Net Neutrality, Monopolies, and Innovation: Deciphering Ted Cruz

US Senator Ted Cruz posted a baffling tweet last week:

The media response to this tweet was mostly confusion. The Oatmeal drew a cartoon attempting to explain net neutrality to Cruz in The Onion’s usual bombastic style, and a bunch of other blogs have reacted with either confusion or dismay. The underlying theme of many of these seems to be, “what the hell does that even mean?” Columnists often seem to interpret Cruz’s comments as completely detached from reality, either due to ignorance or cynicism.

Is this true? Or is Cruz making an actual argument, even a bad one, with this tweet? At first glance, it certainly seems to be the former. Obamacare and net neutrality, superficially, have very little in common. Obamacare concerns a service delivery industry essential for the survival and quality of life of millions of people, while net neutrality one concerns an infrastructural system that is essential for a handful of important things and a lot more unimportant things, such as cat videos. Obamacare imposes controls to ensure that everybody has access to health care, while net neutrality imposes controls to make sure that internet providers can’t privilege their own content on the internet. Perhaps the thing that unites them the most is as cartoonist Matt Bors pointed out, that they are both good things.

But for all the silliness of his comment, I don’t think Cruz was just spouting random Republican gibberish. His social media staff are probably too well-paid for that. In order to understand what the comparison actually meant, you need to look at some other Republican talking points to see how it fits into general American right-wing narratives. Republican discussion of Obamacare is a good place to start. Consider this Wall Street Journal article about Obamacare:

“Of the many unintended consequences of the Affordable Care Act, perhaps the least noticed is its threat to innovation. Although most discussions center on the law’s more immediate effects on hiring, insurance rates and access to doctors and care, attention should also be paid to its impact on U.S. research and development and health-care technology. “

I’m not going to address that article in detail, because I don’t know very much about health care innovation. If you do, I’m sure you can pick the article apart. But when you consider that basic understanding about innovation being vulnerable to government interference and apply it to the issue of net neutrality, the parallel between the two in Republican discourse instantly becomes clear. Here’s a statement on net neutrality by Republican Speaker John Boehner:

“It’s disappointing, but not surprising, that the Obama administration continues to disregard the people’s will and push for more mandates on our economy.   An open, vibrant Internet is essential to a growing economy, and net neutrality is a textbook example of the kind of Washington regulations that destroy innovation and entrepreneurship.”

Now we can see what Ted Cruz was actually getting at. To him and other Republicans, Obamacare and net neutrality are similar because they are both liberal-supported government interventions into a business sector that thrives on innovation. What Boehner was saying with his tweet, then, was that just as Obamacare will hurt the health care industry’s ability to innovate, so will net neutrality hurt the telecommunications industry’s ability to innovate.

So then the question becomes: Is this actually true? Will government enforcement of net neutrality harm the telecoms’ ability to innovate? The evidence suggests it’s pretty unlikely.

The problem with Cruz’s view can be summed up in just three words: Monopolies don’t innovate.

This is obvious when you give the matter any thought. Why would a monopoly innovate? Innovation is expensive. It requires research and development labs, uncertain pilot projects, legal wrangling, labour negotiations, and all kinds of difficult and expensive stuff. There is a slight incentive for monopolies to innovate on the supply side to keep their own costs down, of course, but if you want them to work on innovations that could benefit the consumer, then you’ll have to appeal to the goodness of their heart. I’ll leave it up to you whether that’s a viable strategy.

And of course internet service providers, like any other provider of infrastructure, are monopolies. In order for ISPs to compete in any meaningful way, there would have to be duplicate internet infrastructure connected to most houses. Maybe one day that will be possible with wireless internet, but as things currently stand, ISP competition would require a lot more dug-up streets and front lawns in order to lay completely superfluous cables. With the exception of completely new transmission technologies such as Google Fiber, it simply makes no sense to do that.

So if monopolies don’t innovate and ISPs are monopolies, then any first-year philosophy student can deduce that ISPs don’t innovate. And, for the most part, that is true. That’s why we need to have regulations, to make sure that ISPs and other natural monopolies still act in the best interests of their customers, including by innovating. In fact, net neutrality is completely essential for innovation of a different sort. Many of the most exciting innovations we have seen in the past ten years have been introduced by websites. Netflix, for example, has completely changed the way many people watch TV and movies. But, as we have already seen, the Internet Service Providers, who also frequently happen to own cable companies, have been hostile to Netflix; charging it additional fees for access to the network and even throttling its service to get it to pay more. Infrastructureal monopolies are not only reluctant to innovate themselves; they are also both willing and able to block any other innovation that disrupts their business model.

This is all pretty obvious stuff, and I’m not the first person to make these points. But there are a few broader takeaway messages. Firstly: Don’t be blinded by the word “innovation”. The word has lost a lot of meaning lately, and is just as likely to describe new methods of price-gouging or labour exploitation as is is to describe a better mouse trap. Secondly, it’s important to go beyond mere mockery when somebody like Ted Cruz says something like ridiculous like “net neutrality is obamacare for the internet”. There are often hidden dog-whistle messages in statements like that which need to be answered. And finally, this is just further evidence of why we should be working towards a public internet: It would mean the end of lobbyists paying people like Cruz to say things like “Net neutrality is obamacare for the internet”. Maybe net neutrality, like Obamacare, doesn’t go far enough. Maybe in both cases we need a public option.


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