
Net Neutrality and the Oil War - trevoragilbert
http://recode.net/2014/01/16/net-neutrality-and-the-oil-war/
======
jimrandomh
These aren't analogous at all. The situation that Net Neutrality is about
preventing involves four parties: a website, a comsumer, the website's ISP or
datacenter, and the consumer's ISP. Call these W (website), C (consumer), D
(the website's ISP), and I (the consumer's ISP). There are network connections
between these parties, and the graph of who has a network connection to who
looks like this:

    
    
        W---D---I---C
    

The website and the consumer each pay their respective ISPs for connectivity.
Those two ISPs typically have a connection between them, in an arrangement
called "peering". If they don't, then instead they will both pay a third ISP
(a backbone provider, B) to bridge the gap. So the graph of who pays who for
network connectivity looks like one of these two arrangements:

    
    
        W-->D   I<--C
        W-->D-->B<--I<--C
    

If the connection between W and D is too slow, then W pays for an upgrade. If
the connection between C and I is too slow, then C pays for an upgrade. If the
connection between D and I is too slow, then D and I haggle over who pays,
under threat of losing business from W and C.

Now suppose a I, a consumer ISP, decides to block or slow down traffic coming
from W. The key fact of this situation is that in the original state of
affairs, _there is no business relationship between W and I_. The website only
has business relationships with C and D. Basically, I is threatening to
sabotage W's relationship with C, by degrading C's service, unless W pays up.

~~~
bradfordcross
Jim, this is a really fantastic breakdown. thanks. The part I still don't
understand is - how can I threatening W other than by violating their terms
with C? Doesn't C, the party who pays I, ultimately pay for a service spec? Is
the spec too loose such that it allows I to throttle specific W's?

~~~
jbooth
We've sent you a new EULA, it's 5,000 pages, please sign it to continue to
receive internet service.

~~~
bradfordcross
done. plz fax eula, i only received digi

------
higherpurpose
Mike Masnick had an interesting article about the solution being competition,
too:

[http://www.techdirt.com/articles/20140115/15035825890/losing...](http://www.techdirt.com/articles/20140115/15035825890/losing-
net-neutrality-is-symptom-not-problem-now-is-time-to-focus-real-
competition.shtml)

I think there's a good argument for making the Internet be an utility like
electricity is, but I think that also means there won't be anymore competition
effectively (at least in terms of deployment), and they will upgrade their
networks much more slowly. So the money for upgrades might have to come from
the government (which actually did happen already, but with few results:

[http://www.pbs.org/cringely/pulpit/2007/pulpit_20070810_0026...](http://www.pbs.org/cringely/pulpit/2007/pulpit_20070810_002683.html)

That being said, we also can't just say "let the free market deal with it",
because right now there's _no free market_ in the broadband space. ISP's have
managed to basically outlaw competition from their areas, so before we even
begin to accept the idea of "competition is the solution, not regulation",
then we need to actually make that true, and make sure all such restrictions
against new entrants are lifted, and generally make it much easier for new
competition to appear and exist.

If it becomes super easy to move from one ISP to another the moment one of
them pisses you off, and there are at least several good choices, then this
could work.

~~~
tomrod
> I think there's a good argument for making the Internet be an utility like
> electricity is, but I think that also means there won't be anymore
> competition effectively (at least in terms of deployment), and they will
> upgrade their networks much more slowly

It depends. Some of my academic work looks at network neutrality and ISP
investment incentives in the long-run (as well as the effect on content
providers and consumers) when the ISP is a geographic monopoly. The investment
incentives (improvements to bandwidth) _should_ theoretically improve over a
net-neutral policy if network neutrality is dismissed, but it's not guaranteed
to be all _that_ great.

Intuitively, if we really wanted to see innovation, we should do away with the
typical geographical (natural) monopolies we see with Comcast, et al. For
example, for years Austin plagued with internet problems and (especially)
relatively low bandwidth offerings compared to places like Dallas (with FiOS,
etc.). However, quickly after Austin was chosen by Google as a place for
Google fiber, AT&T began offering GB/S speeds (as part of Uverse? Not sure the
exact name). The point is -- if we want to see improvements in the network,
opening up competition will encourage firms to innovate.

