Neutral net?

The Telecom Regulatory Authority of India (TRAI) recently came out in support of the concept of net neutrality or open internet. It said that it opposed any “discriminatory treatment” of data, including blocking, slowing or offering preferential speeds or treatment to any content.

Should the net be neutral in that the internet service providers are not allowed to discriminate between their customers and offer differentiated products? The answer of this question lies in the understanding of the workings of the market system.

The free market is a process where voluntarily agreed exchanges of property titles take place between buyers and sellers. Voluntarily agreed exchanges means voluntarily agreed contracts to transfer property titles to each other. Voluntarily agreed contract means no party can coerce (i.e., force via physical aggression or threat of such physical aggression) the other party to accept and agree to the contract. This implies anyone is free to voluntarily contract with anyone on the mutually agreed terms and condition. A voluntary contract also means that both parties have the right to withdraw from the contract if they find the other party not fulfilling its obligations or outright violating its terms and conditions. This means that both parties have the freedom to associate or, more importantly, disassociate with each other. The logical implication of this for the internet market is that both parties can freely agree to contract on any mutually agreeable terms and conditions including a provision for blocking or throttling data or any other kind of preferential treatment to any content.
Also, in the market process property titles are transferring which means both buyers and sellers are owners of the property that they are transferring with each other. And ownership implies differential and discriminatory treatment by buyers and sellers in whatever way is suitable to them e.g., I can allow a beggar in my home but refuse a king. If any of the party doesn’t like the discriminatory or different treatment being on offer then he is free not to associate with the other party. He can definitely not coerce, by using the state machinery like TRAI, the other party to associate with him because that itself would be a violation of other party’s property (human) right.

The whole idea of an open or neutral internet thus is antithetical to the workings of the market system. Internet is a scarce commodity just like any other commodity selling in the market. The efficient allocation of this scarce commodity demands discriminatory preferential treatment. The price system, varied price for varied buyers with varied needs, must be allowed to work otherwise internet will be misused and wasted. If people will not have to pay for extra heavy usage of internet, because ISPs cannot discriminate based on usage, then they will overuse it, which means those who really need the bandwidth will be deprived of it.

Net neutrality means internet socialism, and we know socialism ends badly. It is better that the government and its bureaucratic regulators be kept away from internet. Once they will get the control of internet they will try to thwart its openness in the guise of defending it! They will try to find the kill switch so they can stop people from freely communicating with each other and exchange new ideas that can challenge the governmental authority. The Indian government already does this in conflict areas like Kashmir or Gujarat during Patidar agitations, and net neutrality will only give the already authoritarian Indian government more power.

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3 thoughts on “Neutral net?

  1. Gene C says:

    Data neutrality and data volume are not related concepts.
    An ISP can charge 1X for 10GB and 3X for 50GB of data transferred. This is pricing based on volume of usage and that is simple, use more thus pay more.
    The content of the data being transferred is what net neutrality is about. The data may contain 1GB of porn or 1GB of BBC, or whatever. The ISP should transfer all data in equal fashion without discrimination.

    • Mises India says:

      As I said in the original article, in a voluntary contract the ISP Can have any ‘terms and conditions’ including not transmitting data with porn content or BBC content. If consumers don’t like that condition then they can buy some other company’s connection which doesn’t have such condition. Discrimination is essential feature of market process. No one has any right to force the ISP not to discriminate on whatever basis they want to. What people should demand is not state enforced ‘net neutrality’ (state intervention) but opening up of the internet market for more competition and companies; That will give us more choice. Allowing government to control internet will result into more tyranny.

      • Gene C says:

        The ISP can discriminate on whatever basis they want – agreed. As long as they own the data line from end to end.

        Clearly they do not own the line in entirety. The end user owns the segment going into his home, telecoms own their segment, a website is served and owned by yet others. There are multiple owners spanning multiple continents. Typically ISPs do not own any part of the line, they usually lease capacity from a national telecom. They are just one link in a long chain.

        The ISPs are usually happy to be neutral in that they cannot be blamed for anything that traverses the data line. If child porn is being transferred over their service, they have zero responsibility to stop it. If crucial medical data is being transmitted, they do not have to speed or facilitate it.

        Like you, I favor minimum government. Neutrality is the simplest option that involves least government. All other options require more regulation and more work. I’ve seen this first hand with ISPs in Qatar and Kuwait that need to hire staff to screen adult and un-Islamic content so that it can be fire-walled. This is direct result of govt regulation. If they were given the freedom to be net neutral, they would immediately opt for it.

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