
Cato Institute: The Case Against Net Neutrality - zacharyvoase
http://www.cato.org/pubs/pas/pa507.pdf
======
grellas
The FCC is way out of its league on this one. Basically, it is a creature of
statute. It can do whatever Congress has authorized it to and no more. Nothing
in its authorizing statute expressly permits it to impose the rules now known
as net neutrality. Therefore, it sought to justify its ability to do so under
the doctrine of so-called "ancillary jurisdiction," meaning that it had an
implied power to do so in aid of its expressly granted powers. Unfortunately,
a definitive federal appeals court ruling held that no such ancillary
jurisdiction existed, leaving the matter for Congress to decide. Rather than
deferring to Congress, the FCC chose to adopt a new rationale for its
assertion of this authority. Congress overwhelmingly balked at the idea of any
broad assertion of such authority and, in the back and forth, the FCC came up
with the toe-in-the water approach just adopted to the satisfaction of almost
no one. Even this assertion of jurisdiction will certainly be challenged in
the courts in cases that will take years to decide, leaving this whole issue
in a pathetic state of uncertainty for all concerned. Nothing good will come
of this except for lots of employment for the lawyers who will be litigating
whether this or that action is "reasonable" and whether the internet is really
like a public utility or not. All in all, a royal mess.

This article, and the comments on this thread, attempt to address the
principled issues relating to net neutrality both pro and con. The sad reality
is that, at the moment, principle has little to do with any of what has been
implemented and only lawyers and lobbyists will be driving this process for
the near future.

------
zdw

        No firm or industry has any sort of “bottleneck control” over or market power in the broadband marketplace; it is very much a competitive free-for-all
    

Uh, last I checked, I had one viable, reasonably priced internet provider
(local cable company) - all the others are either much slower (DSL) or much
more expensive for equivalent service (ptp wireless).

Seriously, I'd be willing to give up "network neutrality" in a heartbeat for a
free market system, provided that I get plenty of viable, competitive choices
for the last mile to my house, which I think would solve additional problems
rather than just the one being discussed...

~~~
akozak
So then are you willing to give it up in the wireless space? Because there
appears to be plenty of competition there.

~~~
zdw
Sure, as long as the competition is:

1\. An equal playing field - ie, no one carrier has a technical or legislative
advantage over any others.

2\. Carrier lock-in is eliminated - any device allowed on any network, no long
term contracts.

3\. There are little to no barriers for new carriers to enter the market.

This would increase competition, in the favor of wireless customers.

~~~
num1
1) Technical advantages are welcomed, just not legislative. 2) Arguing from
the perspective of the Cato institute, who are you to place restrictions on
the phones carriers sell? The root issue is whether providers have a monopoly
or not. But keeping a distinguishing feature just as phones to yourself is
just good business. 3) Completely agreed.

This paper (circa 2004) was written from the perspective that internet service
is not a monopoly. In this situation the answer is clear; (to a libertarian)
government has no business dictating how we should do business.

A large debate within libertarian circles is what to do when monopolies
happen. The reflexive answer is no government interference allowed no matter
what, the market will figure it out. Obviously in certain situations that
doesn't work too well, as far as I know it's still an open question.

~~~
wtallis
Would you count patent protections as technical or legislative? Patents are
supposed to be used only to encourage technological progress, but all too
often they screw up the competitive landscape on an entire market in ways that
are obviously unfair. If we could reform our patent system to get rid of
software patents and raise the bar for physical inventions, then it might be
okay to say that technical advantages [protected by patents] are fair.

~~~
Symmetry
This is sort of a divisive issue for Libertarians. On the one hand, patents
extend the reach of Capitalism into new places, which some libertarians who
are reflexively pro-Capitalism like. On the other hand, patents are government
restrictions on what you can do with your property, so more consistent (imho)
Libertarians tend to be against them.

------
kevinpet
This is a very poor article that does nothing to provide any insight into
network neutrality. That's not too surprising, though, since it's 7 years old.

If the knee-jerk fans of benevolent government want to criticize their
position, it would at least be appropriate to criticize their current
position, such as found in this recent paper:

<http://www.cato.org/pubs/pas/pa-626.pdf>

