Should We Treat the Internet Like a Utility?

The FCC is looking to get its hands on the internet again, this time with a set of sweeping set of regulations known as Title II. Essentially, this would allow the internet to be regulated like any other public utility. Defenders of the plan argue that regulation is necessary to preserve competition and protect small startup companies.

There are plenty of solid economic arguments for why all this is nonsense, but we don’t need to delve into the arcana of academic studies or economic theories to see that it doesn’t pass the smell test. We need only look at the world around us, and observe the effect that regulating utilities has on consumer choice.

Simply take a look at the companies you buy from every day. How much choice do you have, for example, over your water carrier? If you decide you are paying too much for water, or you don’t like the taste, how easy is it to find another provider? Not very. The same goes for electricity. Has government regulation of this public utility resulted in lots of firms competing for your business, or are you pretty much stuck with whatever you’re given?

Contrast this with other services where regulation either doesn’t exist or has been loosened considerably. In 1996, the government amended the Communications Act of 1934 to decrease regulation on telephone service and allow more firms to enter the market. Anyone who lived through the 90s doubtless remembers the fierce competition between AT&T, MCI, and Sprint trying desperately to convert customers. The comparatively lighter regulations of the post-1996 reforms forced companies to cut prices and improve service in order to retain the business that government had previously guaranteed them.

Then there are the countless other services we use every day that are not regulated as utilities. For virtually any consumer product, we are treated to a wide variety of styles, of hugely varying levels of quality and price. Consumer choice is paramount, and we all benefit from it. Public utilities, on the other hand, are essentially an excuse for government to create monopolies and oligopolies, where the lack of competitive pressure pushes prices up and quality down.

Furthermore, providing internet service doesn’t involve any of the physical limitations inherent in other utilities. Internet service has no requirement for laying networks of wires or pipes in order to function effectively. This observation eliminates a large portion of the rationale given for regulating other utilities, and undermines the pretense of consumer welfare.

We should trust the evidence of our senses. The internet is working well as is. It is a hub for uniquely creative and innovative activity, whose equal has never been seen. The other utilities, under heavy government regulation, are stagnant, with a marked lack of competition and of consumer choice. Let’s keep the internet free from government meddling, and preserve the unregulated information superhighway we’ve all come to know and love.