priority of content speeds to the highest bidders and deepest pockets, which in turn will affect all the top-tier names (Comcast, Time Warner, Verizon, AT&T) which we know and love…(het-hem). This seems to be the righteous stance for all of those without blazing speeds of internet at their office or home, and play of role of Robin Hood (he was a childhood hero??)…
Should we reclassify broadband providers as common carriers?
Can we expect the government to artificially control the internet now as a utility??
Although gut reaction may instinctively wish for pure transparency of fast lanes, the economics of play creates a stronger role and one we may not wish to artificially control.
Why should we support regulation of the heavy broadband platforms such as Netflix, Facebook, Twitter, and Hulu for their desire to pay for premium speeds with Comcast, Time Warner, Verizon, and AT&T? Whoa! Shouldn’t I have equal access to have the same amount of unadulterated bandwidth as these powerhouses? Supply and Demand have been taken into account in some respects, but it seems if observed in core economic principles, we are permanently severing our growth plates.
Now, let’s move Net Neutrality and Economic Regulation through the Market Structure Continuum we may gain an interesting glimpse of why some someone would want to enable capitalism within a “pay to play” model.
Core economic principles through the natural continuum does not require artificial tampering or regulation. The core market structures: Perfect competition >Monopolistic Competition > Oligopoly > and Monopolies.
On the lower end Perfect Competition by definition includes a great amount of competition, high ease of market entry, and a high price elasticity. The further we move to the right, the less competition (more difficult barrier of entry), and lowered price elasticity. The Oligopolies carry the best ability to pursue innovation, expanded production capabilities, promote economic growth, and lead to higher living standards.
If the ISP’s are labeled as “common carriers”, these oligopolies will face a prisoner’s dilemma game theory amongst their rivals http://bit.ly/1uemXQf of which rational companies might not cooperate, even if it’s in their very best interests.
Case in point:
This past week, AT&T’s CEO, Randall Stephenson indicated they expect to invest $18 billion in its existing fiber optic network infrastructure next year (sounds good, right?), however their rollout could be a standstill if Title #2 hits the scene. Stephenson said, “We can’t go out and invest that kind of network without knowing the rules governing the network.” With a dead stand-still up in the air, the infusion of advanced technologies in 100 cities alone and infusion of capital will be put on ice.
It’s officially getting a bit cold right now…