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Censorship, the Super Bowl, and Net Neutrality

Government price controls are always harmful.

By Will Offensicht  |  February 8, 2010

Reuters reports that there's so much interest in the annual Super Bowl TV extravaganza that organizations are suspected of submitting ads that they know won't make it onto the air just to get free publicity by claiming that they were discriminated against by those heartless capitalists at CBS or whichever network is showing the Bowl this year.

With a price tag of almost $3 million for 30 seconds, it can be just as effective for those submitting ads to have a spot rejected as inappropriate and use the attention generated from that to drive visitors and business to their websites.

"A whole cottage industry has grown up out of trying to make use of network turndowns," said Martin Franks, executive vice president of planning, policy and government affairs at CBS Corp, which is televising the NFL game this year. "It can happen in the middle of July, but obviously this is a wonderfully high-profile opportunity."

CBS rejected an ad for a homosexual dating site; advocates are claiming discrimination, censorship, or both.  These words are abused so much that it's worthwhile to look at how defines them:

Censor (n):

  1. an official who examines books, plays, news reports, motion pictures, radio and television programs, letters, cablegrams, etc., for the purpose of suppressing parts deemed objectionable on moral, political, military, or other grounds.

  2. any person who supervises the manners or morality of others.

Discriminate (v):

  1. to make a distinction in favor of or against a person or thing on the basis of the group, class, or category to which the person or thing belongs rather than according to actual merit; show partiality: The new law discriminates against foreigners. He discriminates in favor of his relatives.

  2. to note or observe a difference; distinguish accurately: to discriminate between things.

Given CBS' sympathetic treatment of homosexuality in virtually every other aspect of their corporate undertakings, it can't be that they objected to the topic of homosexual dating on moral grounds.  Therefore, by definition, they weren't undertaking censorship: they see nothing wrong with homosexuality, and thus couldn't be said to be censoring the ad.

They appear to have discriminated, however, by noting differences between the ads they accepted and the ads they rejected.

CBS Is A Business!

When choosing ads, CBS has no interest other than making money.  Individual executives and reporters have their own personal political prejudices, of course, which are almost exclusively liberal; all else being equal, CBS will take the furthest-left feasible position 99 times out of 100.

They still have to make money, however, or they'll wind up in the fix of the New York Times and MSNBC: maintaining ideological purity, but slowly dying financially.  CBS knows that the only way to build the value of Super Bowl ads is to build the audience, which means increasing the number of sports fans.

Although there are exceptions, most sports fans become fans as children.  If a high-school graduate isn't already interested in a particular sport, the chances of his becoming a fan later in life are small.

Thus, CBS wants very much to do nothing that would keep parents from letting kids watch future Super Bowls.  It's likely that an ad for homosexual dating would lead to widespread parental censorship of the show on their moral grounds.

Much though CBS staffers find these moral qualms repulsive and as energetically as they're attempting to change them by pro-homosexual programming elsewhere, at this moment, CBS has no choice but to avoid parents yanking their kids away from the screen at all costs.

Focus on the Family also stirred controversy by asking that CBS air a pro-life ad featuring college star quarterback Tim Tebow, whose mother chose to exercise her "right to choose" by rejecting advice to have an abortion even though she was told that the pregnancy was hazardous to her health.  After CBS rejected the ad initially, Focus on the Family softened the message so that CBS agreed to run it, but the pro-aborts weren't satisfied.  As the Washington Post put it:

Pam Tebow and her son feel good enough about that choice to want to tell people about it. Only, NOW says they shouldn't be allowed to.

His critics find this intrusive, and say the Super Bowl is no place for an argument of this nature. "Pull the ad," NOW President Terry O'Neill said. "Let's focus on the game."

The NOW gang can scream all they like, but the fewer women abort, the more children there'll be who might grow up to be sports fans.  Airing this ad is clearly in CBS' long-term economic interest.  They can't officially promote a woman's right to choose life, however, because politically-connected feminists are only interested in a woman's right to abort and want nothing to do with women who choose to give birth.

The Power of Fairness to Destroy

Our Federal Communications Commission has a great deal of power over television networks.  Offended feminists, as is their wont, are suggesting that the government intervene to make sure that the process of selecting Super Bowl ads is "fair" to their advantage.  Regardless of your feelings on abortion, this is not a good idea - the government's power to declare what is and is not "fair" has caused huge damage over the centuries.

Government intervention in the economy generally hurts the economy whether in the name of fairness or on any other grounds.  Advocates for government involvement claim that government land grants helped get the railroads built.  True - but in general, the land-grant railroads were built by politically-connected people who did a shoddy job and weren't able to run the railroads profitably.

Private investors built the first profitable railroad to the coast.  This road offered lower shipping rates on goods intended for export, which made it easier for our manufactured products to compete in foreign markets.

Eventually people complained that it wasn't "fair" for some customers to get a price break while others paid higher rates for shipping the same goods.  In response to the politics, the federal government made this sort of price break illegal, creating the Interstate Commerce Commission to ensure that the railroads were run to the satisfaction of bureaucrats, their political sponsors, and their constituents instead of the railroad's owners.

The railroad promptly ended the export discount as required by law.  With shipping costs up, our goods could no longer compete in overseas markets.  Jobs were lost, tax revenue dropped, and railroads lost revenue, but fairness reigned.

Over the years, the ICC was given more and more authority to set the prices railroads were permitted to charge.  As usual with government, the number of pricing categories multiplied, making determining shipping rates nearly as as complex as filling out medical expense claims.