A fun story to consider is how MCI started out against the monopoly AT&T.

~~~
bradfordcross
Not quite sure, are you making the case for no legislation at all?

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minimax
It would be nice to put together a spectrum of possible outcomes if net
neutrality regulations were completely repealed. Here's what I think.

Peer-to-peer file sharing is gone or throttled way back. ISPs have no reason
to support it since it takes up so much bandwidth and there are no
stakeholders with enough money/clout to fight back.

Microsoft starts paying carriers for QoS for Xbox to use it as a
differentiator against Sony. Maybe they try a similar tactic with Skype but
maybe the carriers don't want to go along with that since they have their own
voice offerings.

I don't think streaming music services are affected at all. The bandwidth is
so low and it's relatively insensitive to latency. It seems like it would be
excessively cruel for ISPs to seek out and block arbitrary streaming services.

Maybe video is different? Perhaps they could charge video services (Youtube,
Amazon Prime, Netflix) slightly more for high def streaming to subscribers.

Sports. ESPN already has a sort of self-imposed reverse net neutrality thing
with ESPN3. Hard to see much changing there. I don't think there really any VC
backed upstarts here to speak of either.

~~~
rz2k
"I've got this thing and it’s fucking golden, and I’m just not giving it up
for fucking nothing."

Occasionally statistics are released by companies on how much traffic leaves
their site when it is 100ms slower, or the percentage drop in sales conversion
rates. Furthermore, the sensitivity of visitors seems to be increasing.

And yet I think it would be very difficult to argue in court the specific harm
caused by 50ms of added latency in 2020. Consumer ISPs could easily offer
'prioritization' to companies for a fee. Perhaps a Facebook of 2014 could make
a subtle case measuring the harm of low priority, _or_ cover the nominal fees
to get that prioritization, _or_ get users to complain to their ISPs. However,
a company equivalent to Facebook of 2006 on the other hand would just have its
growth slowed by a degraded user experience.

Already the structure of the industry for consumer ISPs encourages rent-
seeking behavior. The slow spread of gigabit-tier broadband is likely related
to those dynamics. Altering the landscape for content availability and
latency, so that it is not neutral and is likely to favor incumbents, seems
like it does not optimize the internet for innovation or the growth of new
internet properties.

~~~
minimax
You're saying you think ISPs would try and penalize all traffic by 50 or 100ms
and let the big sites pay up to avoid the penalty? That seems like mustache
twirlingly cruel and I'm not even sure you can do that with conventional
network hardware (you'd have to buffer all that traffic in RAM).

On the other hand, if we're just talking about allowing certain companies to
pay ISPs for prioritizing traffic for certain applications (VoIP, gaming),
then I don't think that's such a horrible thing.

~~~
rz2k
I'm not just saying that not doing so is equivalent to leaving money on the
table, I'm saying that the net costs to the economy would be greater than the
revenue collected from content providers. In a certain sense the revenue
collected from content providers could be seen as offsetting revenue that
would otherwise be collected from subscribers, and may lead to faster
deployment of network improvements. However, that neglects the full cost to
the internet as a whole, which would be the increased barriers to entry for
new companies.

Blagojevich got in trouble because he pushed the envelope so far, but I used
the quote because it reflects the reality that not cashing in on some
opportunity is equivalent to losing money, and particularly so if you have a
responsibility to shareholders.

------
atmosx
> Suppose you want to compete with Amazon, and you want Amazon to pay the same
> UPS rates you pay. It may make sense for Amazon to acquire UPS, or build a
> competitor to achieve rates that are more natural at their scale. [...]
> Vertical integration like this isn’t necessarily anticompetitive. Amazon,
> for example, runs AWS, but doesn’t appear to have engaged in anticompetitive
> practices with prospective competitors who run on AWS. Nevertheless, the
> scenarios above could be more undesirable for competition than the initial
> unregulated scenarios.

The article resume is "don't be pro regulation, because X company might
acquire W company and create a vertical company?", because that is really _not
smart_.

If it makes sense for Amazon to acquire UPS or run it's own courier, since
it's not illegal to do so, be sure that it will. The _Net Neutrality_ has
nothing to do with this. Corporations don't do any favors, last time I
checked.

According to the author's reasoning we should let any bill pass by, because
_hey if we push hard on the other direction, only God knows what other
solution might find corp-X to make money, better the devil you see_ and we
could go on like this for ever.

Hence:

* We should leave the NSA do it's job, because repercussions of our action - of protesting - might be grave!

* We should have accepted the DRM on mp3s, because _Sony might buy an ISP_.

