GO
Loading...

Boom! Net neutrality takes a body blow

You know the old saying: "Build a better mousetrap and the world will beat a path to your door."

That's been true in market economies for centuries, and I'm not aware that it was ever a controversial point … until the whole "net neutrality" debate sprouted up.

Christoph Rosenberger | Photographer's Choice | Getty Images

Proponents of this policy have employed an Orwellian use of the word "neutrality" to describe their push for blocking Internet service providers from charging content providers different prices depending on the volume and nature of their content.

Read MoreHow would net neutrality changes affect your bills?

To put it in simpler terms, progressives and some business groups want to stop service providers from being able to charge more for faster Internet lanes for companies that stream lots of high-volume content like Disney, Netflix, and Google.

And for years, the Obama administration/Democrat appointees on the FCC have been "neutrality" allies.

Until now.

According to several reports, the FCC is about to drop this key aspect of the program and indeed will allow the big service providers like CNBC parent Comcast and Verizon to pursue the outrageous policy of charging more for better and faster service.

And this, of course, is a very good thing.

Read MoreFCC unveiling net neutrality plan Thursday

Just think about it: the Internet service providers have spent a lot of money and devoted years of work developing Internet broadband. They should be allowed to reap the rewards of that investment based on the whims of the market. This is a very simple example of the risk-reward paradigm that has given the world everything from life-saving vaccinations to the iPhone.

That's why people objecting to this pricing power, calling it a threat to innovation, are so obscenely wrong. It's the promise of greater profits that inspire innovation, not some unelected government body like the FCC that threatens to impose price and profit controls.

Taking away the profits a company deserves for innovating a product as popular and essential as the Internet isn't "neutrality," it's more like being neutralized. Net Neutrality should really be called "Government-Imposed Internet Price Control."

Yes smaller content providers, and even some bigger fish like Netflix will get squeezed… at first. But it's those kinds of free market developments that spur more innovation. If service providers are allowed to charge more for better service, the push for better and faster broadband service will pick up steam. A smaller company or even a start-up will come up with a better "mousetrap" that provides even faster and better online service.

This is particularly good news for remote rural areas who have been bereft of higher speed Internet service for years. With more profit potential, all providers have a new incentive to expand those wires everywhere.

Read MoreTV over the Internet: What will be Aereo's fate?

As for the smaller content providers, this is also an opportunity. Instead of wasting their time and money complaining and lobbying the feds over this issue, they now have a clear incentive to make their content better and even charge more for it.

But this story is about more than just the Internet, it's about the continued dangerous pushback against the basic capitalist forces that made this country great.

Continued efforts to limit the financial rewards for everything from the Internet to medical devices are like a dark cloud hanging over us all.

Frankly, I don't want to live in a society that refuses to reward it's most essential service and goods providers based on market forces. High speed Internet is one thing, but where will we be when the drug companies stop seeing enough of a reward for developing life-saving drugs? If you think it can't happen, just look at the vaccine shortages we've suffered recently in this country.

Washington is still way too involved in the Internet arena, but if these reports about a step back from Net Neutrality are true, then we're hopefully stemming the tide just a little bit.

This is commentary from Jake Novak, the supervising producer of "Street Signs." Follow him on Twitter @jakejakeny.

Contact Technology

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Squawk Alley