
Net Neutrality: Toward a Stupid Internet - dwwoelfel
http://www.theobjectivestandard.com/issues/2008-winter/net-neutrality.asp
======
sshumaker
There is one critical flaw with the reasoning of all these opponents of Net
Neutrality. They claim the ISPs should have the right to regulate traffic to
remain 'competitive', and that users who aren't happy with the regulation can
simply choose another ISP. That's how the free market works.

Except this isn't really a free market. In most locations, consumers only have
a single choice for broadband access (or two at most). Most ISPs have a
regional monopoly. So if your local cable provider decides to charge you extra
to access wikipedia, you're SOL.

You can't appeal to the 'free market' when there really isn't one. Your only
choice is to create one, which is exactly what net neutrality aims to do.

~~~
wmf
Since the lack of broadband competition may be caused by government
regulation, the author would prefer total deregulation rather than Net
Neutrality or the status quo: "The key to competition in the Internet is less
regulation, not the added regulation entailed by net neutrality. ... We must
undo the relatively few controls already placed on the Internet..."

~~~
necubi
Except that it's not created by government regulation, tt just doesn't make
economic sense. Broadband is very much a natural monopoly, like electricity or
water. In a free market, the first few incumbents (usually the phone provider
and the cable provider) who have already built out their infrastructure for
old services (phone and cable TV) have a huge advantage over any other
company, which would have to spend billions to lay their own wires. Thus
market forces prevent any other company from entering the market.

Furthermore, it's not really clear that the socially desirable outcome is to
promote competition at the line level. Because each producer has to spend
billions on infrastructure to serve fewer people (because the more providers
there are, the fewer customers for each), costs will be higher and profits
lower the more companies enter the market.

The best solution is in fact government regulation. Instead of promoting
competition at the line-level, governments should (and most OECD countries do,
with the exception of Mexico, the Slovak Republic and...the US) require local-
loop unbundling, whereby the incumbent telco is given a monopoly on laying
lines to houses but is required to lease their lines to competitors at a set
price.

For more information, read the Berkman Center's Broadband report, which was
commissioned by the FCC and is presently the more thorough empirical look at
these topics. It's available here:
<http://cyber.law.harvard.edu/pubrelease/broadband/>.

~~~
CWuestefeld
_Broadband is very much a natural monopoly, like electricity or water._

ATT used to say that the phone network was "a natural monopoly". Today we'd
laugh at that. Really, this example is so glaring that I'm surprised you'd
offer this argument. And in fact you acknowledge that the local loop is
separate from the actual network. But the difference in the US is that this
_is_ a free market -- I can choose to use Embarq (the traditional copper-wire
circuit-switched carrier), or I can (and do) use Vonage, or scads of other IP-
based carriers, or I could do like many people do and just use cellular. We
the consumers are getting to choose just how this unbundling happens.

If, for some reason, you think that there's something sacred about telephone,
while data is different (or vice versa), there are other counterexamples as
well.

In New York, while electrical _transmission_ remains a monopoly, _generation_
has many choices. It works just like the phones: where the infrastructure
demands a single source, that's what we get, but that doesn't mean that the
people that provide the wires can be the only one involved in the business. (I
pay more for electricity that's generated in part by windmills)

And most obviously, it seems to me that most people have access to two
broadband carriers, albeit their capacity varies widely (but that's what
markets are all about, right?). Virtually everyone I know has a choice of a
DSL provider or a Cable provider.

~~~
necubi
You're missing the point, but not for the reason given below. The pipe is the
natural monopoly, not the services provided over it. This is so obvious that
it hardly bears repeating, but again: it makes no more economic sense for
multiple companies to run fiber to each house than it does for multiple
companies to run electric wires to each house.

Sure you can use Vonage for phone instead of AT&T (or whatever), but you can
only do that because you have a pipe to the internet. VoIP services are means
of getting phone over a different pipe, but you still need a pipe.

You also seem to miss the point of my comment: governments should have
policies like mandatory local-loop unbundling (also called line-sharing) which
produce competition where it makes sense (providing backbone) instead of where
it makes little sense (providing the "last-mile" connection).

Finally, a duopoly is better than a monopoly, but not by much. It still gives
the players far too much control of the market.

