I consider everybody here very smart. In many cases smarter than myself. Therefore, could somebody please explain why we would give the government, which has shown itself to be terribly incompetent with technology issues, the ability to enforce net neutrality? Seriously, I can't get over the dissonance here. If it's such a shitty idea, let consumers decide. Google Fiber et al will just eat the major telecoms' lunch sooner or later anyway. It may just take a little longer, but we'll avoid the possibility of letting the government crush Internet innovation forever.
Because the telcos are currently enjoying a "natural monopoly". The cost of entry to become a telco is so high, that normal competitive forces do not apply.
In situations like this, one role of government is to regulate these natural monopolies to protect citizens.
One such regulation, for instance, is that the power company cannot shut off your power in the middle of winter in Minnesota without fulfilling some pretty stringent criteria.
Exactly. Competition is the "active ingredient" in the free market, and "freedom" from regulation does not always suffice to guarantee competition. Utilities are the textbook example.
The utility market used to be competitive, then municipalities began "licensing" them, which eventually led to the current state of affairs.[1] Even lighthouses, which have large externalities, can be built and operated without government intervention, as they did for a very long time.[2]
That Wikipedia link seems to support the claim that lighthouses actually failed to operate well without government intervention:
"Eventually, all these rights were withdrawn or bought up by the authorities because the total light dues that had to be paid by ships were too high as a result of rent-seeking activities of these so-called private providers of lighthouses. Barnett and Block (2007) qualify these critiques by showing that private lighthouses are possible, but do not show up in the historical record."
The utility market moved towards a regulated model in the very early days of electric and gas transmission. There were lots of really good reasons for this around safety, universal service and public good. Most states today have a model where delivery is tightly regulated, but electricity generation is a competitive marketplace.
At the end of the day the government exists to serve the public interest.
Correct me if I'm wrong (because I'm not very familiar with this issue), but I gather that the tightly regulated part - power transmission and distribution - suffers greatly from decaying infrastructures due to lack of investment and maintainance. It seems to be at the brink of collapse in some places.
I'm not against government regulation of essential infrastructures, but we should be aware of the fact that it's very difficult to get right, particularly (but not only) in a political climate where government spending is such a divisive issue.
Agreed. Regulatory regimes aren't a magic wand -- they are tools that need to be wielded appropriately.
I think that any capital intensive infrastructure becomes more difficult to manage effectively as it ages. Even relatively rich and well maintained infrastructure like the US Interstate system has severe design flaws (35-year lifespan bridges that are 40 years old) that make life more complicated.
Government exists to organize society. Feudalism served its lords, monarchy served its kings and nobles, empire its emperors, and democracy, occasionally, its people.
Government has served a variety of masters in the past - but rarely purely the public interest.
It should serve the public interest, which is good enough for policy debates.
This is absolutely false. Policy debates universally assume that it will serve the public interest, despite experience and extensive research in public choice economics.
The result is that we get policies that aren't crafted to be robust to corruption and bad incentives, and that gets us to the state we're in today.
Any policy debate should include discussion of what could go wrong, what the effects of that would be, and what we could/should do to prevent that.
I guess I wasn't clear enough. My point is that, in a policy debate, whining about how government has not served the public interest in the past is counterproductive except insofar as it helps to prevent all the crap you enumerated. What we're both saying is that policy debates are about how to write policies that actually serve the public interest, instead of falling into some perverse incentive trap.
At the end of the day the government exists to serve the public interest.
I would add to that that the free market definitely does not exist to serve the public interest, as far too many fans of it tend to forget.
Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all. -- John Maynard Keynes
There are places where the free market is ideal - utilities, such as Internet service (which requires either right of way on private land or permission to transmit and receive without interference on public airwaves) is not one of them.
Utilities, and communications which rely on scarce distribution channels as you mention are not, and will not be truly free markets and should be regulated.. how tightly they should be regulated is up to interpretation. IMHO such utilities should not be allowed to be owned by companies that have inherent market verticals and/or conflicts of interest that do not serve the public good. Time-Warner is a prime example.
As far as outside utilities, and similar services... I feel the government's role should be to limit monopolies, not eliminate, but only so much as to allow for competition to happen. The rediculous extent of IP protectionism, specifically patents on design, algorithms and business processes are counter to that. Corporate personhood as a legal concept is against that. For that matter, corporations should probably instead have limits on unutilized/underutilized assets for a given length of time, and enforce distribution back to investors in those cases.
A free market is a market is one where upstart competition can generally succeed, and entrenched incumbents are regularly surpassed, or continually growing.
If by "natural monopoly" you are implying a monopoly arising without government intervention, I'm pretty sure you are completely wrong on that point.
Telecommunication companies need permission to rip up streets and run wires, or run wires on poles, or exclusive rights over parts of the electromagnetic spectrum, or put satellites into the right geosynchronous orbits to broadcast signals to consumers.
(I'm curious to know if I'm wrong about any of these. For example, did Dish/DirecTV require permission to put their satellites in place? Do they even own the satellites.)
All of these things require specific government enforcement. So every telecommunications company is pretty much created through government regulation.
So the idea that backing the wishes of telecom executives is somehow pro-free-market is completely farcical. Free market activity has had almost nothing to do with the current U.S. telecommunications industry. This is just yet another industry asking for a windfall through government acting in their favor, similar in spirit to the financial industry bail out.
> If by "natural monopoly" you are implying a monopoly arising without government intervention, I'm pretty sure you are completely wrong on that point.
The reason telecommunications service is a natural monopoly is that the fixed costs are extraordinarily high and the variable costs are trivial. In consequence it is not profitable to build a competing network once one already exists, because all you accomplish is to lay out an enormous capital expenditure in order to enter into an aggressive price war with the incumbent, since making $10/month from a customer that costs you less than that to service once the network is already built is still more profitable than losing that customer to the competitor and making $0. So the result will always be the same: Either there will be a monopoly (or equivalently a cartel), or there will be a price war until every competing provider either goes out of business or joins the cartel and it reverts to a lack of competition. And prospective market entrants understand this dynamic ahead of time and choose not to participate. The only reason we even have the duopoly that exists today instead of a straight monopoly is that the two networks were originally built to provide different non-competing types of service, so now they effectively act as a cartel with the knowledge that no one else is likely to enter the market.
It is certainly true that government intervention has been involved in the creation of that infrastructure -- it's plausible to say that it wouldn't have been cost effective without it. But that only means that in the alternative "free market" for telecommunications service, the infrastructure cost would have been even higher because the provider would have had no subsidies and would have to buy all the land without eminent domain and pay off holdouts etc.