~~~
wtallis
So, it looks like they now admit that neutrality is a good thing, but they say
not to worry, because it's impractical for ISPs to actually discriminate. The
documented cases of anti-p2p traffic shaping, large-scale deep packet
inspection, and the eagerness of ISPs to secure their rights to do those
things without even telling consumers all prove that the Cato Institute's
analysis has not yet converged with reality.

~~~
dnautics
...and the eagerness of the government to 'regulate' wikileaks out of
existence proves that the statist's analysis will never converge with reality.
Look, if ISP wants to fuck with packets, then all you have to do is encrypt
them, on onion route them, or whatever. If you are being regulated by the
government, though, you just might get a friendly knock on the door. Or maybe
the government will raid you with a swat team. Hope you don't have any pet
dogs.

------
Xuzz
(This is from 2004, so please add a (2004) tag to the end of the title nobody
else misses that.)

------
iwwr
I think Net Neutrality is profoundly a US issue. Unlike in the US, in Europe
one usually has his choice of 4-5 ISPs and several good mobile bandwidth
providers (plus, there is no such thing as tethering). While in the vast US
suburbs there is usually just one ISP, providing tiny bandwidth and terrible
service.

In the US, bandwidth is much more scarce and therefore either ISPs, content
providers and individual customers are more urged to economize it. Consumers
want to do it through Net Neutrality out of a fear of being stuck on a "slow
lane" and ISPs want to gain the maximum value possible from their assets.

Perhaps an environment more friendly to new ISPs (less rules, more tax breaks
etc) could solve this problem. Of course, established companies (semi-local
monopolies) have political power. The push should be rather toward breaking
this political power.

Over the long term, even without Net Neutrality, having a fast growing
infrastructure will prevent the sort of abuse customers are currently being
threatened with. With Net Neutrality, but still with a quasi-monopoly, I don't
think people would necessarily get a better service.

------
japaget
FYI, the Cato Institute is a well known libertarian think tank. I upvoted this
because like to hear both sides of an issue.

~~~
detcader
<http://www.sourcewatch.org/index.php?title=Cato_Institute>

~~~
anamax
Since we're playing that game, sourcewatch is published by prwatch. Some of
their funders are listed at: <http://www.prwatch.org/finances.html>

see also <http://www.prwatch.org/pdfs/2008_990_Disclosure.PDF> .

What makes you think that those folks are on the up-and-up?

Ad hominem doesn't just go one way....

~~~
bbatsell
Uh, the publicly-edited, well-sourced, and very thorough Sourcewatch wiki
article isn't even in the same _galaxy_ as "ad hominem".

