Ev Ehrlich's Everyday Economics

Letter To The Editor

The New York Times editorialized last week in favor of “net neutrality,” the doctrine that everything on the Internet must travel at the same speed and under the same terms, regardless of circumstance.

As anyone who has leafed through this site can ascertain, I think the Times is wrong in a big way.  The Internet is a Promethean gift, to be sure, but I don’t understand why the techniques we’ve learned for getting the most out of other “networked” resources – like electric utilities or highways -- shouldn’t apply to the Internet.  My posting entitled Big Website and the Neutrality Trap expands on that point. 

But the Times makes some additional and even more remarkable arguments in their editorial that merit discussion.  The first is this:

“Businesses could slow down or block their competitors’ Web content.”

Wait a second!  Nobody has ever argued that a company has the right or should have the ability to interfere with a competitor.  Schwab, for example, paying a broadband provider to slow down the website of e-Trade is more than an anti-trust violation – it’s a predicate for a RICO case!  Nobody thinks that kind of thing should be allowed, and the fact that the Times has even mentioned it makes you wonder what other kinds of disinformation they’ve been fed.

The editorial then goes to a second point:

“A cable company whose leaders disapprove of a particular political or social cause could block sites supporting that cause.”   

First, I think the right preposition for a company is “which,” as in “A cable company the leaders of which disapprove…”  Otherwise, we turn the company into a person, which the law does, but grammar shouldn’t. 

But the proposition is worse than the preposition.  In fact, it’s so outlandish that it merits a digression.

When I was a kid in Queens, half a century ago, WPIX was the radio station of choice of Italian barbers, like those at Joe and Angelo’s on 35^th Avenue in Jackson Heights (the establishment my pompadour, cowlick, and I then frequented), because it played opera.  And WPIX used to offer for sale a radio set that played only one station, (unsurprisingly, WPIX).  Really, it had no tuner -- you turned it on and it just played WPIX, that was it, like Marconi meets Rainman, or the radios that Winston Smith and North Koreans listen to.   They advertised it on television as “it’s like having your own radio station.”

Unsurprisingly, no one bought it.  But the Times apparently believes that people would buy it today.  The idea that Fox News (or, for that matter, MSNC, or anybody) would decide what you could see or not see on your Internet connection is Orwellian.  But the idea that you would let them, or that the companies that want to sell you broadband connections want to do that or could get away with doing that is equally Orwellian, to say the least.  Who would buy Internet access from a provider that blocked content without your permission?

But the Times hasn’t considered that.  In fact, it goes on:

Concerns about open networks are not limited to access to Web sites, and they are not hypothetical. In 2007, Verizon Wireless rejected NARAL Pro-Choice America’s request to send text messages over its network, a decision Verizon reversed after an outpouring of criticism. Recently, Apple was criticized for rejecting an iPhone application, Google Voice, an Internet-based service that would permit users to make low-cost calls without using AT&T, which has an exclusive arrangement for the iPhone in this country.

What do these “concerns about open networks” have in common?  Take another look – they mention Verizon Wireless making a (foolish) decision about texting and Apple limiting the applications that can be used on an iPhone.  The obvious answer is – neither of them have anything to do with the Internet!  Through some incredible sleight of hand, the Times has raised the specter of editorial abridgement of the Internet by mentioning two incidents involving mobile telephony, a medium in which consumers are favorably disposed to service providers maintaining control over the service environment.  (Or did you want spam phone calls and text messages?)

 Let’s start with Verizon Wireless rejecting NARAL’s request to send text-messages.  (And let me first state that I support NARAL without equivocation – the idea that a woman could be compelled to give birth against her will strikes me as absurdly dictatorial.)

This is what happened.  Verizon Wireless decided it would not allow NARAL to distribute text messages to subscribers who were willing to receive them, saying they were potentially "highly controversial" and (here’s a great vocabulary choice) "unsavory."  (Verizon had a standing policy governing these text "short codes" that was aimed at prurient material and some lawyer misapplied them.)  Regardless, they read about the decision the next day in the paper and, faced with the reality that all other wireless carriers were carrying the messages not to mention the tumult their foolishness caused, they reversed themselves that next day.  But it was foolish, not venal, and hardly a pattern of censorship.

Apple’s denial of Google Voice is another story.  Apple maintains control of the applications that run on its phone for a variety of reasons, most of them technical – it has the responsibility and business objective of setting quality standards for its product.   The Google Voice application that Apple rejected was a so-called “beta version,” that is, an experimental version that is not yet fully developed.  In fact, the Google voice service is “by invitation only” and there are a backlog of requests for it.    So if you were Apple, would you put an app on your phone that your customers would be denied when they tried to use it?  And, while we’re on this, Google is also making a version for Blackberry and Android phones, so if Apple doesn’t use it, its competitors will, and we can let markets sort it out.

And that raises a second characteristic that the NARAL and iPhone instances share.  Both demonstrate that competition does a better job of promoting openness, innovation, and consumer choice than the regulation that the Times endorses.  Verizon Wireless screwed up in the NARAL case, but reversed its decision within a day because its competitors exercised better judgment.  The Times might second-guess Apple’s decision not to load Google Voice onto the iPhone, but competition will let you get it if you are willing to live without an iPhone.  In fact, competition led to the iPhone itself, led thousands of applications to be created for it, and led the iPhone’s competitors to innovate rapidly – compare the Blackberry handsets on the market today to those you had in your pocket a year or two ago. 

When a cause relies on arguments this stilted, you need to look for the axe that’s being ground.  “Neutrality” – to my thinking – is really about the Big Sites trying to maintain their advantages.  That’s why Google supports a policy, the advocates of which maintain would make it easier for Google to be challenged by new competitors.  That strikes me as odd.  The Times editorial does, too.