Don't assume that the network must be entirely owned by one party. That is the situation right now in the cell and broadcast markets, but it is caused by regulation rather than anything "natural". It isn't the 1940s anymore; wideband radio technology exists that would allow the sharing of all spectrum rather than the single-use requirements we have. After that is adopted the first-mile connection is to a WISP, which is connected by fiber to the rest of the internet.
Wireless is not a panacea even with spread spectrum. You still have a finite amount of radio spectrum you have to share with everybody within range. The amount of bandwidth you can serve to each customer with a fiber-terminating central office every square mile is limited in practice by the cost of installing fiber. The amount of bandwidth you can serve to each customer with a WISP every square mile is limited in practice by the laws of physics -- the only way to get more is to build a higher density of wireless base stations, and in higher population density areas the cost of that is on the same order as installing fiber to the customer premises. Moreover, the cost effectiveness of using wireless for the last mile goes down as the demand for bandwidth per customer increases over time, because you have to increase the density of wireless base stations and run new cable to each of them in order to expand capacity rather than only replacing the terminating equipment at both ends of an existing cable.
Wireless is a great solution to providing high bandwidth services in rural areas where the cost of laying new cable is prohibitive. It's not a solution for cities.
It's true that there is a rural/urban breakover point; I'd contend that is at far greater densities than most people think, especially if we made use of the entire spectrum rather than the drips and drabs meted out so far by the FCC. The portion of the population getting shafted right now, all the "rural" (and most suburban, and urban in Texas-style "sprawling" cities) folks, is definitely a majority. "Laws of physics" arguments aren't convincing at this point, since engineers have had their hands tied by FCC regs. Let a big market for this type of radio tech exist for a decade, and then we'll see what can be done.
You can't use the entire spectrum without addressing the sunk costs problem. All the existing users of the spectrum would have to throw out their equipment and replace it with spread spectrum equipment. Nobody wants to do that, especially when the benefit of them doing it goes primarily to third parties. You want to talk about phasing it out in favor of spread spectrum, fine, but that's going to take years or decades. What do we do in the meantime?
The next piece of trouble is, if you really want high power unlicensed spectrum, what do you do about contention? What happens when scientists start setting up transmitters to continuously send 50Tbps of scientific data from remote monitoring stations to the regional university's data center? Or people set up a distributed mesh network of Tor nodes? Or someone decides to operate a wireless "cable TV" franchise and starts transmitting 50,000 streams of 4K HD?
Don't get me wrong, I think you have the right idea -- spread spectrum is the way to go for wireless and there is room for a lot of innovation there if the FCC would get out of the way. Especially in the way of short and medium range mesh networks. It just isn't a replacement for fiber to the premises.
A natural monopoly is a well defined term in economics. A natural monopoly occurres when there are massive fixed costs but insignificant variable costs in delivering a service.
The economics of the industry naturally lead to one firm providing the service, a monopoly.
Not at all "natural". The cost is so high partially due to special agreements between these corporations and governments, from local agreements to lay down fiber, to national agreements regarding the use of the electromagnetic spectrum.
> The cost is so high partially due to special agreements
This is true, but it doesn't contradict the fact that telcos are also natural monopolies.
Let's play a game: pretend that all of these special agreements have suddenly become invalid and the market has become deregulated. Assume you have (or can acquire) the technical expertise to challenge them. What's your business plan?
Thanks, this is is a point I do not see expressed enough. Regulatory capture just one expression of a 'free market'. When you are a non-moral entity, free to do business however you want, you will cheat, you will find ways within any system to lock others out of your market, you will screw the customer for every last cent, you will break the law if you can get away with it - or at least the ones that do will end up ahead of the game.
Liberalists seem to believe that free-marketism is a self-perpetuating algorithm. But when the unit tests fail, they suggest it should be unleashed system wide without thinking through the consequences. If your competitor has locked you out, and you are a non-moral entity, and there is no legal recourse, what do you do? How do you break a cartel? Car-bombs?
The opposite of regulatory capture is not no regulation, it is public education and engagement and power. Consumer power is directly proportional to market freedom.
edit: cool, so what do you call them in the states? there is no such distinction in oz, the current governing party is the liberal party and there is no way in hell they are progressives ;)
> Liberalists seem to believe that free-marketism is a self-[optimizing] algorithm.
It's worth noting that in the US, the term "liberal" is often used in association with those who are skeptical of the free market (moreso than their political opponents, anyway). Classical liberalism does promote laissez-faire economic policy, so you aren't incorrect, but the term is a bit ambiguous in context (see the 2nd paragraph in http://en.wikipedia.org/wiki/Classical_liberalism )
Anyway, I agree completely with your point. Business interests and consumer interests often oppose one another, and I believe that governments ought to put consumer interests first, even though presently they have a track record of doing the exact opposite.
Campaign finance reform would be a good start (private campaign finance => bribery is a prerequisite for obtaining power).
> I believe that governments ought to put consumer interests first, even though presently they have a track record of doing the exact opposite.
For me, this is the part I'd emphasize, and probably where we could create a great deal of consensus. Whether or not we agree that the government should be interfering for the benefit of the consumer, we definitely agree that it shouldn't be interfering for the benefit of big business.
> Whether or not we agree that the government should be interfering for the benefit of the consumer, we definitely agree that it shouldn't be interfering for the benefit of big business.
But government is largely bought and paid for by special interests. Given that, it seems there's very little point in asking what the gov't should do.
What it will do, is quite obvious: it will serve the interests of the highest bidder.
Not necessarily. Right now our system has a policy of mandatory bribery built into the system by way of campaign finance rules. It's relatively easy to go from "mandatory bribery" to "optional bribery" through public campaign funding, which I think is a step in the right direction.
Campaign finance reform is a boring but necessary first step towards fixing this mess.
I agree, that's the real world result, but we can't win that argument easily. Instead we can point out each instance of it happening and hopefully the more pragmatic liberals will come around eventually.
>>> The opposite of regulatory capture is not no regulation, it is public education and engagement and power.
And unicorns. Most of all the unicorns, being the most real part of the deal. At least until people realize that regulatory capture is not some excess of the regulation, it is a direct and inevitable consequence of it. There's no people that can understand the industry enough to regulate it but the people of the industry. There's no people that are motivated enough and having enough concentrated resources but the people of the industry. Thinking that you can beat a team of industry experts knowing everything about their industry and already having majority of regulatory body composed of their former coworkers by chanting "power to the people" and "public education" is beyond naive. Of course, if you're lucky, you can align your interest with a competing group and suppress opposing group's interests for a time. But that would not give you any power - it would just redistribute the power between the two groups. As long as you agree that the power should belong to the regulatory bodies, you would have them to be controlled by major industry players, partially or completely. You can say feel-good things like "public education" all day long, but you'd have to wake up and face the reality one day - and the reality is that regulatory capture is an inevitable consequence of powerful regulation in a big industry.
