People sometimes wonder, and not unreasonably, why anyone in business would ever support Democrats or their ideas. With their hostility toward free markets and profits, it seems a natural that business people would oppose the left's economic and regulatory agenda.
But people are prone to temptation, and that includes the temptation to think command-and-control economies might not be so bad as long as the scales are being tipped in your favor. The federal government wants to put the Internet under regulatory control just like 80-year-old phone companies? "Hey," thinks a power broker like Netflix, "it might not be so bad if we get them to make rules that give us the advantage!"
Just like the health insurers thought when they got on board with ObamaCare. That didn't work out so well for them, and Netflix has now expressed its regret that the FCC didn't come up with a "non-regulatory" solution in lieu of grabbing control of the entire Internet. Of course, the problem with that sentiment is that there really was no problem to begin with - just a hugely successful Internet company hoping it could use its influence to rig the game and crowd out competitors. That's what happens when you try to make big government your ally. It seems like a good idea until you actually see what they do:
Today Netflix is a poster child for crony capitalism. When CEO Reed Hastings lobbied for Internet regulations, all he apparently really wanted was for regulators to tilt the scales in his direction with service providers. Or as Geoffrey Manne of the International Center for Law and Economics put it in Wired: “Did we really just enact 300 pages of legally questionable, enormously costly, transformative rules just to help Netflix in a trivial commercial spat?”
Ironically, Netflix could end up the biggest loser with a regulated Internet. The FCC did not stop at claiming power to regulate broadband providers. It will also review the interconnection agreements and network tools that allow the smooth functioning of the Internet—including delivery of Netflix videos, which take up one-third of broadband nationwide at peak times.
Net-neutrality advocates oppose “fast lanes” on the Internet, arguing they put startups at a disadvantage. Netflix could not operate without fast lanes and even built its own content-delivery network to reduce costs and improve quality. This approach will now be subject to the “just and reasonable” test. The FCC could force Netflix to open its proprietary delivery network to competitors and pay broadband providers a “fair” price for its share of usage.
There’s no need for the FCC to override the free-market agreements that make the Internet work so well. Fast lanes like Netflix’s saved the Internet from being overwhelmed, and there is nothing wrong with the “zero cap” approach Netflix is using in Australia. Consumers benefit from lower-priced services.
Netflix got burned here because it jumped into the game of trying to use government overreach for its own benefit. That's a little surprising from a company that has done so well on the unfettered free market that has been - until now - the Internet. Big business does get tempted sometimes to run for the protection of government, especially complete failures like Chrysler, who figure they'll need a bailout every generation or so.
But you'd think businesses would start learning their lesson about what happens when you get in bed with the Obama Administration. They'll be glad to take your support, but their only agenda is power and control for themselves. Netflix now realizes it screwed up. It's too late for the rest of us.
