Net Neutrality and Facebook’s Free Basics: A Case Study on Being Too Stubborn

In the past two years, Facebook has brought access to basic internet services to people in developing countries through a campaign called Free Basics. While Free Basics (as the name suggests) is completely free, it only offers limited services, a characteristic that is inflaming net neutrality advocates to not just criticize Facebook, but in some cases even call for its illegalization.

Net neutrality is the position that Internet Service Providers (ISPs) should treat all content equally and without prioritization. The stock example is the issue that took place between Netflix and Comcast/Verizon a few years back. Many accused Comcast and Verizon for slowing internet speeds for Netflix streaming, which (at least as claimed) was particularly outrageous since they may have been doing so in an attempt to rid themselves of competition in the television arena. Net neutrality advocates want to ban this sort of behavior so that those that use the Internet as a platform to sell products and services do so on an even playing field.

While I think there are problems with net neutrality in general, what is more disturbing is when advocates take that principle to the point of absurdity. The outlawing of Free Basics is one such example, and economist Don Boudreaux brings clarity to that with a thought-provoking analogy:

A hungry woman dying of thirst in the desert is approached by an entrepreneur who offers her unlimited quantities of bottles of water and a selection of snacks, all at a price of $0.  No strings attached.  The entrepreneur also informs the woman that, if she wishes, he’ll sell to her a seven-course meal (champagne included) for $100.  A moment later an armed regulator shows up.  Offering nothing to anyone but diktats, the regulator orders the entrepreneur to cease and desist this practice of differential pricing.  Unless the entrepreneur offers to the woman access at one, flat price to all that he sells, the entrepreneur must not offer the woman anything.

Uncertain of the woman’s willingness to pay enough for a seven-course meal (champagne included) – and unable to afford to supply such a meal free of charge – the entrepreneur leaves the scene, giving the woman nothing.  The woman soon dies as the regulator boasts of his magnanimity at having protected her access to “food-neutrality.”

The situation with Facebook is the same. Through Free Basics, Facebook is offering completely free access to the Internet. It’s true that these involve only access to limited services, but something is better than nothing. It’s fine to try and persuade Facebook to expand the services they offer (as long as one keeps in mind there is a price they have to pay for this, and at some point it becomes overly difficult), but as soon as a person goes from polite criticism to the use of force to prevent them from doing anything, he steps over the line. It’s not just disrespectful to Facebook, who is attempting to help developing nations, but disrespectful to the people of these developing nations, including many impoverished individuals who have never had access to the Internet before.

A separate criticism Peter Nowak makes is that Facebook CEO Mark Zuckerberg does not properly understand philantropy:

Ultimately, the difference between charity and marketing is that the true altruist doesn’t seek anything, including recognition, in exchange for a donation.

Those who seek something in return are merely catering to their self-interest.

A self-styled philanthropist like Mark Zuckerberg should know that.

Nowak might be correct in criticizing Zuckerberg for being deceitful about his motives – the CEO claims to be doing this out of altruism, yet includes Facebook as one of the services Free Basics offers – but I don’t think that’s very important. While altruism is an amazing virtue, it is not always practical. The most beautiful quality of capitalism is that people in market economies are led to serve others despite being motivated by self-interest. The person who exchanges goods he has produced for money does so only because he values the money over the goods. Meanwhile, the person who exchanges the money for the goods does so because he holds the opposite valuation. Through the voluntary trade of the property each owns, both parties benefit. In offering selective services free of charge, Facebook is receiving something it values more than it is giving up – likely the access to millions of users and the data they provide. Likewise, the individuals who are choosing to get access to these basic services are doing so because they value the access free of monetary charge over the data they give up. Attempting to ban Free Basics is direspectful of the choices these people themselves think will bring them benefit.

Which brings me to my final point. Though I disagree with net neutrality in general, I at least can admit that the arguments for it are plausible. Proponents are scared that the internet they know will change for the worse and become segmented based on the selfish interests of ISPs. But they need to realize that there are exceptions to be made. In stubbornly holding onto the idea that there should be a neutral internet, they should not go so far as to say that otherwise there should be no Internet. Because a third option, a completely free, though limited Internet, helps and would help billions of people on the planet, a portion of which are too poor to afford anything else.

 

Photo Credit: networkedindia.com

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Posted on February 2, 2016, in Economics, Politics and tagged , , , , , , , , . Bookmark the permalink. Leave a comment.

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