FCC Upset with Verizon and Google Private Agreement on Internet

The FCC has been holding closed-door talks with lobbyists to reach agreement on ways to regulate Internet traffic without making major changes to existing laws.  However, Verizon Communications Inc. and Google Inc. reached an agreement of their own on Internet traffic rules that would allow Verizon to move some broadband traffic at higher speeds at premium prices.  This has angered the FCC, which is seeking the power to dictate how Internet providers manage traffic on the networks they have built at great expense themselves.

The FCC was under attack about the closed-door meetings as another of many violations of the Obama pledge for transparency in government.  The FCC called off these talks upon the announcement of the Verizon-Google agreement.  The FCC very much wants the power to enforce what it calls Net Neutrality, which supposedly means that all broadband traffic must be carried at the same speed at the same price.  This does not allow the investors in the broadband networks as much flexibility in pricing their services and as much opportunity to make a good return on their investments as they might have under other negotiated terms with customers.  Net Neutrality would result in slower networks, lower volume handling capabilities, and if operated through a political gateway such as the FCC, almost certain restrictions on content, probably based upon a lowest common denominator viewpoint of morality and based upon the political viewpoints of the party in power.

Some inter-company private agreements may seem inconvenient to some of us at one time or another, but that inconvenience has historically proven minor compared to the inconvenience of government regulation.  A good case in point is the regulation of the railroads because many people did not think it was "fair" for the railroads to charge less to large-volume shippers and to long-distance shippers.  Regulation by the Interstate Commerce Commission of the railroads did much to bring on the long-term decline of the railroads.  The result was a decrease in the growth of track mileage, a slowdown as regulations increased in the rate at which freight rates had been dropping under competition, a decrease in innovation, and the growth of a few very large rail systems because the ICC did not allow existing smaller railroads to pool their resources to handle a shipper's needs with agreed upon rates over longer distances on the tracks of multiple railroads.  The long-term growth and the competitive nature of the railroads was stunted by the ICC.  This is the usual pattern for industries regulated by government.  For the moment, the Verizon-Google agreement may be a bump in the road for the FCC attempt to similarly manage the Internet.

It is also a victory for property rights, albeit momentarily.  The government does not have the right to impose duties upon property owners which require them to offer services using that property which they do not voluntarily wish to perform, as things are customarily done in the free market.  The government does not have the right to push investors and their operations managers into involuntary servitude either.  Freedom in the market place is essential so that we will have as many personal choices as possible.