There's a lot of ambiguity in your scenario. Do I get equal access to the existing infrastructure (presumably paid for by the existing monopoly)? Assuming this deregulation comes along with some law or judicial ruling that no local government can create such an ongoing monopoly, there would likely be created a separate industry that simply builds infrastructure at some price to the locality with no continuing agreement.
Second, who am i? A startup? Since this is a fantasy world, I imagine I'd have invented some new tech that would substantially reduce the cost of operating an ISP. I'd pitch that to investors and raise enough to get of the ground?
But that's only one way I might enter the market. I may be Google, or even an existing telco looking to expand my turf.
My overarching answer is simply: I don't know, but let's get rid of the artificial constraints on the market and see what results. In most unregulated industries, quality rises and price falls (in the long run). There may be exceptions, but which industries do you see this not happening:
1. Finance
2. Medicine
3. Utilities
4. ?
All industries with close connection to the state. I'd wager that sans these connections, things would be a lot different.
Umm, the only way you would have access to there infrastructure is with heavy regulation so no there is no access to any of it. Suggesting otherwise is seriously ignoring the question.
PS: 1 billion in capital no regulation no access to any existing infrastructure no magic wand and the only way you can dig is to convince the local government or individuals that there is so reason to let you dig aka spend money. Which is clearly harder where there is already existing high speed internet. So what do you do you find city's without FIOS (etc) and build there at which point there yours and everyone else leaves them alone more or less. (Though if there is no natural monopoly then fighting in existing markets should be easy...)
Clearly a local government is going to be less receptive to more digging if high speed service is in place, but it's not a "natural" monopoly if a deal with the government must be made as a prerequisite to provide services. You are also assuming that the "digger" is necessarily the service provider. In my view, local governments are basically seduced by telcos subsidizing or eliminating the up front costs of building infrastructure. In the long run, it's a bad deal.
I would say the monopoly is "natural" if and only if the local government is required to allow anyone (or no one) to dig. Or if it pays for the digging itself.
Ah, yes it is? Someone owns that land, and it's not you. And for that matter, you want to see expensive, wait till you have to convince 10,000 property owners individually to let you trench up their gardens.
A natural monopoly is an economic concept about how high fixed costs makes a single company the most efficient. Regulation of a natural monopoly is secondary to that. A telco might then be a both natural monopoly, due to how the business works, but also have a government-granted monopoly due to licenes etc.
> Do I get equal access to the existing infrastructure (presumably paid for by the existing monopoly)?
No, the existing company retains ownership of the infrastructure they paid for and the ability to charge anyone whatever the heck they want for using it. Also, they retain all rights granted in private contracts (not involving government at the federal, state, or municipal level).
> Second, who am i? A startup [with new, cheaper tech]? Google? Another telco?
You get to pick, subject to three constraints:
* Your source of capital is rational (they'll replace you or refuse to fund you if you're acting against their monetary interests)
* Your source of capital is limited (or, rather, their trust in you is limited). Enough to cover a town, but not a city.
* Your competitive advantage isn't disruptive (for the sake of arbitrary concreteness, your up-front and continuing costs are 80% of what they are/were for the competition)
> My overarching answer is simply: I don't know, but let's get rid of the artificial constraints on the market and see what results.
That's what I was afraid of. The "game" we're playing is going to pit my knowledge of anticompetitive market practices against your ingenuity. My thesis is that the anticompetitive opportunities offered by the market will be enough to stymie innovation all on their own, unless the government takes an active role in leveling the playing field.
> In most unregulated industries, quality rises and price falls
Yes, but it works better for some industries than for others, and the industries where it has a track record of failing miserably (utilities, basic research, health care) require government intervention if we want a functional society. Adam Smith himself didn't believe that the market was suited to the task of optimizing infrastructure or military/police forces (he didn't think said list was in any way complete, either). Perverse incentives, externalities, anticompetitive opportunities, information asymmetries, and pathological nash equilibria (prisoner's dilemma) all frustrate the ability of markets to optimize society. Medicine is probably the worst rat's nest of such complications, but let's keep the focus on utilities for brevity.
> which industries do you see this not happening: 1. Finance 2. Medicine 3. Utilities 4. ?
You can't use these observations to support your point over mine because they also fit my model of reality (government must be more involved with industries that stymie the free market's optimization abilities). Also, health care in the US is ~2x as expensive as in "socialist" single-payer systems, so I find your choice of who to blame less than convincing. The ACA is the plan proposed by market reformists -- not even the Heritage Foundation thinks deregulation is the way forward on that front.
I was in the middle of writing a long-winded reply, but I'd rather just agree to disagree on philosophy and economics. I'm also not the right person to come up with the winning business plan to your scenario (little knowledge of the ISP market other than as a consumer).
And ultimately I probably agree with you about how to deal with the situation right now, in that we shouldn't lose net neutrality when the ISPs are clearly public/private partnerships, not independently operating entities in a free market.
Where we disagree is whether or not it is possible to create the conditions for a truly competitive market primarily by reducing state involvement. I believe it is.
In my opinion, fears of private monopolies are generally unwarranted, that most "natural" private monopolies are flimsy and temporary. I fear more the monopolies created by the government, such as the monopoly that "licensed" physicians hold over what substances we put in our body, who gets to sell us information about our own DNA, who gets to invest in startups ("accredited" investors) etc.
In the long run, I think our freedom is better protected by fighting against artificial monopolies such as these ..
> I'd rather just agree to disagree on philosophy and economics.
I'm sure you would. I'm armed with a long list of time-honored principles that allow a big player to anti-competitively grind a small player into the ground long before any real competition can take place.
You are armed with your faith in the market.
> Where we disagree is whether or not it is possible to create the conditions for a truly competitive market primarily by reducing state involvement. I believe it is.
You hit the nail on the head: I believe that there are a handful of important markets where the "more freedom!" approach not only doesn't lead to optimization, but leads to counter-optimization.
I take international comparisons of health care costs/efficacy as my evidence.
> In my opinion, fears of private monopolies are generally unwarranted, that most "natural" private monopolies are flimsy and temporary.
If only I could force reality to comply with your opinion, I would be a much happier person.