* etc, etc, etc...

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mullingitover
> Sure enough, Microsoft arguably did become complacent, and that resulted in
> the well-documented shift in power from Microsoft to Apple and Google.
> Anyone seen an antitrust discussion centered on Microsoft recently?

Microsoft was under DOJ scrutiny[1] up until 2007, and that's the timeframe
when their competitors grew surprisingly strong. Coincidence?

[1]
[http://www.justice.gov/atr/cases/f201200/201205a.htm](http://www.justice.gov/atr/cases/f201200/201205a.htm)

~~~
bradfordcross
Pretty sure the answer is yes and it has a lot more to do with what Apple and
Google were able to do. They didn't gain share in any PC OS or PC apps markets
where microsoft was dominant, they just made those markets less relevant.

~~~
joshuapants
It sounds like you're agreeing with him. Microsoft was complacent, that's why
it didn't try to get into those new markets until it was too late

------
johnvschmitt
If you're running the pipes:

1) Charging more/less by VOLUME? = OK.

2) Charging more/less by CONTENT? = NOT OK.

The article misses that critical point.

And, yes, an even better solution is competition in ISP space.

But, we need to get money out of politics for that to happen, so we can't hold
our breath!

(For example, big ISP's have bought senators to block cities from running
their own free wifi networks, passing state laws prohibiting municipal ISP's!)

------
ryanobjc
Interesting article, although right when I thought we were going to get to
some interesting suggestions, the article ends.

So let me finish it for him, what we need is more dynamic and realistic
competition in the last-mile ISP business. I believe point to point high-
frequency bandwidth can help solve this problem. Metropolitan fiber with sub-
leasing capacity to ISPs that carry the traffic is also an option. But the
natural monopoly position of last-mile wiring has always been a major issue.
Hence regulation of phone companies.

In dense cities with irregular geography, the wireless line of sight can work.
Eg: Webpass, monkeybrains in San Francisco. In flatter cities, this may not
work as well. In less dense areas, the installation cost usually means a
natural monopoly, but towers, line of sight wireless may help there.

The problem is all the LOS wireless stuff has been more of a bespoke solution
rather than a scalable one. Tech has helped reduce the hardware cost, but
tuning and aiming antennas - does this work for a city like, say, St Lewis?

~~~
bradfordcross
To summarize, you're saying that none of these look like legit solutions
broadly, but a hodgepodge of different solutions in different locations can
create interesting options for competition against the natural monopolies, but
these natural monopolies may remain in some areas regardless?

------
mwsherman
Net neutrality basically says, these are the legally acceptable network
protocols and architectures. It inevitably requires a specific technical
definition of acceptable traffic patterns and network uses, either by Congress
or by case law.

So much of what we think about neutrality is based on a hand-wavy assumption
of natural monopolies, that our current lack of last-mile competition is
inevitable. At different times, we thought the same of package delivery, voice
calling, sending messages. The things that obviated them were not obvious, a
la “faster horses”.

Thought about this way, neutrality legislation actually locks in the
incumbents’ current arrangements instead of opening them to (so far
unimagined) asymmetric competition.

~~~
mindslight
No, net neutrality is just a restatement of the End to End principle - network
intelligence should be kept at the hosts. The only things routers should be
doing are forwarding packets based on daddr, and dropping packets when queues
are full (and I guess egress filtering these days).

Having said that, I'm sure that any FCC-created net neutrality would devolve
into blessing specific protocols, defining protected classes of businesses,
specifically excepting p2p, etc.

~~~
bradfordcross
So are you saying you think no legislation can help here, or do you think
there is something that can enforce e2e but it just wouldn't get through in
practice without dinging certain use cases?

~~~
mindslight
In general, I don't think legislation ever helps. The political meat grinder
perverts a grassroots call for sanity into more red tape that supports the
incumbents' status quo. Keep in mind that the large companies you might be
tempted to say would support net neutrality are actually incumbents and would
love to keep competition from springing up, especially if they were based on
compelling non-http technologies.

If you think otherwise, please take my first point and run with it. I
personally think the only way forward is to get more encrypted peer-talking
traffic-indistinguishable apps into more people's day-to-day use. Then there's
an actual market demand for real Internet access.

~~~
bradfordcross
agree. while people may sometimes have valid concerns, its the chain of
reasoning that leads to proposed ways of addressing those concerns that often
isn't grounded in realistic economics.

