January 2016

The problem with regulating price

[Commentary] Price sets the right incentive for both supply and demand.

In the Netflix example, price encourages demand for efficient broadband products and, in turn, encourages Netflix to supply a trim and lean broadband product. Price not only helps companies determine what to supply (for example, streaming video), it helps prioritize the many qualities of that supply (for example, ease of streaming over low-bandwidth connections). The end result is a more efficient and sustainable allocation of broadband resources. Experimentation with supply prices is not unusual.

But free-market pricing alternatives in broadband markets, such as data caps, paid prioritization, and zero-rate pricing, have always been problematic for professional advocates of net neutrality. These advocates prefer that regulators approve or prohibit certain pricing models. This is a mistake. When we interrupt demand signals by fiat, we invariably must speak of the “unintended consequences” of government action.

[Boliek is an associate professor of law at Pepperdine University School of Law]

Tax Internet Sales for Fairness, Federalism

[Commentary] Your Christmas Eve story “Malls Reel as Web Roars” reports broad declines in traffic at physical stores amid double-digit gains by online merchants. There are many reasons, but a leading cause is the fact that many online merchants don’t have to collect sales tax. On Dec. 28, however, your editorial “The Internet Tax Hostage” unfairly takes Sen Lamar Alexander (R-TN) to task for fighting to fix the discrimination in federal policy between local retailers and their online competitors.

Sen Alexander is defending a core principle of federalism: Congress, either through action or inaction (as is true in this case), should not be allowed to interfere in the business of a state. Furthermore, he is defending one of the hallmarks of conservative tax principles—that the best tax is one that is applied fairly across the broadest possible base.

[Shay is President and CEO of the National Retail Federation]

ProPublica Launches the Dark Web’s First Major New Site

The so-called dark web, for all its notoriety as a haven for criminals and drug dealers, is slowly starting to look more and more like a more privacy-preserving mirror of the web as a whole. Now it’s gained one more upstanding member: the non-profit news organization ProPublica.

ProPublica became the first known major media outlet to launch a version of its site that runs as a “hidden service” on the Tor network, the anonymity system that powers the thousands of untraceable websites that are sometimes known as the darknet or dark web. The move, ProPublica says, is designed to offer the best possible privacy protections for its visitors seeking to read the site’s news with their anonymity fully intact. Unlike mere SSL encryption, which hides the content of the site a web visitor is accessing, the Tor hidden service would ensure that even the fact that the reader visited ProPublica’s website would be hidden from an eavesdropper or Internet service provider.