By Ashton Barwick | USA
It’s official; on Thursday, December 13th, the FCC finally repealed net neutrality.
The internet has been set ablaze by hysteria over net neutrality. One question that everyone has asked is: What will become of the internet once it’s gone? The internet has always been a beacon of liberty because of its ability to advance faster than the government can legislate. However, in February of 2015, the Federal Communications Commision passed net neutrality in response to Comcast throttling access to illegal websites. Comcast, one of the largest internet service providers, is protected by a myriad of regulations designed to protect them from competition. The market is in a constant state of competition between suppliers. Businesses have to face two types of competition: potential and actual. Potential competition is just as threatening as actual competition because it forces the producer to keep prices low and quality high. Competition filters out the inept and the malicious.
How did the market for internet service become so volatile?
Internet service providers usually do a perfunctory job of ensuring quality internet access, but who’s to blame? Capitalism is often the scapegoat for most because it is easier than combing through pages of regulation. A government can completely destroy a market, and people will still blame capitalism and beg for even more regulation. This phenomenon is exactly why internet service leaves much to be desired. Local governments require ISPs to pay exorbitant costs and navigate through oceans of red tape. They also have to enter contracts with public utilities so they can rent space for wire connections to publicly owned electricity poles. This results in one ISP being granted monopoly privilege over a certain jurisdiction. Consequently, the supply curve shifts left, but government prevents potential suppliers from taking advantage of the augmented supply curve.
Despite all of the corporatism, there’s a light at the end of the tunnel.
Trump has recently reignited the debate over whether online transactions should be taxed beyond their current levels. Currently, only sales taxes can be collected on transactions on the state level. However, in 2014, Congress passed the Permanent Internet Tax Freedom Act (H. R. 3086; 113th Congress) which bans state and local taxation of internet access. This was a big win for free speech because the government now cannot legally impede your access to the internet. The internet has been in the sights of the government since its inception. In a Firing Line debate, with William F. Buckley, they debated whether sales on the internet should subject to taxation by the Federal government. Christopher Hitchens spoke in favor of the legislation citing that it would equalize the playing field. The only problem is: you could use that line of reasoning to justify just about any tax increases. William F. Buckley and his team brought up many great points, but one did stand out. Many businesses that pay taxes also sell things over the internet so the many businesses would be demolished because they would be taxed twice. Businesses rely on the internet to make a profit because it is one of the few tax havens left. Amazingly, the internet has survived relatively unscathed, and it will continue to be the backbone of American commerce for the foreseeable future.
Szoka, Berin. “Don’t Blame Big Cable. It’s Local Governments That Choke Broadband Competition” Wired. July 2013.
Hillebrand, Mary. “Buckley Bows Out With Internet Tax Debate” Ecommerce Times. December 1999.
Selyukh, Alina. “FCC Repeals ‘Net Neutrality’ Rules For Internet Providers” NPR. December 2017.
Jagoda, Naomi. “Trump reopens fight on internet sales tax” The Hill. July 2017.