The Comcast Canary

How #NetNeutrality shows the increasing instability of our politics.

More than any other case in the 21st century, the Net Neutrality fight is a clear battle of public good versus a singular corporate interest. Our political system has been slowly breaking with financial deregulation, but the absurdity of the NetNeutrality conversation shows that the canary in the mine of American government is getting exponentially more sick.

It doesn’t take much convincing for the average American to nod their head that something has gone wrong in Washington: A Gallup poll in July 2014 shows a 16% national approval rating of congress. But while it’s easy to generate opinions on specific members or legislation, it’s more important to form a system view. The actions of the telecom industry, namely Comcast, and its regulatory body, the FCC, are ideal probing points.

Comcast is a rational actor in a legacy system. The CEO is Brian Roberts and it’s his sole job is to increase shareholder value, which he will do by increasing revenue, increase volume, or decrease costs. The primary punchline of any strategy presented to Roberts is the Return on Investment (ROI): for X amount of investment, what is the multiple on X that the company could expect back? Traditional strategies include buying competitors, launching new products, offering promotions, but now corporate lobbying is proliferating as a valid strategy in that list. Although money in politics is notoriously difficult to monitor, the ROI of lobbying is enormous, hence, more interesting to a CEO.

A few quick illustrative examples of this logic in action:

1. The American Jobs Creation Act was a large, one-time tax break to corporations. For every $1 that the companies invested in lobbying for the creation of that legislation, they received $220 back (full report here, summarized on NPR here).
2. The most debated issue on the floor of congress in 2011 was the debit card fee battle between retailers and banks. Every large player, from JPMorgan to Walmart, had a stake in the $16Billion pile of money that congress could either divert as revenue for the banks or as savings to retailers. For every month that the law was delayed, the banks profited $1.35Billion, meaning that any amount of money spent on Washington was bound to have ROIs in the region of 10–100x.
3. The Oil and Pharmaceutical ROIs on legislation have been as high as 59x and 777x as shown in the infographic below. For reference, standard corporate investments are on the order of 1.1–2x.

With ROIs in the domain of 100x, it is irresponsible for an executive NOT to consider lobbying as part of the company’s strategy, if for no other reason than the competitors are surely doing it. And now that we live in the world after the Citizen’s United and McCutcheon decisions which removed constraints on corporate spending, we are seeing exponential growth in the money flowing to Washington.

That is, the demand for lobbying is increasing, which means the price on top influencers is increasing. More top influencers means more impact on legislation, which means higher ROI performance, which means more future demand for lobbying. This is called a positive feedback loop.

Positive feedback loops are dangerous. As a civil engineer, this is what positive feedback looks like:

The Tacoma Narrows bridge had insufficient damping: Wind excited the bridge, funneling energy into bigger and bigger oscillations at the resonance frequency until inevitable collapse.

An epidemiologist would say this is what positive feedback looks like (Ebola chosen for topicality, the AIDS graphs from 1981–2001 tell the same story on a bigger scale):

The more people that have a communicable disease, the more people that *will* have a communicable disase

A government analyst would look at campaign contributions, now bucketed as “independent expenditures,” and see similar exponential growth in the new world of uncapped corporate investments in Washington:

Positive feedback loop in government: the more people that spend, the more people that will spend.

We’re seeing the effects of this now with the snails pace of healthcare reform (current profit margins are worth a lot of lobbying). We’re seeing this now with the KeystoneXL pipeline issue that keeps making it back to Congress (the prize is $Billions for TransCanada). We’re seeing this in the bizarrely militarized police forces around the country (DoD1033 program to sell military gear to domestic police). There’s no conspiracy: just many unbounded, selfish actors. Yet all of those issues are at least somewhat contentious across the American public compared to the uniformly bad results of segregating the internet into fast and slow lanes simply because a monopoly wants more money.

As someone who has spent years in Silicon Valley in companies that started as 2 people and have grown to hundreds, it breaks my heart to see American elected officials vote against the very entrepreneurial spirit they based their campaign rhetoric on. And now, as a computational neuroscientist whose future innovations will depend on the ability to rapidly share terabytes of data, I’m afraid what internet segregation will do for American Science.

The mathematics of systems says that what tempers a positive feedback loop is damping (transferring of energy out of a system) and constraints (either on the input or the output). Constraints would be limiting “independent expenditures” and blocking the Revolving Door. But while we hope for those reforms to ensure a sustainable government/economy balance, let’s continue do our best to show private industry that true innovation will always be the highest ROI.

Go home, Comcast. Go build something real.

Please support the important work done by the Sunlight Foundation to monitor money in Congress and The Electronic Freedom Foundation’s efforts to protect digital rights. And if you’re curious how lobbying works, the 60 Minutes interview with lobbyist superstar Jack Abramoff is an extraordinary primer.