> I fear more the monopolies created by the government, such as the monopoly that "licensed" physicians hold
I fear a "free" health care market more than I fear a single-player "govrnment monopoly."
I also object to the use of the term "monopoly" in relationship to the government. Market monopolies have direct incentive to screw you for whatever they can, and they get to keep the spoils. The government has checks and balances that frustrate the process, and the people involved get to keep a far smaller fraction of the spoils. Market monopolies are worse.
It's also worth adding that the "dumb pipe" model of utility regulation was the one adopted (rather successfully) by Margaret flipping Thatcher when she privatised the UK utilities.
If any of the subsequent logic is flawed I'm very open to conceding points based on logically rebuttals.
Aside: This community is awesome, so much respect for this intelligent lengthy, conversation.
It seems 'regulated' vs. 'unregulated' is a false dichotomy, no?
A company in the US (there maybe some complications due to globalization) cannot kill a customer who writes a bad yelp review. This might be advantageous, if the customer will never use the company's service again and may convince others to avoid that company (and the killing does not cause PR harm) then it as a gain to have this customer, and their review, gone.
This is a regulation. So are anti-discriminatory laws (it is true that the market can potentially correct for racists attitudes by naturally punishing those who refuse do business with a segment of the population. This only holds when the discriminated group is large enough and the market is not saturated).
Lets look at this point:
> In most unregulated industries, quality rises and price falls (in the long run)
Can we instead substitute: 'In most industries, as you decrease regulation, quality rises and prices fall'.
Can we agree that if a company could force us to buy their products at gun point, they would sell us terrible products? Or at the other extreme, if the government regulates everything, companies often create shitty products (Products in some communist countries)?
If we can, what we are looking for is a 'sweet spot of regulation'. Maybe that allows the natural spirit of competition to create the best product given the constraint of cost?
To look even further, (I'm blanking on an example >_<) is it unreasonable to say that the advent of new technology can shift this 'sweet spot'?
So would a comprise to this question of 'should telecommunications be regulated?' fall to, yes, 'there should be a set of regulations which allow for competition' and that change when 'a new technology emerges that hopefully decreases (it could increase by the same logic. For example, advent of very expensive technology that is advantageous to have) the amount of regulation need (or even that changes the type of regulation).
In this picture, the government might be more akin to a gardner, the lump of citizen action (a tree) and the laws (in case the regulations) the frame used to shape the tree as it grows[1].
So if we accept this flow, we have arrived at, 'regulation which shifts as technology affects the barrier to entry meant to allow for competitive spirt to flourish and natural create the best product given cost constraints'
I'll readily admit this logically path takes a wide definition of what 'regulation' means.
Are we throwing out the FCC's regulation of the spectrum? If so, then WISPs will sweep across the nation, competing to provide consumers the best wireless access at the lowest prices, on frequency bands previously wasted on broadcast, cell, and official uses. A great deal of money will be made in that sector, especially to whichever equipment maker rolls out the best first- and second-generation wideband modems.
Another good business will be replacing car radios, at least for some time.
> Let's play a game: pretend that all of these special agreements have suddenly become invalid and the market has become deregulated. Assume you have (or can acquire) the technical expertise to challenge them. What's your business plan?
My business plan is to be Google: Install duplicate infrastructure for 80% of what the incumbent paid (per your other post), using my massive cash reserves, and charge $0 for equivalent or better service. Revenue comes from my massive ad network (which my competitors don't have), so I can sustainably run the business like this for as long as necessary to force the incumbent to fold. I now have the local monopoly, which I can use as I see fit. I might (for example) give priority to packets originating from hosts who are also customers of my ad network.
This creates a virtuous cycle for me--advertizes will only want to spend money with me, so I can upgrade my infrastructure more rapidly that the former incumbent ever could. That brings me more internet-users, which makes my ad network more valuable. Since I have a monopoly, I can also rent-seek with respect to internet access fees (though I might keep it at $0 to encourage end-uses to continue clicking on ads).
I will then repeat this process in other cities until I have a nation-wide monopoly. Despite being in blatant violation of anti-trust laws, I will continue to do this by bribing^H contributing to the election campaigns of friendly politicians.
Of course, this is cheating a little (because my business plan replaces one natural monopoly with another)--but not a lot, because you asked for my business plan to break into the current natural monopoly, not how one could sustainably obtain a competitive market. The answer to the latter question is obvious: You can't.
Considering the economic defintion of a natural monopoly, deregulation would be the wrong path to go down. Instead, we should see more regulation like that of "last mile" and caps on or forced wholesale pricing.
I was working on creating an MVNO (http://en.wikipedia.org/wiki/Mobile_virtual_network_operator) at one point but after crunching the numbers we decided (among other reasons) not to pursue it further. We were looking at handing over about 80% of turnover, even with fairly good laws in place (EU). On top of that, the contracts we were looking at where all based on bundling of services (i.e. XX amount of data, minutes and texts) which would have made our business more of a game of demand estimation. We could perhaps have gotten a small margin if we could estimate what our users would use of services better than what we paid for them wholesale. This has also led to the unfortunate business strategy of most MVNOs around here where they look for a quick exit by being bought out by the infrastructure owner when they have gotten enough customers. Few make it into into black numbers before that.
Not as much as I despise both the thing it refers to and the propensity of self-styled libertarians to pretend that it's the only problem in the world :)
You may be right but this is a moot point for the present discussion. Regardless how or why, there is a monopoly and it will be very difficult for any party to provide a competing service.
The idea that a new competitor will jump in and make everything better is an absolute delusion.
I thought it was the other way around, i.e. the telcos were given a monopoly on the wires, in order to avoid a bunch of different companies all running their own cables and turning the streets into an ugly mess. In exchange there is a bunch of regulation such as they are required to provide service to rural areas at a loss.
Its both. Monopoly with infrastructure providers is inevitable, so in many cases the government created regulated monopolies instead of letting unregulated monopolies arise naturally.
That said, telcos are not monopolies. They're in a hybrid state of regulated competition.
The problem is that governments forcefully prevent competition and call that "natural monopoly." Personally, I would call that the opposite of a natural monopoly. The term is used very confusingly. Wikipedia gives one definition, which I think is reasonable, which is basically a (theoretical or real) environment in which a single producer maximizes efficiency. But the term used by governments and their supporters is something completely different, where the government forcefully prevents all producers but one from operating.
It's silly to talk about telcos "enjoying" a "natural" monopoly, when the airwaves are one of the most tightly-regulated industries, and in addition to being expensive for a competitor to enter the market, it's generally illegal.