Personally, I think it makes Cato look good. I don't always agree with Cato or
what they do, but they are at the very least consistent in their principles
and don't misrepresent the fact that they explicitly represent corporate
interests, both things that are incredibly unusual among D.C. think tanks.

~~~
anamax
> Uh, the publicly-edited, well-sourced, and very thorough Sourcewatch wiki
> article isn't even in the same galaxy as "ad hominem".

<http://en.wikipedia.org/wiki/Ad_hominem>

An ad hominem (Latin: "to the man"), also known as argumentum ad hominem, is
an attempt to link the validity of a premise to a characteristic or belief of
the person advocating the premise.

The suggestion was that something from cato was bad because its supporters
were bad, which is ad hominem. The accuracy of the list doesn't change that.

------
A1kmm
The article, when read carefully, seems quite disingenuous, because given the
way the points are carefully phrased to sound sensible while actually being
wrong, it is hard to believe that the author actually believes the argument
themselves.

Going through it point by point:

* Their first argument against is that it is hard to define network discrimination. But it really isn't, and I can define it in one sentence: routing network packets differently depending on anything other than header information specifically designed for routers to process (IP headers in the case of Internet Protocol), or routing outgoing traffic based on destination addresses with the intention of deliberately slowing traffic to some destinations but not others.

* 2 - to paraphrase "Internet access is not a right, so we shouldn't protect it". The reality is that so much human communication, including participation in democratic processes and a huge part of the economy happens online, and so it is reasonable to consider it a human right. The fact that it is relatively new doesn't change that.

* 3 - To paraphrase "Network discrimination can be good, because it lets operators:

Stop immoral practices like spamming or 'hacking'" (presumably they mean
cracking). That some people might do bad things not a good reason to censor
the Internet. Favouring downloads over uploads for technical reasons - that is
not really within the scope of network neutrality.

Conserve bandwidth - they give examples about usage caps, which are content
neutral so outside of the scope of network neutrality. Specifically trying to
slow certain applications, relative to another, is not necessary to limit
bandwidth usage in a neutral way.

Promote brands - this is exactly why network neutrality is needed - network
operators shouldn't be able to exploit their market position as gatekeeper to
the Internet to favour one company over another.

Preventing 'theft' of service - except that if I pay for bandwidth, it is not
theft to use it however I like, including allowing others to use it. Another
good argument for network neutrality, not against.

Implementing a variety of network access charges to help to recover costs -
ISPs can make money charging users for bandwidth in a non-discriminatory
fashion, so there is no need for them to exploit their market position to
charge people who aren't even connected to the network as well - and stopping
them from doing that is a legitimate aim of network neutrality.

* 4 - to paraphrase "consumers might want more than a dumb pipe from their ISP, and if they go too far, the market will take care of it"; ISPs can offer services which are optional to consumers - that isn't a network neutrality issue, it only is when they become compulsory (e.g. you must use our nameservers) that it is. No consumer wants to be forced - at best they will tolerate it or it will make no difference.

* 5 - to paraphrase, "the market will sort it out". The market can't sort it out, because there are high barriers to entry, it is a finite market, and so the market is not infinitely efficient (and in some areas approaches a monopoly), and in practice there is little room for consumer choice influencing Internet markets except with regards to price, advertising, and to some extent reliability. While consumers benefit from network neutrality, very few are in a position to take this into account when choosing services.

* 6 - To paraphrase "ISPs should be free to put whatever they want in their contracts". The reality is that 'freedom of contract' is not fair when there is a huge difference in bargaining power, the markets can't sort it out for the reasons discussed above, and government intervention is appropriate.

* 7 - To paraphrase, "Network operators own their equipment and should be able to do what they like with it". That is like saying gun owners should be able to do what they like with their gun, even shoot people. It is reasonable to put in place laws against certain types of unreasonable exploitation of a market position, and property rights don't extend to using the property to break those reasonable laws. The argument here seems particularly disingenuous.

* 8 - To paraphrase, "network neutrality will discourage innovation and investment". The reality is that network operators can still profit from charging users for access - and that is enough to encourage investment. The main limit on ISPs profits is likely to be competition, and all ISPs are subject to the same laws - so no service that was profitable without network neutrality is likely to become unprofitable because of network neutrality.

* 9 - to paraphrase "introducing laws around the Internet will encourage players with a special interest to try to game the system". There is an obvious and simple solution to this one - transparency and openness in decision making. Gaming works both ways - gaming to not introduce network neutrality because it is in corporate interests anyway.

* 10 - to paraphrase - "putting in place Network Neutrality laws will start down a slippery slope towards government control of the network". Nothing specific to any network neutrality law makes it easier to change laws around the Internet later, so the argument is wrong. Unjustified corporate and government interference in network neutrality are equally big issues, and network neutrality fixes one of the problems and makes no difference to the other one.

All in all, none of their arguments stack up.

~~~
grandalf
Do you think Comcast should be prohibited from offering asymmetric broadband
connections?

Suppose Comcast offered the following packages:

\- 6 megabits down, 2 megabits up for $50/month

\- 10 megabits down, 4 megabits up for $80/month

\- 10 megabigs down, 4 megabits up, 20 megabits to youtube.com for $35/month

You're telling me that package 3 reduces consumer welfare and threatens the
internet?

