Net Neutrality: Law, Money, and Culture

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Bill Moyers enters the fray in the raging legal debate over net neutrality tonight, with a documentary on PBS. The Wu/Yoo debate on the topic gets the central issues on the table: should we permit dominant ISP’s (like Verizon and Comcast) to discriminate among the “bits” on their networks, giving more rapid service to preferred sites? I’ve offered some tentative thoughts on the matter, and these continue in that vein.

The net neutrality battle may offer us a classic efficiency-equity tradeoff. Imagine a world where everything on the internet came to you four times faster, but dominant ISP’s could cut deals with certain sites that made their content come 10 times faster. On many classic economic accounts, that would be Pareto-optimal–everyone’s better off. As some very smart people (like Philip Weiser) have claimed, that differential pricing could finally lead to revenue levels that would remedy the US’s unacceptably slow pace of getting people connected to broadband (and faster) networks.

But on the other hand, what about the competitive disadvantage of those unable to cut the deals? Compare this article reprinted in the Boston Pilot (the Boston Roman Catholic Archdiocese’s official paper) touting net neutrality and this piece from Brookings-AEI disparaging it as a form of “price control.” The economists just tend to miss the cultural importance of media consolidation. That’s what convinced me that the stakes are ultimately a “battle for mindshare” (to use Hannibal Travis’s evocative metaphor), and can’t be cast in simple economic terms.


To make this case in blog-time, let me focus first on the core of the economic argument:

[N]et neutrality advocates generally abhor the idea of Internet “fast lanes” in which content providers could ensure priority delivery of their content if they were willing to pay for it. Yet, we know a demand for this general type of service exists. This is one reason people and businesses are willing to pay more for faster Internet connections now. We find it ironic that the net neutrality advocates are willing to say that price discrimination on the basis of general speed and convenience of the Internet connection is acceptable; but discrimination that would guarantee a site will be available at a certain speed and time is not. The latter is simply a version of peak-load pricing that is used to help solve a host of resource allocation problems ranging from dining at restaurants (early-bird specials) to commuting (higher rush-hour subway prices) to generating electricity (lower prices in the middle of the night). [emphasis added]

Remember the uproar provoked by Mark Fowler’s characterization of TV as “just a toaster with pictures?” And yet Hahn and Wallstein would have us regulate the internet, a cultural force poised to be far more influential than TV, by the same principles that govern utilities and greasy spoons.

Compare Hahn and Wallstein’s econotalk with these queries raised by the Future of Music Coalition:

“What would happen if Sony paid Comcast so that sonymusic.com would run faster than iTunes or, more important, faster than cdbaby.com — where over 135,000 indie artists sell their music?” they asked. “Would a new form of Internet payola emerge, with large Internet content providers striking business deals with the dominant Internet service providers?”

In other words, do we really need another avenue for the large corporations that dominate the culture industry to fast-track their wares to consumers? In the end, network bias-toward-wealthy-entities portends ever more pervasive commercialization of cultural life. We are already inundated with messages from well-heeled corporations in daily life. Do we really need to reinforce this cycle on the internet? To assure that a marketing-driven model of content provision doesn’t merely embroider the sides of the web pages we want, but also affects which web pages get to us most quickly?

Guy Pessach has already convincingly documented how endogenously tastes arise in film and music. Once we begin to critically examine the origins of our tastes, we may want to avoid giving already-dominant entities even more opportunities to leverage existing networks of distribution into an ever more powerful hold over our collective imagination. Churches, schools, museums, indie musicians–all deserve as much of a shot at our computers as iTunes, Disney, or Comcast[‘s cable subsidiary].

PS: This is in part a cross-post from Madisonian, where I’ve been highly influenced by co-Blogger Brett Frischmann’s theories on digital infrastructure. Brett points out that so much of this infrastructure has so many positive externalities that it makes sense to treat it as a public good. So even if you think my cultural argument is baloney, you still have to deal with the problem he identifies: so many unpredictable social benefits can arise from the use of individuals who can’t afford private charges (remember Carol Rose’s Comedy of the Commons on maypoles?). If we let private companies adopt the same “high margin/low volume” business model here that has been adopted in so many IP/IT areas, we risk exacerbating the digital divide, both among corporations and individuals.

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