Someone has to say it. The debate surrounding so-called net neutrality proposed policies reminds me of a heavily Marxist-influenced student protest from 1968. It's all about keeping private property in name only, while regulating the product so that it can only be provided in a way defined by the government. In otherwords, it's a regulated utility which may just as well not be a private enterprise at all.
The "debate" regarding net neutrality is in fact no debate at all, reading 99% of the commentary on the matter. It's equivalent to the debate surrounding "rent control" in many cities, say 50 years ago. Just prohibit private property owners to run their businesses the way they want, and the consumer will benefit unequivocally and proportionately the argument goes. The government bureaucrat proposingto rob Peter and give the monies to Paul can always count on the support from Paul.
We all know what a brilliant idea rent control was. Indeed, applying the net neutrality principle to all of society, as it was ostensibly done in the Soviet Union, really catapulted the standard of living forward to new consumer friendly heights -- not.
So what is net neutrality? It's the idea that it will be illegal for anyone to purchase preferred access on broadband networks -- wired as well as wireless. All bits must be treated equally. No special privileges for anyone. A fine principle, taken straight out of Cambodia's "Killing Fields" and of every other socialist utopia attempted over the last 100 years or so.
Indeed, why limit the net neutrality legislation to broadband networks? Shouldn't all products and services in society benefit from the egalitarian principle of nobody being able to purchase a preferred service or product? Take an airline, for example. Let's establish an air neutral policy of prohibiting business class and the practice of charging people based on supply and demand for seats. Each airlineseat will have a fixed price and there will be no multiple classes of service. Air neutrality will prevail in the same nirvana as on the net utopia envisioned by the Federal Communications Commission.
What are the most important products in society? Food, shelter andclothing. Without them, we would die relatively soon. We can manage without broadband, air travel, and even health care in many cases over an entire lifetime. Let's apply the net neutrality principle to food. Nobody should be able to buy "preferred" food of higher quality and better taste than anyone else. This dictates a government bureaucracy dispensing identical rations to all citizens. Think Mao's Chinese cultural revolution and great leap, and 50 million dead.
The net neutrality principle applied to shelter? Equal apartments to all. Nobody should be able to pay for a better house than anyone else.That is, except for the political elite. Did you ever pay a visit toa Moscow suburb in the 1980s?
How about the net neutrality principle applied to clothes? Nobody should be able to pay up for something differentiated or better. Government must ensure neutrality in clothing, with everyone in adult school uniforms. Think North Korea or China in the1950s, again. I can't wait!
I could go on and on showing how the net neutrality principle is simply a warmed-over Marxist wet dream. The sad part here is that these madnesses of Marxism sometimes make it into policy, such as the innocent-sounding "rent control" which managed to destroy the living conditions in many U.S. cities for decades until they were phased out, allowing for entrepreneurial freedom and individuality.
Owners of broadband networks need to have the freedom to provide access to their properties on whichever terms they see fit, just like owners of hotels and airlines. If the consumers demand and are willing to pay for usage looking like net neutrality, chances are those service providers will find it in their best interest to supply services in that fashion. You can always get together with like-minded investors and build your own net neutral network if you think the incumbents aren't doing what they should.
We just can't have a situation -- at least not in a free non-North Korea-style society -- in which government bureaucrats dictate the manner in which private companies provide services. If this happens, we must ask ourselves why the government doesn't just expropriate
Time Warner Cable
and others. If a private company isn't allowed to design and price its product in any manner itsshareholders see fit, we simply aren't a free country anymore.
Back in 1944, Friedrich Von Hayek, who later came to receive the Nobel Prize in economics in 1974, published his most-read book -- "The Road To Serfdom" -- in which he explained that government control over the private means of production must spiral into a lack of political freedom. If people don't have control of their private property, they cannot fund political pluralism.
Hayek's book became a favorite behind the Iron Curtain, passing hands in brown envelopes because its possession could yield a labor camp sentence or worse. In the current net neutrality debate, we should heed Hayek's warning and praise the right of owners of property to be free from socialism enacted through the back door. If you like government-mandated products and services -- from food to clothing,shelter and transport -- you will love net neutrality. Those of us who value the freedoms afforded to us through our exercise of private property rights will fight net neutrality just like Ronald Reagan fought the Evil Empire.
Advocates of net neutrality tend to be the same people who complain that there hasn't been enough broadband capacity built. If broadband networks are to remain privately owned, net neutrality legislation will only serve to disincentivize investment. If the government told you how you had to use your house, offer services in your hotel, or whatever, how much would you invest in such a building? Probably next to nothing. You surely wouldn't expand. This is basic incentive theory, folks. If the government will punish you for making an investment, you're not going to do it. Enacting net neutrality legislation is simply one big discouragement of investment.
Anton Wahlman was a sell-side equity research analyst covering the communications technology industries from 1996 to 2008: UBS 1996-2002, Needham & Company 2002-2006, and ThinkEquity 2006-2008.