The "natural monopoly" of telcos and other utilities comes from the limited amount of physical space available to run water pipes, electrical lines, and data lines. Not to mention the limited opportunity to install those services without causing disruption (typically when the land is first prepared)
It's not the case that everyone can simply spend the same amount of money as the first utility, and replicate it's services in order to compete.
While you are correct that telcos currently enjoy a certain degree of regulatory capture, they are also natural monopolies/oligopolies in the sense that competitors have an astronomical barrier to entry. It's tempting but naive to think that all we need to do in order to see the market right itself is to eliminate existing regulations.
What we actually need to do is to change regulations to encourage competition, both by eliminating explicit monopoly rights and by mandating and/or price-controlling B2B bandwidth/traffic sales so that incumbents can't kill new entrants without beating them on a level playing field.
Forcing telcos to act like "dumb pipes" is one type of regulation that forces them to compete against each other (otherwise they just lump their market power with media providers until they are once again too big to challenge).
> .. by eliminating explicit monopoly rights and by mandating and/or price-controlling B2B bandwidth/traffic sales ...
Are you willing to try the former before the latter? If so, I don't think we're far off .. I'm not an absolutist, if there is a compelling case after the artificial constraints are removed, then I might consider state intervention as a last resort. But not before giving the free market a fair shot.
In principle, I agree with you. In practice, I'm hesitant due to the analogy with the health care market. We've been giving them "just one more chance" to find the set of market regulations that promote progress for the last few decades at the price of trillions of dollars and tens of thousands of lives every year (in comparison to established single-payer systems). Without a concrete stopping point and with LOTS of money behind the lobby to perpetuate a pathological free market experiment long past its due date, I'm inclined to fight for utility regulation from the getgo.
"just lump their market power with media providers" is interesting considering that's Comcast, today. In a world without net neutrality, how do you stop Comcast from delivering NBC video content on the fast pipe, while degrading the performance of it's competitors?
Telecom is not a natural monopoly. My little flyover city has three wired telcos, and who knows how many wireless ones. If San Francisco does not have hundreds of telcos, it is because somebody rigged the game.
Another disproof of natural monopolization is the operating costs. If a monopoly could profitably run handmade cables through the air to an office full of operators, then modern buried cables and automated switches can support several competitors in every large market. Again, lack of competition is actually proof that the game is rigged.
Anybody who supports network "neutrality" without trust-busting has AT&T's dick in their mouth.
hard to know if the 'cost is too high' or not since regulation makes it impossible for companies to compete. Know what cost is too high? State enforced monopolies.
Consumers don't have the flexibility to decide if they're dealing with only a small number of sellers working in collusion. The cost of entry into this market is astronomically high -- even Google, with all its money and all the dark fiber it snapped up, hasn't established a foothold yet.
Setting up telecommunications networks is expensive and legally complex, and the resources involved are extremely limited. The likelihood of a functioning free market in this space is essentially nil. In the absence of a functioning free market, the government is the only entity with the authority to apply regulations for the benefit of the citizenry.
The distinguishing factor should be how the government protects net neutrality. Should the FCC have a limitless authority to regulate the Internet, which they happen to apply to net neutrality for now? Or should the FTC have authority to bring suits against monopolistic ISPs to discourage these behaviors?
Your argument is that the free market will favor ISPs that support/don't oppose net-neutrality.
I argue that most people won't care about their "choice" (air quotes, because most people can't pick from more than 2 ISPs) of ISP until it's too late.
Already you have ISPs throttling access to streaming video sites (netflix, youtube, twitch) with little to no REAL blowback.
With the barriers to entry as high as they are, there's no way for a competitor to succeed in the market solely on the basis of being net-neutral.
Google Fiber, in markets where it's available, has led to competitors reducing prices and offering better service. However, there's no word of change regarding net neutrality.
>Google Fiber, in markets where it's available, has led to competitors reducing prices and offering better service. However, there's no word of change regarding net neutrality.
As a KC resident, TWC has not yet reduced my internet costs or increased speeds.
The only other option is U-verse which is more expensive for the same speed or they don't even offer the same speed. Calling the ISP and threatening them only works if you can find someone with the power to do so(and hope they don't note your account for trying it again, later..), and assumes they hold true to their word on your next bill.
I was primarily refuting your "causes isps to lower their prices" because Google fiber has done NOTHING for TWC's marketing. It's still the same terrible prices.
The way customer service works (again in my experience) is that you'll go through several people before you get to someone who has the power to change your bill.
It's a needlessly involved process, but it is an option in some cases.
The original comment was regarding Google Fiber's effect on competitors. If you're in an area that can get their service, then you should be able to back up your threat.
Either google fiber is faster and cheaper than what you have now, or it's not and what you have now is better.
I'm in the one section of KC that Google has yet to actually proliferate (probably some shady dealings with TWC and the council, but alas... no proof). TWC still offers the same terrible rates in the adjacent areas regardless of Gfiber actually being present. I'm pretty sure they just wrote off KC as an experiment and not indicitive of actual market importance. Coworkers with Gfiber have recieved no resistance from abandoning their previous ISP.
You would think the OP area of KC without Gfiber would be the one area trying to 'make nice' with people offering better service, discounts, and/or promises, but there is absolutely zero signs of 'competition' in the market.
My ISP - Virgin in the UK - has a transparent proxy cache for streaming video sites. If I want to watch an episode of Breaking Bad then it is there, instant. However, that 1992 B-side tack with 200 views 'buffers' for a while. That probably is because it is not cached down the road or further upstream at some Akamai CDN. It probably has to come straight from the heart of the GooglePlex, Sergei's very own hard drive...
Given that most people watch what they are told to watch, i.e. the same stuff as everyone else, and, since almost all of that can be cached by the ISP, why would they throttle? The final mile I pay for, I could buy the basic 'throttled to 5Mbs' service but they kindly let me pay for a sensible level of bandwidth. How is this throttling thing different in the USA?
Because they want to slow the demise of their television business unit. Many of the telcos here in the states not only also offer cable television service, they also directly compete with Netflix (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/0...). If they can make Netflix slower than the Comcast online offering (and they can), then more users will often choose the Comcast offering, even if it is inferior in every other way...and, most nefariously, the consumer probably won't know why Netflix is "so slow" and Comcast streaming is so fast.
In short, Telcos want the ability to kill their rivals, without having to provide a better product. They succeeded in doing so during the 90s on the broadband Internet front (there used to be thousands of independent ISPs in the US; they were killed by the telcos abusing their monopoly power, it's a story I've told here before, and so won't go into again).
