Prohibiting paid prioritization is a distraction from government’s true role

During last week’s U.S. House Committee on the Budget hearing regarding the Congressional Budget Office’s outlook on the economy, U.S. Representative Dan Crenshaw, Republican of Texas, raised the issue of what the role of government is. Mr. Crenshaw expressed doubt that government’s role is simply to maintain itself; that government served some other probably noble purpose.

Democrats may agree with Mr. Crenshaw on that point given their offer of more political packages for their lower to middle class constituents and their apparent willingness to raise taxes necessary for financing these packages.

And as much as Republicans argue for reduced budget deficits that are driven by too much spending on irresponsible social programs that serve irresponsible constituents, they too are complicit in crafting tax policies that favor more affluent taxpayers or the profit needs of the private sector.

The Current Role of Government

At the risk of being cynical, the current role of government as perceived by the taxpayer may be to dole out the promises that get a Congressman or Senator re-elected. That perception is, in my opinion, a result of a lack of education regarding the history of government or public administration. The role of government is to create an environment where resources can be managed in order to create taxable events. This environment must be stable and predictable.

Stability and predictability is ensured by implementing a universal cultural and social standard that has no room for diversity. Diversity and fragmentation are precursors for government’s implementation of a single cultural, social, and political standard, not an outcome to be pursued as in keeping with the philosophy of the Left. When making policy regarding communications infrastructure, government should keep in mind the goal of stability and predictability.

The Necessity of Stability and Predictability

For a nation to exercise its capacity to extract, organize, package, and trade resources, the area over which it exercises jurisdiction must be stable and predictable. Violence, theft, uncertainty of property ownership, unenforceable contracts, determination of liability for bodily or property harm make the trade of information and the goods and services that encompass information very difficult. For example, European nations that sought to extract resources from Africa and India determined that effective administration of these areas required the defeat of warring empires and merging disparate tribes under one set of rules for language, culture, legal and political engagement.

I imagine the construction and deployment of transportation infrastructure necessary for moving goods out of these regions could not tolerate local mores and values that slowed down or halted economic development according pursuant to Western philosophy. Diversity of legal, economic. or political thought could not be tolerated if government were to effectively administer public resources to encourage trade and commerce. Diversity is a distraction for public administrators and statutes should be promulgated in order to bring certainty. Net neutrality is one of those issues for which certainty is needed.

Reversing the Politicization of Net Neutrality

There is currently a diversity of thought around net neutrality. For the average internet consumer, net neutrality is about accessing your web content of choice without a broadband access provider throttling the content provider’s speed or blocking the subscriber’s access to content.

For the content provider, the net neutrality argument is about having regulators treat broadband access providers like telecommunications companies where content providers apparently want to be treated like business customers by either buying services out of an approved tariff or negotiating rates.

On the other hand, the broadband access provider wants broadband treated as an information service, much in the same way as a data storage or email service is treated, meaning, with the exception of consumer protection statutes enforced either in the courts or at the Federal Trade Commission, not regulated at all.

I believe what all the major stakeholders are really asking is how should the trade of data between consumer and content provider be regulated. Should data trade be regulated by free markets where content providers, network providers, and consumers set the prices or should government be more involved in the pricing aspect of the trade.

And, as we discussed earlier, government action should occur within its role as an ensurer of generated taxable events in a stable and predictable environment. Would a net neutrality policy based on classifying broadband access as a telecommunications service meet this goal? The answer is no because net neutrality skews data about how the market values data exchanged over a broadband access provider’s network.

Prohibiting Paid Prioritization Prevents Accurate Market Signals

Net neutrality proponents want all traffic treated equally, meaning that a content provider sending a subscriber a video shot of a beach gets the same priority as a doctor sending ultrasound images to a patient. Under paid prioritization, a content provider could signal a broadband network as to the value of their content by paying to have its content sent ahead of other packeted information. By prohibiting paid prioritization, networks will have less information as to the value of the data sent over networks and may not configure networks accordingly to account for higher valued traffic.

Is this skew in market signals something that government wants? Again, no. All things being equal, maximized revenues from clearer price signals increases revenues and increases the probability of greater taxes collected. Maximizing taxable events is the government’s role.

Conclusion

Network effects prevent broadband access providers from slowing down traffic from content providers or blocking subscriber access to content of choice. Throttling and blocking may discourage use of broadband networks and reduce their value. Allowing paid prioritization, however, sends signals to new broadband access provider entrants that content providers are willing to pay higher prices to get their traffic to their subscribers faster.

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