Crony capitalism comes in different shapes and sizes, with policies like bailouts, trade barriers, tax credits, and subsidies all benefiting certain companies at the expense of their competitors.
Large corporations, those with the power and money to spare, all know that it is thanks to these privileges that they manage to keep rising to the top. And it's because they are so big that they require these crutches.
To a large firm, the fact that the government can buy them favors is why they keep the cash flowing, feeding a political class that will later grant them privileges once in power.
In order to better illustrate how internet service providers (ISPs) understand this game and play it well, Paul Bischoff from CompariTech looked into the industry’s lobbying data, compiling and analyzing the lobbying expenditure of 51 ISPs. What he found was that, in 2018 alone, companies like AT&T, Comcast, and Verizon each spent over $10 million on lobbying efforts.
And if you’ve been paying attention to the news, you know their investment has truly paid off.
From Net Neutrality to Broadband for All — Who’s Behind the Policy?
According to Bischoff’s investigation, the five top ISPs in the market today — AT&T, Comcast, Verizon, Sprint Corporation, and Deutsche Telekom (T-Mobile USA since 2007) — have each spent between $69 and $341 million on lobbying since 1998.
Net neutrality, the policy that claims to level the playing field but actually strengthens monopolies, is one of the many policies championed by at least some of these very companies — until they realized they were actually being played by other monopolies.
Comcast even lobbied for “permanent, strong, legally enforceable net neutrality rules,” while AT&T and others joined tech companies on the Day of Action to Save Net Neutrality, a campaign that hoped to pressure President Trump’s Federal Communications Commission chairman Ajit Pai to keep net neutrality.
Critics of major ISPs who joined the effort often point to AT&T’s opposition to Title II of the Communications Act of 1934, which comprises rules that would not translate well to the internet age. However, major internet service providers had other reasons not to like net neutrality, as large tech corporations like Google, which lobbied more in 2018 than any other ISP, and Facebook sought to block ISPs from trading in users’ private information.
By keeping broadband firms from having this access, Facebook and Google would have no more competition, becoming the sole dealers in private user info in the market. This realization may have pushed many ISPs to shift their support to Republican lawmakers.
But what about policies that benefit ISPs alone?
Broadband firms have long championed policies that artificially increase the demand for their services at the expense of the taxpayer.
Take Indiana Gov. Eric J. Holcomb’s plan to take broadband to rural areas of the state.
Holcomb, whose campaign relied on a great deal of broadband cash, promised to “make a difference” by allocating $100 million in taxpayer dollars to offer internet to the entire state. As I explained for AIER in the past, Indiana used this money to offer grants to internet providers so they could serve these remote locations. In the end, ISPs and their political “investment” paid off, at least in Indiana.
Aside from these two examples, Bischoff writes that ISPs are also behind lobbying efforts against smaller competitors with the intent to get regulators to accept their mega-mergers. Unfortunately, their relationship with regulators and lawmakers, both on the state and federal levels, continues to grow closer with each passing year. And the privileges they obtain from the government, as a result, translate into greater barriers to entry for smaller competitors.
Much like the large tech firms playing a lobbying game that guarantees they remain at the top, calling the shots and punishing those who disagree, ISPs have an agenda. It is up to consumers to understand this and ask themselves what we should do next.
If what we want to see is the end of government-backed monopolies, then perhaps it’s time to consider a more decentralized type of government structure. After all, if bureaucrats weren’t so powerful, companies wouldn’t try to be on their good side.