In the UK cable TV took a lot longer to arrive than in the US. When it arrived it quickly merged into some monster debt vehicle that had to be refinanced somehow. Nobody really went for cable, it took on a new life with the Internet. This competes with ADSL copper from BT and various competitors. There is no local monopoly, if I go for Talk Talk instead of BT then the same wire to the door gets used. Sounds like we have a better market over here.
I moved from Mountain View to London and I have to say the whole telecom system is night and day better in the UK. It's embarrassing how the wool has been pulled over the eyes of Americans in terms of believing that the country has good telecom infrastructure and value.
In the UK I pay £10($16)/month for my mobile service on pay-as-you-go vs $70/month on contract in the US (which high limits than I needed, but it was the cheapest I could get). Similarly, I pay £30($50)/month for my FTTC connection from BT, which gives me actual sustained speeds night and day of 75/15mbps up/down vs something like $80/month (and it rose by a dollar or so every single month) for a highly variable 10/2mbps up/down cable from Comcast in Mountain View that suffered heavily during prime time.
Oh, and don't get me started on nationalized healthcare and the willfully ignorant propaganda that has been fed to and swallowed by the American people hook line and sinker.
Moved from eastern Europe to London and the only thing that is actually better is 3G coverage. The rest is expensive/extremely low quality.
Just came back from holidays at parents. 300 Mbps FTTH is £20/month, however it's not all bells and whistles. Speed to London is 200 Mbps. To NY - 1 Mbps. Neighbouring countries get 100-200 Mbps and I couldn't establish a real pattern, but international torrent speed is usually 25% of the national one.
The thing is we have monopoly and no one is bothered to play that game "rent from us, it's competition" because everyone knows it's extremely inefficient. Where as in London I could choose among 5 or so "competitors", which offer precisely the same service (and all of them won't offer upload speed of more than 200-300 Kbps - it's hardly enough for video chats (which gave me the idea that not only upload speeds should be advertised, but also streaming bandwidth)).
Oh, and how about the whole BT's rollout of FTTC? Why would you'd be saving couple ££'s, when you know for sure that couple years later that will have to be upgraded?
Mobile plans are roughly half price, 3G coverage over the country is spotty and 4G is virtually non-existant.
In the UK we were able to get something good enough using the copper that was in place 'since Marconi was a lad' simply by putting in better boxes at the local telephone exchange.
Meanwhile, in Eastern Europe, after the wall fell, the situation was 'well, let's start from scratch'. Hence in places like Latvia you have internet speeds both ways (uplink as well as downlink) that are ridiculously fast compared to what is offered in the UK.
When it comes to the fat pipes, a lot of it was put in place during a speculative bubble more than a decade ago. Remember companies like Nortel? I think the bubble burst before they got to places like Riga. So it does not surprise me at all what you are saying.
Incidentally 3G was also a weird speculative bubble in the UK, more than 20 billion or so went on the auction for the radio spectrum. Maybe things were a bit more realistic in Eastern Europe.
The situation in the USA is going to be quite scary. Lots of areas that were remote but sophisticated, e.g. Missoula in Montana, could fall off the map as a desirable place to live, just because of poor internet speeds. It does not seem the government is that alarmed about the country turning into internet have's and have not's.
Yes. As a person who has been using small ISPs since forever, and who tries to encourage others to do the same, most people just don't have the background or the inclination to really understand this stuff. They just see that the first-year cost for a major telco is twice what the open alternative is and they're done.
I'm lucky I live in the SF area, where there are enough hardcore nerds to support Sonic.net, a great independent ISP. But elsewhere? Not so much.
> If it's such a shitty idea, let consumers decide.
If you leave it up to the prisoners, they will both rat each other out resulting in the worst possible outcome (https://en.wikipedia.org/wiki/Prisoner%27s_dilemma). Assuming that consumers will decide what is best for the whole of society is simply incorrect. "Internet innovation" is very much one of those big picture goals where I think some community planning (e.g. government intervention) would help the outcome.
You might also look at Braess' Paradox[1], which while often applied to traffic planning, tells us that a network of nodes that choose their options selfishly will not result in improved performance when expanding that network (increase in number of possible choices).
Braess' Paradox "states that adding extra capacity to a network when the moving entities selfishly choose their route, can in some cases reduce overall performance. This is because the Nash equilibrium of such a system is not necessarily optimal."
Also, isn't the internet itself more or less a "a network [where] the moving entities selfishly choose their route"?
>Also, isn't the internet itself more or less a "a network [where] the moving entities selfishly choose their route"?
The moving entities? No, the routers make choices; it's equivalent to the road telling you which turns to take. In the example scenario the router at 'start' could evenly distribute the entities for optimal performance.
You should go read about the history of the Internet. AT&T was a major barrier to early efforts in creating the Internet. See, e.g., http://www.amazon.com/Where-Wizards-Stay-Up-Late/dp/06848326... In my view, the breakup of the Bell System laid the groundwork for the Internet to thrive.
For that matter, read about the origins of antitrust law. Monopolies and oligopolies neutralize the market's usual power to straighten things out. Giant companies aren't generally interested in innovation; they're interested in dominance. (See The Innovator's Dilemma for more on the economics of why.)
If it makes you feel any better, it's not like the FCC's going to go around kicking down telco doors and inspecting routers. Proof of net neutrality failures will come from us, the nerds. As individuals, measuring our own networks, and as the techies at innovative companies, going public when telcos try to discriminate against them.
I plan on doing this. I'm actually excited for the day when I get to nail Verizon for discriminating against my business.
(I wish I were youtube.)
Here's what I plan to do, and please tell me what you would think if you saw this:
"Hi, Verizon customer! We've detected that Verizon is hurting your speeds to reach us, while favoring access to _____ (competitor). Click on this link to see some other internet service providers in your area. If you'd like to file a complaint with the FCC, click here. If you'd like to get a refund, this link has instructions. If you'd like to join a class action suit, a discussion is occuring at this link."
We'll of course not list competitors where there are none.
Proportional to your popularity, it might even be possible to hurt Verizon's bottom line.
Net Neutrality is how the internet has operated since its beginning. It's not "giving" the government or anyone else anything new, just preserving a very successful status quo. It's the telco's and the anti-NN crowd that want to change that, not the other way around, despite their dissembling. If you want the internet to remain a level playing field for everyone, as it has been since day 1, from bootstrapped startups to giants like Google and Microsoft, support Net Neutrality.
The government isn't completely inept. They execute policy decisions quite well.