------
rbranson
Just because someone owns property does not mean that they have unending
rights to do with that property what they wish. Go buy a piece of land in the
middle of the city, build a giant bonfire, and see what happens. Due to state
"regulation," your landlord can't just barge in on his/her property whenever
he/she wishes. Laws like this have existed to protect the weak or meek for
ages.

In a sense, "property" does not exist. Property only exists because laws exist
to protect it. If the country you live in is invaded by a more powerful
nation, how much do you think your "property" matters at that time? It's just
a set of limited rights granted to you by the government, not unlimited
license to do whatever you wish.

~~~
jswinghammer
What you are suggesting depends entirely on the source of rights. If rights
are granted by men and can be removed then you're right. If your rights are
inherent or granted by God then you are incorrect.

If my rights are granted by God (and included in those rights is the right to
private ownership) then if someone invades my land they are violating God's
law.

Private property is the basic requirement of wealth. It is defined by law to
codify what existed for the protection and benefit of everyone. I'm basically
quoting Aristotle here.

~~~
hugh3
If God has laws to protect our rights, then He really should be way more
vigilant about enforcing them.

Rights aren't granted by men, they're asserted by men. We have the right to
free speech because we assert that we have the right to free speech, and the
collective will of those who wish to assert the right to free speech is
(currently, in this country, for the most part) greater than the will of those
who wish to restrict it. This is why it's so important that we all agree on
what rights we do have, and that we all spend a lot of time vigourously
asserting them.

~~~
rbranson
^^^ This is mostly exactly what I'm getting at, but said in a much more
eloquent way. Thank you.

------
wmf
TLDR: This is exactly what you'd expect ultracapitalist Objectivists to say:
ISPs should be allowed to do whatever they want because their networks are
private property.

~~~
api
ISPs networks are not (totally) private property though. They are in many
cases publicly subsidized, and they operate with a state-backed grant of
monopoly or oligopoly within each region.

IMHO, regardless of what you think of Objectivism or libertarianism, the
standard libertarian critique of government interference does not apply to net
neutrality. It would apply if telecom were actually a free market and if
telcos did not receive large amounts of state support.

Conservatives and most libertarians usually fail the see the distinction
between actual private businesses that operate in a free market (e.g. Google,
Apple, etc.) and state-backed quasi-private enterprises like telcos. The
latter are aptly called "Soviet bureaus."

~~~
dantheman
I don't think they fail to see the distinction, but instead of further
cementing government control they in fact argue that telcos should lose their
government privileges and be left to compete in the market. Sure at first they
will have significant advantages but as time goes on competition should be
able to function.

~~~
jbooth
Yeah, because if I have a problem with my ISP, I'll just head to the bank,
borrow a few hundred billion and build my own backbone.

~~~
jquery
This is sort of funny, but despite receiving many more upvotes than its
parent, it displays a startling lack of understanding of the capitalist
system.

More likely than you borrowing a few "hundred billion," large, midsize, and
even small corporations would invest a "few million" in a city or neighborhood
somewhere and use the profits to continue investing in other profitable areas.
They might even collaborate and start connecting entire cities together (oh
look, a backbone). I find this a much more desirable outcome than a
government-run or (the current) psuedo-government run scenario.

