Imagine you own an important highway, used by countless drivers. Since yours is a private one, consumers forcefully have to pay you a toll everytime they want to drive down there. Which would be the optimum price that should be charged?
Basically, since your lanes are scarce and shared simultaneously by several users, one can imagine you would follow some sort of “size and usage” principle, charging a higher fee to lorries or big vans in comparison with small cars or motorbikes. Assuming that heavier vehicles implies higher maintenance costs, a price strategy like this one is quite better than imposing a uniform tariff to all users. The higher your need is, the higher your toll must be.
Otherwise, imposing uniform fees, less frequent users would be unfairly financing most frequent ones. However, if these more sporadic consumers considers the toll expensive enough, then it would be expected that they find other alternatives. Namely, they would choose cheaper and worse roads.
At the end of the day, a good road would be used relatively less (and it will be poorly maintained) than it should be. Or, if there’s no such a second choice to scape, an unfair decision would be imposed and consumer satisfaction will be lower. What’s more, the road probably will tend to collapse in the long run due to heavy vehicles taking advantage of the beneficial situation for them.
Fortunately for us, the free market process naturally tend to lead to optimal solutions like this so-called “price discrimination” I’ve just explained (that’s why we use to have different toll even in semi-private roads). To put it simply, without government intervention the price system itself finds the best solution for allocating scarce resources like our lanes.
Why am I telling you this story? Because, unfortunately, the current internet market is not working like it should, like your road. Despite broadband is as scarce as the lanes of your road, the so-called net neutrality means (among many other things) that a bureaucrat forbids internet providers to offer different prices for different internet consumers.
Therefore, a consumer who compulsively requires more broadband for watching those Netflix series (for instance, Netflix now accounts for almost 37 percent of USA Internet traffic) is stealing money from those who hardly ever use internet but pay the service. As there are no clear internet substitutes like there were for your highway (wifi?), the result is also slower and deficient internet supply.
Hence It’s not strange that the repeal of net neutrality is openly criticized not only for industry giants of content delivery such as Google, Amazon or our aforementioned Netflix (of course), which are being obscenely subsidised, but also for big providers such Verizon (secretly lobbying for the maintenance).
Bureaucrats, needless to say, are angry as well.
How come? The ruling class, backed by these big corporations, will lose its political power to decide who can and cannot play in the market. Getting rid of this absurd regulation, the market will be open to real competition allowing small players to innovate in different and new ways. Consumers will finally enjoy price reductions, something that despite all the technological advances of last decades, has hardly happened in the recent past. Rather, the opposite.
Artificially high barrier entries will disappear and with them the slow technological development of a sector consciously controlled by few cronies, not to mention that the internet will be no longer “a public utility” regulated by orwellian states and its censors.
Internet socialism is dead…or soon it will be.
Internet socialism is dead by Manuel Fraga is licensed under a Creative Commons Attribution 4.0 International License.