Regulation / Rule of Law / Technology

The FCC’s Disregard for Property Rights

The Federal Communications Commission (FCC) has seemed to make its mission of late to trample over property rights in the name of “public interest.”  Nowhere is this propensity more clear than in its recent moves on net neutrality and the blocking of Wi-Fi by private entities.

In the coming days, the FCC will probably designate Internet service providers (ISPs) under Title II of the Communications Act. Title II is aimed at regulating public utilities that have a monopoly on the provision of a service. The reclassification means that ISPs would face the heavy handed regulations meant for exploitative monopolies rather than the light touch of their current Title I status. There are significant reasons why this move is bad for consumers, in whose name it is being done, and bad for online innovation in general. Leaving these facts aside for a moment, the underlying issue behind all net neutrality proposals is property rights.

ISPs own their networks and should be allowed to control those networks. No one is required to use the Internet (much less the Internet provided by a certain ISP), and, although we would all prefer low prices and high speeds, we also must recognize that it is not up to us to force other people to provide services for us.

ISPs are essentially delivery services. They provide you a service by delivering the content that you request from a place where it is stored to your device. We can evaluate net neutrality regulations by applying them, hypothetically, to another delivery service. Your local pizzeria may charge an extra delivery if you live in certain locations or decline to deliver to you at all. If net neutrality principles were applied to ground shipping, this practice would be illegal. The pizzeria would be forced to deliver your pizza to you for the same price and in the same amount of time regardless of how big it is or how far it is being carried. Clearly, this conclusion is nonsensical and immoral, but the FCC chooses to flex its regulatory muscles and expand its own power rather than protecting the property rights of private firms.

Another example of the FCC’s disregard for private property occurred last week when it advised hotels and other businesses that it would be cracking down on private firms which block their customers’ access to their personal Wi-Fi hotspots. While the Commission’s actions are probably within its legal authority to prevent willful interference to radio communications, that very legal authority is a violation of individuals’ right to their property, and it shouldn’t exist.

Hotels are owned by private agents, and they have no legal ability to force anyone to consume their service. Consumers may elect to stay at any hotel they want or at no hotel at all. However, if a consumer chooses to make a contract with the hotel and agrees to its policies, then the government should not invalidate that contract because it decides it is not in the public interest. This is exactly the course the FCC is pursuing, and it is a gross misappropriation of regulatory authority. Hotels are not setting the forests on fire or dumping waste in a river, they are making a contract with an individual who has freely chosen to enter into that contract.

There are already many businesses, like restaurants, which ban the use of mobile devices in their establishments, and the government has acknowledged their right to do so. The unelected FCC, however, has decided that as the beneficent overlord of the airwaves it must put an end to the same practice when it is done by technological means.

By allowing private producers and consumers to be sovereign over their own affairs and transactions in the information market, the FCC would not only be respecting a just rule of law, but it would permit a free market to transmit consumer preferences so that producers cannot take advantage of consumers. Such a system would work at least as well as government control and, in all likelihood, would be far superior for all parties.

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