

The Very Expensive Myth of Long Distance - echair
http://bits.blogs.nytimes.com/2008/11/03/the-very-expensive-myth-of-long-distance/

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shimon
This article briefly hints at the less regulated internet transit industry. I
worked for two years at a company that sold competitive intelligence tools to
large ISPs, and what I learned about the global telecom business was pretty
eye-opening.

First, internet transit is incredibly competitive. The protocols are designed
from the ground up to support changes and redundancy in network routes, so
there is not a lot preventing any company from switching ISP service aside
from their contracts and the constraints of what wires reach their data
center. Because of this competition, prices are always getting lower and
vendors are constantly working to reduce costs. Geography is a very
significant variable, of course: getting a lot of bandwidth in rural Idaho is
going to be much much more expensive than getting it in New York, London, or
Seoul because you won't have many options. The most expensive, of course, is
in markets that are regulated monopolies; many African countries have
absolutely ludicrous bandwidth costs for the same reason they are expensive to
fly to.

On the bright side, though, ISPs are constantly working to make the network
more efficient. One mechanism for this is peering, where two ISPs agree to
exchange traffic that is bound for destinations on each other's network
directly, rather than each individually paying their provider to do so. It
used to be that only large ISPs would bother to work our peering agreements
among each other, but over the past 10 years peer-to-peer traffic has
dramatically increased traffic between different ISPs in local and regional
markets, so those smaller guys have learned to do peering as well.

What does all this mean? I'm no libertarian, but it's hard not to be awed by
the efficiency and power of the unregulated global internet. For whatever
reason, tens of thousands of companies are working together around the world
in an amazingly cooperative and efficient way, even though many of them are
fierce competitors. We could certainly stand some of that in the domestic
telephone market, and we'll probably get it eventually, if only because the
cost of VOIP transit will probably round to zero within our lifetime.

~~~
acgourley
So would you mind giving your opinion on Net Neutrality? I've always been a
bit torn and I bet you have a good perspective on it.

~~~
shimon
As far as I can tell, net neutrality is an interesting mythology that probably
is not reducible to specific technical requirements in a long-term-meaningful
way. One one hand, there have been good rulings from the FCC, e.g. preventing
ISPs from (anticompetitively) slowing down VOIP traffic that isn't handled by
their own VOIP service. But on the other hand there are intrinsic physical
limitations to the way networks are designed, so it's perfectly reasonable
that if you have a Comcast internet connection your VOIP packets will have a
faster route to Comcast VOIP servers than to Vonage.

There's also a tricky distinction going on here. If you have a Comcast cable
line going to your house, your network connection is already non-neutral. That
cable carries video signals over IP on a certain share of the wire's
bandwidth; this share is always dedicated solely to Comcast IPTV and no matter
how many blip.tv videos you have going on your laptop your digital TV will
always have the same dedicated bandwidth. Is that unfair? Comcast did a lot of
work putting up wires to your house, navigating a bunch of annoying state
and/or municipal laws, and investing in a lot of network infrastructure, for
which they clearly deserve some reward. Is it OK to dedicate bandwidth on the
wire but not over IP? Seems like a distinction that will get meaningless
pretty quickly.

On the other hand, there are many good reasons to be suspicious of telecom
conglomerates, and it might be a reasonable policy position to say that
comcast-the-internet-provider and comcast-the-cable-service should be separate
companies. All I've heard from the Net Neutrality heroes, though, is vague and
inactionable invective. It worries me not because I think it might work, but
because it's (1) likely to generate incompetent legislation and (2) crying
wolf now when we might well need coherent opposition to specific industry
actions or proposed mergers in the future.

~~~
wmf
Although it doesn't affect your argument, I feel compelled to mention that
cable TV isn't over IP; it uses MPEG transport stream directly over QAM.

~~~
shimon
Good point; I meant to say "IPTV" somewhat generically. The important point is
that it's a digital signal on a dedicated portion of the wire's bandwidth. I
think Verizon's FiOS TV might be over IP, although I really have no clue.

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maarek
So, a bunch of regulations passed with the intent of helping the "Little Guy"
are being abused by the people with the power and influence to have them
rewritten. I really hope no one is surprised by this.

Clearly the answer is to have Congress hold some hearings and add new layers
of regulation. Since that always works so well.

~~~
scott_s
I think that misses the point that the regulations are for an infrastructure
that no longer exists. The telecommunications infrastructure has changed
significantly, but the laws governing it have not.

~~~
Prrometheus
We have many laws on the books that were meant to address situations that
occurred nearly 100 years ago.

~~~
ckinnan
The long-distance phone tax was instituted during the Spanish American War 110
years ago as a surtax on "luxury" good.

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olefoo
"""One of the concepts that has run through phone regulation for years was
that the price of local service should relate to how many people you can reach
in your local calling area. So the people in cities where it is cheap to offer
phone service have been paying high bills to subsidize low rates for people in
the country."""

The original rationale for this was to help spread telephone service to those
parts of the country where it was more expensive to build out. This actually
made sense since phones are much less useful if significant portions of the
population don't have access to them. That this policy outlived it's
usefulness to the extent it did is somewhat surprising.

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gibsonf1
The answer: VOIP. (I highly recommend PhonePower, btw - saving me in excess of
$200/month with better features than AT&T business lines.

~~~
timcederman
Or Skype. $3/month for unlimited domestic calls, 2c/minute to most countries.
I believe I'm also paying $30/year per SkypeIn number (1 in San Francisco, 1
in Brisbane). It works on my iPhone, although basically I can have access to
my home phone line so long as I have a net connection and some computing
potential. I also have a dedicated wireless Skype home phone for convenience.

Shame about the woeful customer service.

