Cola, Cakes, and Net Neutrality

At the tail end of the 19th Century, two quintessentially American brands were born in the height of the industrial age. Two brands that would develop a financial rivalry that fueled legendary popular culture slugfests, sparking arguments and ruining dinner times for Americans for decades. I am, of course, talking about the two titans of the beverage industry: Coca-Cola and PepsiCo. Together, their total holdings (at over $161B) would put them just outside the top 50 countries in the world, by GDP. Yes, they are that big.

Their storied rivalry aside, the two companies have long established a common practice between them when marketing supplier contracts with restaurants, whether it is a huge nationwide chain or a single mom and pop shop, and that is exclusive contracts. You can buy from Coke, or you can buy Pepsi, but the one thing you’re not going to do is buy from both. This is why when you go to a restaurant, and you order a drink, the server may politely reply, “Sorry, but we have Coke (or Pepsi) products.

Suffice to say, exclusive contracting is a big deal, especially to Coke and Pepsi, and Americans, though they definitely complain about it, have tolerated it for decades now, because it’s just how these two giants have operated for so long. There’s no serious push to force Coke and Pepsi to end their exclusive contracting policies, and I honestly can’t see any such push being taken seriously if there were one, which brings us all the way back to net neutrality.

“Pepsi and Coke have to co-exist on the shelf for the long term because if they pull each other down, no one’s going to drink carbonated soft drinks anymore.”
-John Quelch

Ultimately, the net neutrality issue centers around concerned citizens who believe the federal government should step into the internet industry in order to prevent internet service providers from doing what Coke and Pepsi have been doing to each other for literally generations. Comcast (at over $180B, more than both Coke and Pepsi combined) is one of the largest media companies in the world, and, in 2007, Comcast throttled down access to BitTorrent, an extremely popular file sharing protocol. Though infamous for its use by piraters of media of all kinds, it has a significant legitimate footprint as well.

Regardless, this move by Comcast to slow or deny service to BitTorrent users caused the immediate uproar among the easily provoked internet user community, and internet users, being just like every other group of people, except worse, did what people usually do when some private group or entity does something they do not like. They banded together and boldly said, “Government should do something about this!” Government, always eager to look like they are doing something, did something, and thus net neutrality was born.

As briefly as possible, net neutrality is simply the governing of internet service providers by the same standard used for the telecommunication service providers since 1934, which, faithful readers, you’ll quickly realize was almost exactly the opposite of the free market period in America. The Communications Act of 1934 brought communications by wire or by air under the single authority of the Federal Communications Commission (FCC), the same FCC that controlled local radio stations now controlled phone and, in the Telecommunication Act of 1996, that authority increased to the internet.

From a small government, limited power position, is it reasonable to grant power over such a crucial public resource, if it means protecting the rights of people to get access to information freely? The answer is unequivocally (and should be unsurprisingly) “no“.

“Government’s first duty is to protect the people, not run their lives.”
-Ronald Reagan

From a Jeffersonian liberal position, when responding to the assertion that government needs authority beyond what is necessary and proper to act as an objective arbiter in cases of legal disputes, the answer is simple and predictable. Where no individual’s life, liberty, or property is harmed, no authority of government exists, and only in such cases where an individual’s life, liberty, or property has been harmed does the government have even a limited political authority, just enough to order restitution. That’s the ideological argument, but let’s talk realities.

One of the arguments that many net neutrality advocates put forward is that, without government regulation, companies would price their services separately, with one price for e-mail, another price for web, another price for gaming, and another price for streaming. My response to them is two part. (1) “So what? It’s technically their property, isn’t it?” Yes, it’s their property, and so long as no one is being injured, slandered, or their property damaged, the internet service provider has no more duty to their customers than they wish to provide.

To defend this position, I present the famous case of Jack Phillips, whose case is before the Supreme Court right now. The Colorado owner of “Masterpiece Cakeshop” was famously sued by a gay couple who wanted to force the owner to bake a cake for their wedding, after the owner declined citing his Christian faith. In this instance, the conservative position still holds, the baker has no duty to violate his freedom of religion, and the gay couple have no right to his labor or his product.

I even go one further, the exact nature of his refusal to do business with the gay couple is utterly immaterial, it’s his property, he can contract it however he wishes, which leads me to my second point, (2) “I trust the market.” The marketplace, filled as it is with different providers who approach data and services differently, has two major constituents. The first is obviously the providers of internet access. The second is obviously the consumers of that access. Between them is the contract of how the consumers will be allowed to consume that access and how the providers will be expected to provide it.

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
-Ronald Reagan

If people really want “net neutrality” and internet service providers can provide “net neutrality” profitably, then the providers will provide it to those who demand it. Those who do not demand it won’t get it, but, notice, they weren’t demanding it. The reality of the market is, if consumers demand something, the incentive for providers to find a way to sell something that fits that demand is extremely high, and eventually, someone will figure out a way to do it cost effectively, even if the only reason they do it is to screw over their competitors.

Trust the market.

 


Liberty is For The Win!

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