~~~
jbooth
Well, ok Mr. Capitalist, why hasn't that happened yet? It's certainly not
because the existing cable companies' sterling customer service leaves no room
for improvement.

~~~
dantheman
It hasn't happened because most communities grant a monopoly to their cable
provider so their can only be one legal cable company in a given area.

------
lmkg
The problem with a lack of net neutrality is not how ISPs relate to their
paying customers, it's how they relate to content providers. That's not to say
that I agree with the arguments in the article; I find them extremely
distasteful, although there is some reasoning behind them, based on ideas of
morality that I disagree with but don't find completely invalid.

I'll outline the scenario that worries me. Comcast sends all internet data as
second-tier data, unless the content provider pays Comcast to provide it as
first-tier data. The difference between the two is small, say one or two
tenths of a second in delivery time. The end user doesn't notice a difference.
But, as Google has found, the extra tenth of a second has huge impacts on
conversion for websites. So, Comcast effectively offers the same experience to
users, but now also holds a huge sword over the head of content provides.
Effectively, it is in an excellent position to leverage its ISP monopoly to
create a massive extortion racket to content providers. And the magical free
market isn't going to push back against Comcast, because the experience for
the end-user has not noticeably suffered.

It's quite possible that under such a system the internet could actually be
free, because it's subsidized by corporate content provider partners, and
charging the content consumers becomes obsolete, although I doubt Comcast
would suddenly drop a revenue source. However, it also raises the barrier to
entry for small content providers, because they don't have the spare cash to
pay Comcast for non-sub-standard conversion rates. In a (weasel) word, it's
less democratic. Not to mention, Comcast can sustain its monopoly on ISPs by
giving even shittier third-tier access to its competitors. The end result is a
less-free internet, Comcast enriching themselves by abusing a monopoly, and
all of this done without Comcast delivering a higher-quality internet to
users. I think I'll take my stupid pipes, please.

I agree with the author insofar as I accept that his conclusion is consistent
with Objectivism, although it's still debatable if owning the wires means
owning the data that goes through the wires. Fortunately for me, I'm a
pragmatist, not an Objectivist, and I think the loss of property rights (if
any!) is perfectly acceptable for the benefits to expression and
communication.

~~~
jquery
> Effectively, it is in an excellent position to leverage its ISP monopoly to
> create a massive extortion racket to content providers. And the magical free
> market isn't going to push back against Comcast, because the experience for
> the end-user has not noticeably suffered.

So in the end, being an internet provider is massively profitable, and maybe
another company decides to jump into the space to take a share of the highly
profitable market. Maybe two companies, maybe three. Suddenly there are
choices, these companies are competing on price, service, bandwidth, etc. for
customers and everyone wins, all at the price of Mom's free blog being served
1/10th of a second slower in the interim.

Sounds good to me.

------
pyre
> _Were it not for net neutrality, a start-up ISP might compete against
> Comcast by configuring its fledgling network to favor Bit Torrent’s peer-to-
> peer data packets, thereby earning it the business of serious movie
> downloaders without having to match or exceed Comcast in expensive
> infrastructure._

Really? If someone advertised their ISP as 'BitTorrent-friendly' they would
have to contend with the MPAA, RIAA, BSA, etc trying to sue their company back
into the stone-age.

> _If an ISP were left alone to manage the transmission of data packets across
> its property, it could profitably improve the speed of its network, it could
> profit from charging more for more bandwidth consumption, and it could
> profit from providing special services to certain customers, such as
> smoothly streaming high-definition video feeds. But because none of these
> things is possible under net neutrality’s rules, the property of Internet
> service providers is worth considerably less to them in terms of its profit
> potential. Accordingly, their incentive to expand and improve the
> infrastructure on which the Internet relies is greatly diminished._

The government poured billions into the country's major ISPs to 'upgrade
infrastructure' and there was little to no return on that investment.
Infrastructure was _not_ upgraded and we are now at a point where ISPs are
trying to claim that their networks can no longer handle capacity, so they are
_forced_ to do filtering and 'QoS.' Where did all of that money go? Shouldn't
the free market have allowed the ISPs to use that money to improve their
networks so that they could reap larger rewards from those better built
networks?

The problem with trying to treat Internet Service Providers as some sort of
'free market' is that it isn't. There are _huge_ barriers to entry in the
market, and well-established incumbents. Most places in the USA only have 1 or
2 choices for internet service. How is this in any way a 'free market' that
the government should say out of? In fact, the governments created this mess
in the first place by creating phone company and cable company monopolies. Now
these telcos preach about how 'the market should be free' just because they
have a huge advantage (i.e. established customers and deep-pockets) against
any possible competitors. Which is a hypocritical stance seeing as they are
where they are today due to government-granted monopolies.

tl;dr The ISP business model:

    
    
      1. Get the government to give you a lead in the market through a monopoly
      2. Grow your business by leaps and bounds during this monopoly period
      3. Government opens market
      4. Complain that government intervention in the market is evil and lobby
         against the government helping out any potential competitors

~~~
dantheman
So it seems your problem is with the initial government intervention? So in
order to fix that we need more?

