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Planes, Trains, and the Internet
Innovation, competition, and choice produce good results in Helsinki — why not in your town?

Railway station in Helsinki, Finland. (Dreamstime)

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133
Kevin D. Williamson

One thing about being a “roving correspondent” — you learn to hate airlines. And I mean hate: If hate were carcinogenic, I’d be one big human tumor every time I hit the exits at LaGuardia. A couple of months ago, I sent US Airways CEO Doug Parker a 1,700-word denunciation on the general awfulness of his service, his company, his employees, the malevolent porcine glint in his dead, soulless eyes — a pointless exercise, to be sure, but a cathartic one.

The partial deregulation of the airlines produced some benefits, notably on the matter of cost. Whereas airfares had previously been set by political operatives — a perverse situation —deregulation allowed the emergence of price competition, with the predictable result that in real (inflation-adjusted) terms, airfares have fallen by about half since the early 1980s. Air travel has gone from being a luxury good to a mass-market good, the lifestyles-of-the-rich-and-famous connotations of the formerly evocative midcentury term “jet set” sounding slightly ridiculous to anybody who has spent much time at JFK, IAH, MCO, etc. The level of service has become much more — how to put it? — democratic, less Barney’s and more Walmart.

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You can pay more for better food and drink, more efficient customer service, etc., if you are so inclined. But you cannot pay more for what is most important to many travelers: on-time arrival. About one in five U.S. takeoffs are delayed. Delays vary by airline, but they vary most significantly by airport manager. The New York metro area’s airports can account for as many as half of all flight delays in a year, and the cascading effect of New York’s incompetence is responsible for about a third of the flight delays in the rest of the country. The airlines themselves have been partly deregulated, but the airports, and the flight lanes remain in the hands of the politicians, producing the utterly predictable stagnation, inefficiency, and corruption associated with practically all political enterprise. As the aviation director of the New York airport authority told the New York Times, “You can be in a cab in Manhattan with GPS and you are dealing with more sophisticated technology than is being used by the FAA.”

Air travel, as Fred Smith and Braden Cox of the Competitive Enterprise Institute explain, is a network enterprise organized around a grid-and-flow model, much like telecommunication or electricity generation. In that sort of industry, there are two important sets of factors: the moving parts (airplanes, electrons) and fixed infrastructure (airports, transmission lines). Our grid-and-flow systems very often are highly regulated, with the fixed infrastructure either owned and operated by political institutions or so highly regulated as to be indistinguishable from a state-owned facility. The degree of political involvement with such networks tends to correlate very strongly with how intensely you are inclined to hate it: Airports, cable television, and utility companies are not winning any popularity contests — when was the last time you stood in line for an hour to be the first to get your hands on the hot new product from Con Edison? This provides an instructive study in contrasts: If you are willing to pay for it, air travel can still include some pretty swanky amenities, like American Express’s Centurion lounges and Virgin’s Heathrow clubhouse. But the basic service remains dysfunctional, and substantially so — flight delays cost the U.S. economy tens of billions of dollars a year.

But we do have a network industry that manages to flourish — the network industry, in fact: the Internet. The Internet is a global phenomenon, but it is nominally under the management of the U.S. Commerce Department, which oversees the operations of the private nonprofit Internet Corporation for Assigned Names and Numbers, the closest thing to a central authority that the Internet has. Other aspects of Internet connectivity are of course subject to various kinds of regulations in the U.S. and abroad, from the Federal Communications Commission in the United States to the Supreme Council of Virtual Space in Iran, which surely has the most William Gibson-y name of any regulatory body on Earth and labors perfervidly to ensure that the pristine youth of the so-called Islamic Republic are not corrupted by Facebook cats that want to haz cheeseburger. But, broadly speaking, the Internet is almost certainly the most unregulated feature of the 21st-century global economy — and successful precisely because of its unregulated, decentralized, distributed nature.

But Charles Schumer, like Clement Attlee following Winston Churchill into the gents’ facilities, never saw anything large and functional that he did not want to nationalize, and thus is pressing the FCC to reclassify broadband Internet service as a utility. Columbia law professor Tim Wu, the main intellectual force behind this effort, scored one of the all-time great rhetorical victories by naming this regulatory effort “net neutrality,” but a better term would be “net political conformity.” In effect, Senator Schumer’s policy would subject Internet providers to the same sort of regulation that airlines endured until the 1970s. Most notably, the policy would forbid certain kinds of price competition, just as airfares once were set by federal bureaucrats. It would, for instance, forbid providers from charging different rates for high-volume services such as Netflix (which can by its lonesome account for more than a third of all Internet traffic during peak times) versus relatively low-volume sites. It would also forbid services that are inclined to do so to pay extra for premium “fast lane” connectivity to their customers, and vice versa. Providers would remain private entities, but private entities that are very limited in terms of how they can compete with one another — i.e., you could expect the same vitality and innovation that you get from domestic airlines and your local electric utility.



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