Suppose another package were added:

\- 2 megabits down, 2 megabits up, all requests matching bing.com?q= redirect
to google.com?q= ... price FREE.

How is consumer welfare being harmed? Any consumer who would choose this
package values free internet more than the "right" to use Bing.

Or, suppose there is a mainstream movie about bittorent and suddenly Comcast
decides to offer the following:

20 megabits down, 20 megabits up, no torrent traffic: $30/month. (with
bittorrent it costs $80/month)

I'd argue that protocols have evolved to exploit network neutrality. Why
should your ISP pay for Skype's supernode? Why should bandwidth hogging
protocol users hog all the bandwidth?

Residential bandwidth sales are speculative, since the ISP doesn't have 20
megabits for every customer who is paying for it. The system works b/c people
don't max out their connection and rarely use peak bandwidth at exactly the
same time.

I think under this usage pattern, it's reasonable for prohibitions to exist. I
also think that there should be higher tier bandwidth (like if you buy your
own OC3) where you are buying all the bandwidth whether you use it or not. For
such services non-neutrality makes no sense whatsoever.

~~~
wtallis
The problem isn't so much that Comcast _et al._ want to offer packages 3, 4,
and 5, it's that they want to discontinue packages 1 and 2 and replace them
with crippled packages at the same price, with premium charges for YouTube,
etc.

"Why should bandwidth hogging protocol users hog all the bandwidth?" Why don't
ISPs simply charge by the megabyte, so that by the time they have too many
bandwidth hogs on their network, they're bringing in enough money to afford
network upgrades? "Bandwidth" isn't some fixed resource. If there's demand for
more, the suppliers can provide more by either laying extra cables or
upgrading the equipment at the ends of their fibers, and this kind of reaction
can happen on the timescale of months, which makes it pretty fluid given that
consumers also pay by the month.

~~~
grandalf
True, but it's more a case of a small number of users resulting in tremendous
loss of profits.

Suppose you open a restaurant and offer free bread and some customers come in
and buy the cheapest item on the menu and eat $10 worth of bread. It's just
not sustainable.

~~~
brazzy
Which is why no restaurant claims to offer _unlimited_ free bread.

There is no "but". If it were actually true that a small number of users
consume so much bandwidth that it causes "tremendous loss of profits", then
ISPs should drop the "unlimited bandwidth" claim.

But they want to keep that because it's just so nice for marketing.

What they really want is to claim "unlimited bandwidth" without actually
offering it.

------
gojomo
Plain HTML version:

<http://www.cato.org/pubs/pas/pa-507es.html>

------
detcader
Just a little information on the source from
<http://www.sourcewatch.org/index.php?title=Cato_Institute>

\- The Institute states that it favors policies "that are consistent with the
traditional American principles of limited government, individual liberty, and
peace."

In 2006 Cato raised approximately $612,000 from the following 26 corporate
supporters:

Altria (the report identifies Altria Corporate Services as the contributor)

American Petroleum Institute

Amerisure Companies

Amgen

Chicago Mercantile Exchange

Comcast Corporation

Consumer Electronic Association

Ebay Inc

ExxonMobil

FedEx Corporation

Freedom Communications

General Motors

Honda North America

Korea International Trade Association

Microsoft

National Association of Software and Service Companies

Pepco Holdings Inc.

R.J. Reynolds Tobacco Company

TimeWarner

Toyota Motor Corporation

UST Inc

Verisign

Verizon Communications

Visa USA Inc

Volkswagen of America

Wal-Mart Stores

~~~
anamax
> In 2006 Cato raised approximately $612,000 from the following 26 corporate
> supporters:

From <http://en.wikipedia.org/wiki/Cato_Institute> "According to its annual
report, the Cato Institute had fiscal year 2008 income of $24 million."

In short, the "list of funders" is both ad hominem AND misleading.

~~~
specialist
Huh?

I'm pretty sure ad hominem doesn't mean what you think it means.

And I'm quite certain that his listing of funders could be easily verified. So
unless you have information to the contrary, I'd characterize that list as
"fact based" vs "misleading".

