Friday, March 06, 2015


The Impact and Purpose of Net Neutrality

In theory, Democrats regulate because they believe that society progresses when the leadership elites make decisions for everyone -- and correspondingly, Republicans oppose regulation because they generally believe that societies progress best when individuals are free to make their own choices.

In practice, Democrats regulate because it feels right and doing so attracts both financial and social support from the very rich, the socially established, and media they own; while Republicans oppose it because most are poor or middle class and recognize that regulation always reduces upward social and economic mobility.

About ten years ago it looked as if there might be a significant opportunity to use existing Hughes satellite technologies to provide high-speed, high-security networking support for western Canadian agribusiness. The numbers looked good: manageable entry costs, little technology risk, strong demand, and no significant competition. What I soon came to believe, however, is that while anyone could spend a couple of hundred bucks filing for the required licenses, for an industry outsider whose grandparents didn't go to upper Canada College to achieve a 50:50 chance of getting and holding those licenses would probably cost in the range of three million in cash, two years of delay, and a couple of hundred thousand a year in compliance management.

That's the net effect of the new regulatory framework now being hidden from view under the Orwellian "network neutrality" label -- because an extra bit of paperwork is utterly meaningless to a national telecom provider with its compliance infrastructure already in place, but almost totally prevents industry disruption through outsider innovation.

Education didn't come under significant federal regulation in the United States until President Carter created the Federal Department of Education in 1979. Between 1979 and 2011 the percentage of high school graduates who grade as functionally illiterate rose from about 4% to about 18%; most nonprofessional certifications offered by colleges and universities lost nearly all value; and, the Department of Education grew to control an estimated $141 billion in expenditures for 2014/15.

The microprocessor industries, ten years old and at the MC6502 (8 bit, 1Mhz) level in 1979, didn't see significant federal oversight until the 2007/8 Pelosi budget took effect and the incoming Obama administration set about expanding the role of agencies like the FCC in the United States while transforming many industry standards and procedures from market-determined and voluntary to government-determined and mandatory through the internationalization of services previously performed by volunteers working within the American business and academic communities. During that period, however, the 1979 48K Apple II became the 8GB smart phone; high-speed internet and cellular services became worldwide phenomena; microprocessors improved by five orders of magnitude on cost and seven on performance; and the first commercial aircraft to be designed, built, and supported almost entirely through American-made hardware and software (the Boeing 757/67) flew a combined distance roughly equivalent to thirty round trips to the Kuiper belt.

So, as we all welcome Obama's new Department of the Internet along with Google's commitment to index only websites whose contents meet their standards for factuality, let's all remember that what the microprocessor industries had in common with the Connecticut Yankee, apart from outrageous success on every widely accepted measure of social and economic contribution to mankind, was the nearly complete absence of regulation. 

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