Net Neutrality, Libertarianism, and Free Information

Publius/John Blevins at Obsidian Wings has written quite a bit over the years about the issue of net neutrality.  For the most part, I’ll admit, the discussion has largely made my eyes glaze over and hasn’t much interested me.  Then I saw that in Publius’ Clark Kent persona, he recently filed an amicus brief on behalf of several other law professors, including Jack Balkin of Balkinization.   For whatever reason, this has piqued my curiosity about this issue, which I think presents something of a quandary for libertarian thought.*

The standard libertarian position on net neutrality seems to be that it’s a bad idea that will hinder the development of networks, and that it’s a solution in search of problem (made with much more nuance by Julian Sanchez here, and with some caveats here, amongst many other places, I’m sure).  For the moment, I think Sanchez’ arguments are pretty persuasive, in that existing regulations and market forces thus far have done a pretty good job preventing the kind of discrimination about which net neutrality proponents are worried.  Meanwhile, the distinct possibility of new networks developing that usurp the existing duopoly and allow for even more innovation on the internet is very real; that a net neutrality regime would be a mechanism for that duopoly to prevent such competition and innovation from occuring cannot be easily dismissed. 

And yet….the kind of situation that net neutrality proponents fear hardly seems far-fetched.  Although existing regulations and market forces may, for the moment, be enough to prevent this from happening on a significant scale, there is no guarantee that this will continue.  Existing regulations may indeed be enough for existing providers to block any real competition from developing, and those providers already have plenty of incentive to undertake measures that block applications, unduly discriminate against particular types of traffic, and more or less force users to use applications in which the provider has a vested interest. 

There, I think, is where libertarians have a real dilemma.  Obviously, the boilerplate libertarian position would be to remove the regulations that ensure and enforce the duopoly.  This, however, will be an unsustainable position in that it will have a near-zero chance of becoming reality.  As a result, the practical dilemma will be that libertarians will have to choose between increased regulation of networks (helping to ensure that alternative networks will not be able to develop)  and de facto heavy regulations on application and traffic innovations, implemented and enforced by the duopoly rather than the government. 

At that point, one of the great predicaments of libertarianism becomes clear – more government intervention may well be the only pragmatic way of correcting the flaws of a previous intervention.  To be sure, further shutting the door on network innovation and competition would not be a particularly happy or freedom-enhancing endeavor; but neither would permitting the drastic stifling of application-level innovation and information exchange implemented to advance the duopoly’s anti-competitive interests.

In such an instance, I would argue that the proper way of viewing the situation would be to view the service providers as quite literally creatures of the State.  While they may not necessarily be acting on behalf of the State, the effect of their State-enforced duopoly asa gate-keepers to the internet would be functionally indistinguishable from State action to suppress free speech and innovation.  Indeed, because of the nature of the internet, I would argue that their role as gatekeepers would put them in the position of overseeing the commercial and ideological marketplace that is the internet in much the same way that government is charged with overseeing the commercial and ideological marketplace that is the physical world.  A requirement that the providers maintain neutrality – abide by a sort of equal protection principle, if you will – seems to me necessary should it turn out that the duopoly is unbreakable under the existing regime. 

A quick hypothetical should explain why this would be necessary and essential even from a libertarian perspective.  Imagine that the government turned all of the Interstates over to ABC Corp., all the US Highways to DEF Corp., and all the state and county roads over to GHI Corp., but retained jurisdiction to regulate those three companies.  Wouldn’t the government have not only a right, but a responsibility to ensure that those companies did not discriminate in a way that the government itself would be prohibited from discriminating? 

This is why I think the arguments made by Blevins, Balkin, et al in the Comcast case are important.  Indeed, one of the many interesting components of the brief is that they cite to Schumpeter, of all people, in support of their argument that the FCC acted properly in prohibiting Comcast from blocking BitTorrent and other peer-to-peer uploads.  Although it appears that public outcry over Comcast’s actions was critical to Comcast ending this practice, it also seems likely that this outcry never would have reached such levels had the FCC not treated this as a proper regulatory matter in the first place.  Merely by investigating this issue, the FCC played a valuable role in informing market participants about Comcast’s actions that allowed those participants to exercise their market power in such a way as to force Comcast to put an end to its actions. 

Of course, the central issue in the case isn’t whether net neutrality is good or bad policy, even though that is the central issue addressed by amici, and an issue that can properly inform the DC Circuit about the wider significance of this case, which is particularly relevant given that the central issue is whether the FCC acted within its jurisdiction.  That central issue, while perhaps not as “sexy” as the question of whether net neutrality is good policy, is uniquely important in and of itself, especially given that the FCC’s decision came about via adjudication rather than formal rulemaking. 

One reason why this jurisdictional issue is important is that a decision in the FCC’s favor would largely obviate the need for formal net neutrality legislation, which would necessarily be byzantine in addition to at least partly shutting the door on network-level innovation.  Such a decision would make clear that the FCC has the power to investigate and publicize behavior such as Comcast’s.  Moreover, an entirely favorable decision for the FCC may well encourage the FCC to delay implementation of formal net neutrality regulations.  In that situation, the FCC may be willing to develop its net neutrality rules more organically through adjudications, dealing with neutrality problems if and when – and only if and when – those problems arise, rather than creating one-size-fits-all rules for problems that merely could hypothetically arise (rules that naturally would most severely affect small competitors and alternative service providers). 

On the other hand, a ruling against the FCC in this case would give service providers carte blanche to tightly regulate internet use and access and to “pick winners and losers,” as Blevins writes, without any fear of oversight unless Congress chose to act.  The mere threat of an FCC investigation for violation of neutrality principles would be lost, and with it much of the FCC’s capacity to disseminate information about those violations to market participants.  Safeguards that would potentially guarantee the continued evolution of internet technologies and applications would be wholly dependent on either the development of new network-level technologies and providers or Congressional action, neither of which is at all a certainty, and the latter of which carries with it the problem of at least partly shutting the door on the former. 

*HUGE, GIANT caveat to this post: I’m just now starting to learn about this issue, so I reserve the right to be very, very wrong in my interpretation of this case and of the importance of net neutrality in general.