There will always be more shippers than shipping firms, of course, so the politics and the rates tended to favor the shippers.  By the late 1970's, the nation's railroads faced bankruptcy because of competition from trucking lines.

Railroads had been arguing since the 1920's that federal regulations made it impossible for them to compete and that they would eventually be driven out of business; it finally happened when Penn Central collapsed.

Not long thereafter, Conrail, which was a combination of the railroads in the Northeast left over from the death of PC, had to be taken over by the government in order for it to continue operating.  President Carter's administration faced a $300 billion bill for bailing out the rest of the railroads.  Even Mr. Carter realized that it would be better to change the rules so that the railroads could operate profitably than to subsidize them forever.

In his message to Congress, Mr. Carter warned of a "catastrophic series of bankruptcies" and "massive federal expenditure" unless deregulation was allowed to "overhaul our nation's rail system, leading to higher labor productivity and more efficient use of plant and equipment."

Unions think of "higher labor productivity" as a plot to cut their incomes by making them work harder and didn't welcome the proposed changes.  Mr. Carter had to make many phone calls, but the 1980 Staggers Act ended a century of federal regulation that had started out as an exercise in "price neutrality."  Deregulation brought to the railroads back to profitability except for Amtrak which continues to swallow endless subsidies as a sop to environmentalists and what's left of the passenger railroad unions.

What Is Net Neutrality?

This leads us to the issue of Net Neutrality.  People who favor Net Neutrality argue that it would be unfair for a telephone company who owned a network to charge different rates to transfer different types of data across it.  The idea is that the network, and the Internet as a whole, should be "neutral" with respect to setting data exchange rates.

Google is one of the major businesses pushing the idea.  Google gets a huge free ride when people use its search engine because Google doesn't have to pay for the network capacity it uses to send the results back to the customer.  Google doesn't pay for the data it serves up either, but that's another issue.

Google is afraid that if, say, AT&T built a high-speed network and set up a competing search engine, AT&T might favor their search engine traffic over Google's traffic so that AT&T search results arrived faster than Google's.  If that happened, Google's customers would get tired of waiting and switch to AT&T's product.

Net Neutrality would require that AT&T treat Google's traffic on the same basis as its own traffic.  This sounds reasonable, but it completely ignores the concept of ownership.  If AT&T builds a fiber optic network, they own it, and they ought to have the right to set prices for various services so as to benefit their stockholders.

For comparison, Federal Express owns a vast network of airplanes, trucks, and sorting stations.  FedEx charges more for "next day delivery" than for "2nd day air."  If you aren't in a hurry, you can use ground transportation for an even lower price.

Net Neutrality would be like forcing FedEx to give all packages the same speed of service and require them to handle UPS shipments on the same basis as their own shipments.  How does this make sense?  How could they make a profit operating that way?

At this point, advocates of Net Neutrality would say that the difference between FedEx and AT&T is that consumers have no choice when it comes to accessing the Internet.  They would say that consumers can choose to use FedEx, UPS or a private courier, depending on whose features were most preferable.  While that argument was true at one time, it no longer is.

It used to be that consumers had one choice for Internet access - dial-up.  Older folks may remember the day when AOL became a dial-up colossus which swallowed Time-Warner.

AOL thought revenues would rise forever, but competition arrived and they couldn't cope.  Bandwidth went broadband, and one option turned into two - cable or DSL.  Then satellite dishes gave us three choices.

Now, consumers have fiber, in some cities mass-WiFi and some states WiMax via Clearmax and Sprint.  Mobile devices use 3g/4g to connect, so virtually every cell phone network is also an Internet provider.

The trend of increased competition is expanding, not shrinking.  Few and far between is the person who lives so far out in the boonies as to be served by just one Internet provider; at the very least, everybody has satellite-based Internet and almost every telephone system offers DSL.

As mobile access continues to expand, competition will explode and prices will come down just as telephone-call prices have come down.  If the precedent to regulate the internet is set now, however, while competition is still growing, it will continue long after regulation is no longer needed assuming it was ever needed.  The end result would simply be higher costs and worse service for everyone.

Similarly, it would be a bad idea for the government to get involved in choosing which ads CBS shows at the Super Bowl.  Government getting involved in setting railroad shipping rates nearly put the entire industry out of business, destroying many jobs along the way.

Where's the Broadband Revolution?

Mr. Obama claims to be disappointed that broadband Internet access hasn't become universally available.  It's true that a number of countries have higher rates of broadband availability than the United States, but that doesn't justify Mr Obama wanting to throw our tax money at universal access.

Network companies like AT&T stand ready, nay eager, to pull all the cable and sell us all the bandwidth we're willing to pay for, but regulatory uncertainty has them sitting on their hands instead of creating jobs.  Why spend billions to set up a network when you may be forced to let your competitors, who didn't invest a dime, use your network for the same price you use it?

Would have FedEx invested billions buying airplanes if the government were talking about forcing them to carry UPS freight?  Perhaps the executives at AT&T, unlike the members of the Obama cabinet, are familiar with the story of the Little Red Hen.

Mr. Obama's deficits, his business-bashing, and his talk about raising taxes have created investment uncertainty so that nobody wants to invest any money in business in general, that's why we're still losing jobs.  On top of that, he's talking about making it impossible to make money building network capacity in particular.

Why are we not surprised that we're falling behind other countries in broad band access?

The government has no business regulating Super Bowl ads, or FedEx rates, or shipping rates.  It shouldn't regulate network rates either.