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Why Net Neutrality Preserves a Free-Market Economy for IoT Success

As I explained in my last blog, the real job creators in any free-market economy are not only producers but also consumers. Monopoly capitalism has resulted in poor economic demand due to reduced consumer purchasing power. On this site, I’ve also discussed the possibility of an early demise for Moore's Law due to monopoly capitalism, as opposed to a natural demise due to physics. In a Semi.org article, I explained how the loss of a free-market economy due to monopoly capitalism produced a poor return on investment in the transition to 450mm silicon wafers for the global semiconductor industry, bringing this profitable business to a standstill.

At the 2014 Web Summit this month in Dublin, industry leaders came together to discuss the future of Internet of Things (IoT) technology. The global semiconductor industry is now interested in the IoT mainly because the Internet has flourished at a greater level than the voice telephony industry, due to absence of government-sanctioned monopolies. In my book Mass Capitalism: A Blueprint for Economic Revival , I make a case that, even though voice over Internet protocol (VoIP) requires the same bandwidth to send voice data as Internet packets when compared to voice packets transferred over standard telephony infrastructure, the prices that consumers pay for VoIP services are much lower than what they pay using standard telephony infrastructure.

The real reason voice telephony infrastructure prices have not fallen, in spite of the rapid market growth of cellphones and smartphones, can be traced to government-approved monopolies. Political corruption has enabled crony capitalists to influence the decisions of United Nations' International Telecommunications Union and prevent telecommunications prices from falling, in spite of the relentless progress of Moore's Law. I explain this in “Moore's Law for Integrated Circuits: Maintaining Its Innovation and Business Impact for the Semiconductor Industry,” a chapter of my newly released book.

Since VoIP did not make use of an infrastructure from the old telephony system, it avoided monopolies and fueled the growth of the Internet revolution exponentially. Now monopoly capitalism in the semiconductor industry is bringing this capital-intensive business to a standstill. Very few players dominate this industry. Meanwhile, crony capitalists are trying to establish Internet monopolies through their lobbying efforts.

As a result of these lobbying efforts, in January 2014, the US Court of Appeals, the second-highest court in the US, knocked down Federal Communication Commission's long-standing regulation requiring “network neutrality.” Without network neutrality, the growth of the IoT industry will likely come to a standstill due to poor consumer demand, just like our global semiconductor industry.

Since the United States does not have free-market capitalism anymore, as it had in the 1950s through the 1970s, government intervention offers one way to stop the growth of Internet monopolies. Hence, President Obama is absolutely correct in calling on the FCC to impose “the strongest possible rules” to protect net neutrality — prohibiting Internet service providers from favoring some lawful content over others, and thus avoiding the creation of Internet industry monopolies that would stagnate the IoT's growth. It is possible to have minimal government intervention into the economy and a self-regulation of the economy only by means of implementing a free-market economic system. Free-market economic reforms would also result into exponential growth for the IoT sector. Letting employee wages automatically catch up with employee productivity would boost consumer demand.

Employee-owned companies with a neo-cooperative management would also ensure that all the people in an economy are real stakeholders in that economy, bringing about an economic democracy. This new system would create plenty of jobs and put an end to the debate about having only few people pay taxes and the rest living on unemployment benefits. It would eliminate political corruption in the US democracy, as majority shareholders of the corporations (employees) would not allow laws that would hurt their own interests. Such an economic democracy would add value to the political democracy and make it a stakeholder democracy that would truly work as a government of the people, for the people, and by the people.

In this way, mass capitalism-based reforms offer a free-market solution to achieve net neutrality with minimal government intervention, a smaller government, and lower taxes on individuals.

17 comments on “Why Net Neutrality Preserves a Free-Market Economy for IoT Success

  1. FLYINGSCOT
    November 20, 2014

    Government and regulations are not all bad.  If we let the IoT become like the wild west then chaos will ensue.  We do need regulators to enforce some rules so I0T evolves in a safe, fair and profitable manner.  Everything should not be driven purely for individual gain as we also need to think of the greater good.

  2. apek
    November 20, 2014

    Agree with you. The only thing is today trust in government is at lowest level. Hence, Although I agree with president Obama in his decision, it is possible to have self regulated economy such that government intervention is at its lowest

  3. gippatel
    November 20, 2014

    Yes, I agree that net neutrality is essential on many levels. However, the move by the Obama Administration to classify internet providers under the same laws as the telecom companies– the very ones that you complain about as being the model for what we shouldn't have– makes zero sense. Don't be fooled– this move does nothing to guarantee net neutrality, but instead will cause the same fate to befall the internet providers that you rightly rail against for the telecoms.

  4. apek
    November 20, 2014

    As compared to what U court of Appeals did, Obama seem to be wiser in his decision.

  5. Hailey Lynne McKeefry
    November 21, 2014

    @FlyingScott, these areas certainly need oversight. I'm not convinced that the government is the right organization to do it. 🙂

  6. Hailey Lynne McKeefry
    November 21, 2014

    @Apek, how do you see this situation evolving in the near term? This topic is all over the headlines lately.