IMO, the US government correctly concluded that the Bell Monopoly was initially in the best interest of the nation, as it accelerated universal phone service. Later, with a lot of prodding, they reversed that policy and unleashed the telecom competition that helped bring us the last 30 years of innovation.
The problem is that the telephone companies are essentially rebuilding the old AT&T through merger, and wants to pillage the consumers of telecom services once again. They are doing this by declaring that the FCC can only regulate voice, defined as legacy TDM/POTS lines and related technology. Simultaneously, they are moving in state legislatures and congress to eliminate the requirement to provide universal POTS service.
I've worked in a large enterprise where the network teams became too politically powerful (essentially becoming a troll under the bridge instead of a service provider) and basically put the organization out of business by making it either impossible or too expensive to get anything done. Empowering phone companies without a short, tight leash would be doing the same thing to our nation.
Powerful network owners are the most dangerous people in technology.
>I consider everybody here very smart. In many cases smarter than myself. Therefore, could somebody please explain why we would give the government, which has shown itself to be terribly incompetent with technology issues, the ability to enforce net neutrality?
Because it's not a technology issue, it's a business fairness issue. You know, the same way we let the government handle contracts.
>Seriously, I can't get over the dissonance here. If it's such a shitty idea, let consumers decide.
One's the genie is in the corporate box, there will be no turning back. The consumer cannot decide if he is not even provided with an alternative -- or if any alternative is more expensive. Like you couldn't decide about carrier-locked phones all those years.
You either push for fairness to be regulated in law, or let the 4-5 top players divide the pie as they like.
>Google Fiber et al will just eat the major telecoms' lunch sooner or later anyway.
And who told you that Google WONT take advantage of crashing net neutrality itself?
That's a rather poor example - healthcare is an exceptionally heavily-regulated industry. There's an argument to be made that many of the ills in the industry are a result of over-regulation.
That an argument can be made doesn't imply it's a good one, or that anybody should pay it any heed.
Most of the ills in the health industry stem from the fact that providers--insurers and direct providers alike--have a profit motive rather than a "provide healthcare" motive, because their market is entirely captive and literally without any (real) choice.
Most tire shops have a profit motive rather than a "provide tires" motive. It's true that tire customers aren't "captive", but I don't understand which sense of that word you mean to apply in a relevant way to health care consumers.
You don't understand how health care consumers are captive? Health care is literally something human beings cannot live without. The quality and cost of the care is far less important than its availability, because it's literally a matter of being healthy and surviving, or becoming or continuing to be ill, deteriorating and then dying. Healthcare consumers, in other words, don't have real choices in where and how they obtain care. This isn't the case with tires (or almost any other non-essential good or service).
As a Canadian living in the US, I'd have to say it works a lot better than up north. I realize that's probably heresy for a lot of people, however, it's hard to stomach seeing your parents having to wait multiple years to get in to see a doctor. Particularly when they have debilitating health issues.
That said, I'm not sure what the right answer is; I want everyone to have access to good health care. I'm not sure I need to be able to get in to have an MRI in a day or two like I can here, however it would be nice if my mother could have one without waiting for two years.
Having lived and worked in the health care industry in both countries, I'll have to respectively disagree. I can see how your personal experience must be very frustrating, and I'm not attempting to belittle that.
However on the whole the Canadian system is better at delivering the health care that is needed. Overall, it works better for more people, more of the time, and much more efficiently (i.e. cost effectively). The latter point means that sometimes people with non-critical issues have to wait -- usually not very long notwithstanding the stories people sometimes focus on (the dramatic failure modes of the US system are much, much worse).
That being said, if you a) have the right insurance, b) live in the right state, c) have money, and d) live in the right part (typically urban) of the state -- you can get very good care very quickly in the US. Unfortunately that leaves out an awful lot of people.
You can just cherry pick examples unless you can explain how it's analogous. For example, healthcare suffers from natural monopolies to an extent. Hospitals don't really have to compete with each other, and it's really difficult to build a new hospital. The same principle applies to telecommunications.
On the other hand, healthcare is heavily regulated and hardly a free market, so it's pretty terrible comparison in that aspect.
Look at "US Unfunded Liabilities" towards the bottom. The US is drowning in debt, due to promises made... Or promises soon to be broken. It's laughable to suggest the free market is at work in the medical industry.
We regulate car safety even though there is some competition among car companies. If competition did not lead to net neutrality, then we should still mandate it.
Also, it's true, as others have noted, that competition among ISPs won't be enough to ensure net neutrality because there can't be enough competition (either through regulatory capture or natural monopoly economics).
However, even if there were competition, competing ISPs have the economic incentive to discriminate. The economic modeling is available in the work of Barbara van Schewick (she wrote an amazing, and dense, book on net neutrality). So competition would not necessarily solve the issue, as it does not solve things like car safety (or safe housing). I'm a huge fan of free markets, but there are market failures requiring some government intervention in the form of contract law, property law and its exemptions, and regulation in specific situations.
> I'm a huge fan of free markets, but there are market failures requiring some government intervention in the form of contract law, property law and its exemptions, and regulation in specific situations.
I agree that contract and property law need to be enforced - this is a vital component of a free market. But I don't consider that regulation or intervention.
What are the "specific situations" that demand regulation?
property law is definitely a form of regulation. go to a country without regulation, like afghanistan, and you'll see no property law :)
there's an entire semester in law school on the intricacies of property law, including fee simple, easements, etc., because property law doesn't come from heaven, it's made by men to regulate our affairs.
beyond that, of course, there's regulation of restaurants, securities regulation, regulation of wireless spectrum regarding interference, regulation of satellite orbital slots, regulation of food safety, of drugs, of the legal profession, of the medical profession, etc. often for safety, often because of factors like information asymmetries or high transaction costs. Joseph Stiglitz's writings might interest you on the topic, the stuff he won a Nobel for.
Early horseless carriages didn't sell well, if at all. Consumers weren't making the decision to replace the horse and carriage. Continuous innovation and industry and government did that.
Not until the choice is taken away do consumers (appear to) make a change.
We could all be driving electric cars right now if consumers were making real choices. But we won't see a great number of electrics selling until they become so good that the gasoline car is practically taken off of the table as a viable choice. You can then credit the change to the consumers, but it's really much greater forces at work behind the scenes making it happen.
If consumers wanted to continue using the horse-and-buggy, they would have continued to buy it. But they didn't. The desired the automobile.
I'm not sure how the notion that "consumers don't decide anything" can really hold water. Consumers are literally the people who allocate their resources to particular goods.