~~~
pyre
I'm not really offering solutions. I'm pointing out the lack of a decent
evaluation of how we got here and how we can fix it. Almost all net neutrality
discussions are people that want to prevent large ISPs from enacting draconian
restrictions on their networks vs the people that don't want any government
regulation of anything. There doesn't seem to be much constructive discussion.
Just people taking traditional 'liberal-vs-conservative' positions and digging
in to duke it out on the canned talking points that traditionally follow.

The people that say "networks are private property and I don't want no
government in my private property" are forgetting that most of those networks
were built during periods of guaranteed profits (AT&T) or just regional
monopolies (cable companies). It's not like these companies were little mom-n-
pop shops that were built from nothing with no help from anyone, and now the
'big bad government' is coming in to kill them off by helping their
competitors. These companies where weened off the government's teat.

The people that want to bring in the government to restrict the internet are
forgetting that there is a whole can of worms that will be opened if the
government starts getting their hands into the internet. Sure it could be just
'net neutrality' regulation now, but what you picture as what 'net neutrality'
should be will _not_ be what it looks like once an actual bill gets passed.
Not to mention all the attempts to tack on 'child porn' filtering and crap
(possibly creating some 'Internet Filter Czar' position in the Executive
Branch).

Even solutions like: "the internet should be like the highways; built and run
with tax-payer money." So the government now runs the major backbones of the
internet in the US. This means:

    
    
      1. Companies can easily become ISPs by hooking into
         the backbone at reasonable rates
      2. Congress will be salivating to pass bills to put filters
         on these backbones to 'protect the children.'
      3. The networks will be less secure as routers, servers,
         etc are administered by incompetent administrators that
         only have their positions because they know how to play
         the government bureaucracy politicking games better than
         more technically skilled colleagues.
    

The average consumer is stuck between a rock (the government) and a hard place
(large corporations with vested interests). Neither solution is particularly
palatable, and it's naive to say that one solution or the other will save us
from all the evil in the world.

~~~
jquery
I'll take large corporations with vested interests over the government. At
least those interests are maintaining a profit and answering to the market. I
can pick between a few different COMPETING mega-corps (if they are a monopoly,
break them up via anti-trust). With the government I will have no choices and
I can see them chomping at the bit to take away liberty "for the children."

~~~
pyre
The thing is that you're buying into the false dichotomy of the Net Neutrality
debate. It's not an all-or-nothing prospect. Rather than framing the question
in terms of, "who should control our internet," we should be asking, "how can
we fix the current situation." In your post, you make an excellent suggestion,
anti-trust. The only issue with that, is that we've proven in recent years
that the power of the corporation extends well into the government, and most
anti-trust attempts end up as not much more than slaps on the wrist.

------
dionysiac
Government control of private property - this is how some public utilities
operate. Private industry builds the infrastructure, but the government aims
to bring stability through regulation to what a large part of the general
population sees as an essential service.

This article makes the analogy to the printing press; that the Internet is
changing our worldwide society dramatically. Those who are for net neutrality
(myself included) would likely agree - that this transformation is a positive
thing and should move towards becoming an essential service.

How this is accomplished - either through private industry or government
ownership - is really just a matter of culture. Many countries have
significant government ownership of network infrastructure.

~~~
jonallanharper
Many countries gradually cannibalize themselves in the name of the "public
good" as well.

USA has been the only experiment in capitalism so far (and a raving success
until the income tax was instituted)... why re-model on failed socialist
principles?

------
avdempsey
I wonder if there's a simile to make with electric utilities.

A "smart grid" could potentially distinguish between surcharge-able electrons,
just as a "smart internet" (one without net neurtrality) could distinguish
between good and bad packets. Would you want an electric utility to be able to
charge you more because you bought the wrong brand of refrigerator? Or were
charging an imported electric car?

Of course utilities will charge more for peak hour usage right now, but at
least every electron is charged the same at that time.

What do you think?

------
rapind
Bittorrent invented P2P... Stopped reading when I hit that.

\--edit-- Read it again and he says "developed p2p" which could be construed
as further developed I suppose. Benefit of the doubt.