~~~
anamax
<http://en.wikipedia.org/wiki/Ad_hominem>

An ad hominem (Latin: "to the man"), also known as argumentum ad hominem, is
an attempt to link the validity of a premise to a characteristic or belief of
the person advocating the premise.

The accuracy of the list doesn't stop it from being ad hominem.

The misleading part is suggesting that $612k of donations is decisive in a
budget of over $24M.

~~~
Bud
Uh, isn't quoting the wiki page on "ad hominem" ONCE in a thread enough? Why
do it twice? And do you just run around posting "ad hominem" 100 times a day
and downvoting opinions you disagree with?

You need to get it straight. If you say something nasty about Cato and I
attack YOU personally, that's ad hominem. If you say something about Cato and
I attack Cato or some of its supporters and explain why, that's not ad
hominem, and no matter how many times you post a wikipedia page, that doesn't
change.

~~~
anamax
> If you say something about Cato and I attack Cato or some of its supporters
> and explain why, that's not ad hominem

It depends on the explanation, specifically whether the attack goes to the
substance of their position or, as in this case, "they're bad companies",
which makes it ad hominem.

> And do you just run around posting "ad hominem" 100 times a day and
> downvoting opinions you disagree with?

It's easy enough to see that I haven't. I also haven't killed any puppies this
week.

Any other questions?

------
berntb
I'm coming in so late, that few will see this. Which is good for an irrelevant
question, I guess.

I wonder a bit about Cato Institute.

As people have noted, this 2004 report is too old to build an opinion from.
The arguments were less sophisticated then. It is hard to have an opinion.

From the Wikipedia page, Cato is one of the more influential think tanks in
the US. The US political life is a strange animal to me, so some basic
information would be nice re Cato?

(-: Mainly since I was flamed and called troll by a couple of left wingers for
referencing a Cato report :-).

So... How much "work for hire" does Cato do? Or the average US think tank? Can
you trust anything from a US think tank?

Appendix: The report I was flamed for:
<http://www.cato.org/pub_display.php?pub_id=9626>

(Afaik there are not even attempts to answer this slaughter of 'The Shock
Doctrine", which seemed to be why the "arguments" got personal. But,
certainly, credible references as to why you can ignore arguments form top
think tanks would be interesting?)

~~~
anamax
> How much "work for hire" does Cato do? Or the average US think tank? Can you
> trust anything from a US think tank?

What makes you think that think tanks are different in this respect? Heck -
what makes you think that think tanks are only on one side of this issue?

> But, certainly, credible references as to why you can ignore arguments form
> top think tanks would be interesting?

Yes, if you've got any.

Hint - "they got paid" isn't one. Very few people work for free, and their
record is pretty bad.

A "think tank" is just one mechanism for funding folks making arguments. There
are many others.

~~~
berntb
I'm not arguing a point, I'm just checking if some idealists _might_ have been
correct in disqualifying an argument, just because it came from someone
affiliated with Cato.

From the lack of good answers, I infer they just couldn't answer the argument
-- and lacked the integrity to admit that. Not exactly surprising, for people
with fixed political world views.

(Being called "troll" by a favorite author hurt. :-)

------
pedanticfreak
You know, this is totally ad hominem but Cato is a free market think tank.
They couldn't come up with an article in support of net neutrality if they
wanted. It is completely against the free markets holy scripture they have
vowed to protect. Likewise, the Economist is similarly tainted with the
defense of the free markets in its charter.

Which isn't to say free markets are wrong or bad. I'm just saying they lose
some credibility when they tell you the answer before you've told them the
problem. I kind of feel like I'm just being trolled whenever someone posts
something by Cato or Heritage.

That said, freedom to contract treads a fine line across all aspects of our
lives. And that line is continually being adjusted by the government to fit
the needs of the times which hopefully they understand or at least address
properly by dumb luck.

Because of the importance of the internet and the inherent monopoly of network
providers, net neutrality may be wise to implement so problems do not arise as
Cato so optimistically asserts they do not exist now and will not exist in the
future.

