Net Neutrality and Rent-Seeking

by Ryan Young on October 5, 2009 · 1 comment

in Deregulate to Stimulate, Economy, Regulation, Tech & Telecom

Here is a letter I sent recently to The Wall Street Journal:

September 22, 2009
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Your article “Bad News for Broadband” (editorial, Sept. 22) hints at, but does not make, a key point: net neutrality proposals are driving a wedge between service providers like AT&T and content providers like Google.
Strange, is it not? Their interests are actually closely aligned. If AT&T upgrades its network, Google benefits from the increased bandwidth. If Google improves its products, AT&T benefits from increased demand for broadband.
Net neutrality proposals give companies the incentive to seek rents at each other’s expense when they could be benefitting from each other’s innovations instead. This must be music to the ears of lobbyists, but how sad for consumers.
Ryan Young
Fellow in Regulatory Studies
Competitive Enterprise Institute
Washington, D.C.

Tagged as: at&t, Economics, google, net neutrality, rent seeking, special interests, wall street journal

{ 1 comment }

Avitar October 6, 2009 at 12:30 pm: The biggest cost center to broadband service is right of way to your house or business. The second biggeset is cable plant installition. Beyond that the operation and maintenace is only about 2% per year.
The cost center for most ISP is cutting off customers and reconnecting them. Tje congresman who had the bill to allow every company with right of way to your house or business, power, water, gas,sewage, even the telephone and cable companies, the right to run fiber optic cables and offer network services. Once the fiber optic cables are in place the broadband can be upgraded at costs of about 2% per year of the original cable plant's cost.
The problemm is the local politicians who want to drain the maximum number of dollars from the customers. They want to keep the broad band rare and costly.