Net neutrality for dummies

by Rocket Finance

The arguments for and against so-called “net-neutrality” are mind-numbing in complexity – almost impossible to untangle in anything less than a mid-sized book. I have read extensively on the subject, but still cannot completely grasp all of the implications. I can only challenge you to do some research on your own to see exactly where you stand on the issues. As you read and scan the headlines over the next few years, let me try to make the issue a bit more clear.

Government regulation always stifles competition

Right now, the market for internet access is innovative and moving forward by leaps and bounds. Broadband access is becoming easier to acquire, download speeds are increasing. There are costs associated with this product – and some services cost more than others – but even the most inexpensive internet access is far improved from low end internet even five years ago.

Net neutrality is a move to force internet providers to give the same internet access to everyone, regardless of price or availability. The result of this means that either internet access will become too expensive for low-end users or high-end users will not be able to get the services they want, even if they are willing to pay for them. Net neutrality also throws a wet blanket of government oversight into almost every area of the internet. This “oversight” and “regulation” will serve to stifle competition and innovation, especially from the small providers. The big internet providers will manipulate the laws to serve their own interests.

An analogy can be drawn from different grades of gasoline. Not all of us can afford the highest octane fuel, so we buy the regular or mid-grade variety. What would happen if government decided that gas companies could no longer charge a premium for high-octane fuel, but had to charge the same price for all grades? Prices for fuel would go up, putting access out of reach of many drivers. Or, if the company did not want to raise prices, they would only be able to provide the low-grade fuel. In each case the consumer is harmed.

Government intervention always helps the big guy.

The more control that we give to government, even in the name of fairness, the more that the people or corporations with the most power will control that government for their own benefit. This is a major principle of government regulation. We need only to look at the examples of public education, Ma Bell, the US Post Office and Goldman Sachs (GS) to understand how this works. Did the taxpayer funded bailouts go to small, ethical, efficient companies or to big corporations who made risky bets?

Net neutrality represents a massive attempt by the federal government to control internet access. Many of the goals will be admirable, but in the end we will be left with higher costs, poorer service and less ability for small companies who do not have large lobbyist budgets to compete.

Photo by Elsie esq.

  1. 3 Responses to “Net neutrality for dummies”

  2. By Conrad on May 3, 2010 | Reply

    The little guy always seems to lose out in the end. The big corporations have the money, resources and power to weed out the little guys and they are the ones that are often lobbying political party’s. I wish politics and business didn’t mix but its the reality we all live with in the Western world.

    Thanks for the post.

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  4. By Neil on Jun 5, 2010 | Reply


    Couldn’t agre more that regulation tends to favor the bigger players. They have all the knowledge on how to get round the regulations and it just makes it hard for new operatord to enter the market.

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