  7. Hailey Lynne McKeefry
    November 21, 2014

    @gippatel, What path do you think can be taken to guarantee net neutrality? Is there a clear path or is this something that remains unevolved yet?

  8. apek
    November 21, 2014

    @Hailey , In the near term…Looking at the way our dysfunctional congress is working is by executive actions of president. Both house and senate being controlled by republicans, democratic President can expect least support from them only any issues. If republicans are not for net neutrality…then we can conclude that they are getting a lot of money from crony capitalists. With such a huge amount of Political corruption in US democracy, I also agree that such critical issues should not be decided by Politicians. Politicians should take opinion of their electorate to make these decisions. But, Polticians tak opinion of lobbyists. It is just too much complicated issue. I wonder when will free market economy come back so that prosperity does not depend on government intervention into economy. Let us see what EBN bloggers have to say about it?

  9. rpellny
    December 4, 2014

    So in the name of “net neutrality” and “free markets” the plan is to fix something that isn't broken by applying some 1930s-era utility regulations and possible price controls to 21st-century technology.  Meanwhile, private investment in Internet infrastructure technology will slow to a crawl as a result of uncertainty over new potential legislation.  Sounds like a brilliant idea.

    Why Obama's plan to save the Internet could actually ruin it

  10. apek
    December 4, 2014

    There exist no true “Free markets” in US..hence….without a way to protect neutrality….there would be internet monopolies and just like other sectors of economy….Monopoly Capitalism will thrive in IoT and it would stagnate the economic growth. It is very similar to how monopoly capitalism is bringing about demise of Moore's law.

  11. rpellny
    December 4, 2014

    “…without a way to protect neutrality….there would be internet monopolies…”

    The Internet has never been “neutral” (see the link in my previous comment).  And so-called “Internet monopolies” may not actually be a bad thing:

    Internet monopolies: Everybody wants to rule the world

  12. apek
    December 4, 2014

    If you think Internet monopolies would be a good thing…just look at Global semiconductor industry and Global economy. WHy is the Global capitalism coming to a standstill because a few players have been allowed to monopolize the market. Anyway, Just wait for 6-8 months…US economy will witness a major crash in 2015. THe cause being monopoly capitalism…no economy can survive when monopolies are allowed to thrive. Wait for my next blog explaining the end of Moore's law, stopping of 450 mm wafer transition and reluctance of further investments in EUV because of crony capitalism. Hence, If you study the macroeconomic causes of failure of US economy…you will think twice why Monopolies should be allowed to thrive in IoT sector.

  13. rpellny
    December 5, 2014

    “WHy is the Global capitalism coming to a standstill because a few players have been allowed to monopolize the market. Anyway, Just wait for 6-8 months…US economy will witness a major crash in 2015. THe cause being monopoly capitalism…no economy can survive when monopolies are allowed to thrive.”

    Forgive me for being skeptical of doom and gloom predictions based on Marxist doctrine (i.e., the theory of “monopoly capitalism”) and dubious assertions (e.g., “…Global capitalism [is] coming to a standstill”).

  14. apek
    December 5, 2014

    If you do not know how macroeconomics works, may be I would recommend you to read a small article “A FAILURE ANALYSIS OF US ECONOMY“. After you have read it, I would recommend you to read forecasting record of Professor Ravi Batra . He has better forecasting record than any economist living on this planet. Now, also read about his opinion about who is Marxist in Reagan the great American Socialist. Now, If you agree with his opinion or are convinced what is Socialism, then you could consider reading Greenspan's Fraud . Now, That you have read so much and wish to understand what is Free Market Capitalism, consider reading why Ravi Batra thinks Mass Capitalism is Wave of the Future .

  15. rpellny
    December 5, 2014

    “I would recommend you to read forecasting record of Professor Ravi Batra . He has better forecasting record than any economist living on this planet.”

    Ah yes, Ravi Batra, the author of the prophetic book “The Great Depression of 1990.”

  16. rpellny
    December 5, 2014

    “I would recommend you to read forecasting record of Professor Ravi Batra . He has better forecasting record than any economist living on this planet.”

    Ah yes, Ravi Batra, the author of the prophetic book “The Great Depression of 1990.”

  17. apek
    December 5, 2014

    Well, Ofcourse…he was not riht on his forecast about 1990 great depression because America got a credit card from China in 1990. Now, Do you know how much Debt US owes to China and how much control China has over American economy. Just wait for end of 2015…and watch US sink into an economic crisis far severe than 2008 crash and just keep watching that today China has just overtaken US economy to become no.1 but toorrow…US economy will sink deep into doldrums because of ignorance of common sense macroeconomics. Then Even the critics of Batra would realize that perhaps great depression of 1990 would have been much better than coming crash of crony capitalism and the tremendous pain that would come with it. However, Batra is optimistic of a new golden age to start sometime in 2016. I believe that would happen with election of Elizabeth Warren as president in 2016.

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