In some cases, external forces remove or enforce particular choices. But I don't know how this implies that consumers can't decide anything.
Exactly. Henry Ford paid his workers very well, not out of altruism because he was the one of the most unaltruistic people you can think of, but because he wanted them to be able to afford his car. They would become mobile advertisements of his new technology.
In that, they were much like the Google Glassers are today.
Who decided that automobiles should have seat belts, collapsable steering columns, and the numerous other safety features that save lives today? Hint: not consumers.
> Therefore, could somebody please explain why we would give the government, which has shown itself to be terribly incompetent with technology issues, the ability to enforce net neutrality?
I think the key is the false assumption that this is how the origins and advancement of political authority works. This net neutrality issue is much easier to explain with a model of political authority that treats it as something the ruling class takes by force.
Social contract theory was just the best thing Enlightenment thinkers could come up with to settle the cognitive dissonance they experienced upon realizing that the existence of governments was a plain violation of their new ideas about natural rights.
How can they distinguish personal vs pro servers? They have to inspect the contents, which to me seems related to net neutrality.
The comparison should rather be "Do you get upset at buffets when they don't let you have the main dish after dessert?" They use content inspection to increase their revenue.
I do get upset if the commercial say "up to 20 different kind of food, and all-you-can-eat", but during lunch rush it is just a couple of carrots that looks half moldy.
One aspect of net neutrality is advertizement laws and clear communication between the commercial entity and the consumer. A restaurant can't just say that "its up to!" and give you a carrot when you paid $50 for a buffet, complaining that their capacity to make food is full.
If the network connection Google want to sell has direct limitation to them, Google should be legally bound to make sure the consumer is aware before a contract is signed. That is normally a basic consumer protection law in most markets, and the ISP market is just lagging behind.
Its not enough that you change the fine print in a 20 page long legal contract. A restaurant could easy require you to agree to an customer agreement on the point of booking a table. It would still not allow them to book 50 people and make food for 10, arguing that their capacity to make food is full. Even if the customer agreement said that the restaurant is only responsible to supply food "up to" all-you-can-eat. The police would classify such scheme as a scam.
> It would still not allow them to book 50 people and make food for 10,
Is something like a 5 to 1 over booking happening with google fiber? Overbooking is common practice with airlines and many business that have solid statistics that tell them how safe it is to overbook. It is not normally considered, when done in a reasonable manner, a scam to do so either.
The problem is that telecom is already a heavy regulated area (for historical and technical reasons). Besides this, connecting to your competitor network is going to be always a rigged game, just a handful of players will connect between them, that leads to monopoly... So I think it is virtually impossible to setup your own new company... I live in France and it is quite interesting to see the raise of the provider Free.fr, quite impressive how they defied all other big companies... (Disclaimer: I have nothing to do with this ISP).
I used to live in France, DSL providers are a joke here. Verizon advertised $30 for single play (no phone, no television). In the end they added "fees" and taxes (what those are not included?), the price was $56 per month. The router is as shitty as it gets too. Now I moved and for $55 I have cable with optimum and it's way better. Still more expensive than Free, and still no tv/phone included.
Free has traffic shaping for anything going through their peering, but in particular apple and google.
Good luck using youtube via free's peering. it's nearly impossible. I don't know many people on free.fr that use youtube at all, because it's too terribly slow (1min load for 3s of video?). It's barely acceptable for things like google play downloads.
Why does Google continue to peer with them then? The whole point of peering vs. transit is that two networks will connect for free to each other to get better service.
Well, because obviously if something is wrong in the world, giving a bunch of professional liars selected by people 10% of which disagree on whether it exists and how to fix it and 90% of which do not understand the problem and vote on the looks of the guy and the fact he wears the colors of the team their granddad rooted for - giving such setup maximum power seems like a brilliant idea. If that doesn't fix the problem, what else would?
It's like somebody being wrong on the internet, only you can feel you did something about it. Like empowered somebody who doesn't know how to fix it and has abysmal track record in fixing hundreds of other things, to do whatever it takes to fix it. That can't ever go wrong, can it?
And we can be sure we can totally trust them with this power and they won't think about usurping this and taking it way beyond original purpose and trying to control everything everywhere. It's not like we're living through the wave of revelations showing how far the government can go subverting privacy, undermining security and expanding its powers in very short time. It's not like we have an agency that has an official logo of globe-encompassing octopus on top of the slogan "Nothing is beyond our reach". Calling for more control of the internet for those people would be indeed a bit myopic. But that's not what is going on here, right?
To me it just seems self-evident that monopoly telcos should be required to treat all traffic equally. That's what it means to be a common carrier. Imagine if you called your favorite pizza place to order a pizza and the phone said 'we'll be connecting you in 30 seconds, or press 1 to be connected to a Verizon Preferred Partner Pizza Parlor immediately...'. It seem ridiculous for the phone company to be allowed to do that, so why would we ever tolerate it for an ISP?
At least part of it is that tech companies benefit from net neutrality in the fight against the telcos. Its really to the advantage of distributors like Google or Netflix if net connections are dumb commoditized pipes. That allows them to extract a larger share of the revenue from any given customer. Unsurprisingly, distributors don't want telcos to be able to differentiate their services by partnering with distributors.
This is one of the two key dynamics in the tech industry. The other is distributors versus content companies. When Amazon streams you a movie made by NBC/Universal over pipes built by Verizon, Amazon is positioned antagonistically to these other companies in wanting to extract the largest share of the total you're willing to pay for the whole package. Net neutrality helps them do this, and so does weaker copyright protections, among other things.
Who does the telcos' "differentiating" their internet services help, other than the shareholders of the telcos? That bit of rent seeking behavior would have large negative impacts on everyone else.
Why should we let telcos begin charging for no commensurate improvement in their end of the bargain after they've been granted local monopolies across the country? Internet service looks like a utility, quacks like a utility, it should be treated like a utility.
I would argue that it's not even clear how the market would respond to this, and yet the pro-neutrality camp paint a picture of corporate apocalypse. This seems reasonable to me:
Neutrality rules are repealed. Some ISPs begin discriminating against certain publishers that do not pay up, but can use the payments to subsidize reductions in cost of consumer access. The "multitudes" of neutrality proponents begin demanding undiscriminated connections, calling for boycotts, switching to providers that offer such connections. Neutrality activists develop tools to compare and publicize connection rates to different publishers through different ISPs. Small-time providers form associations to raise awareness of the issue as well. Ethical marketing comes into play as some ISPs and some big publishers reject connection rate differentiation. Some ISPs that also own publishing properties are caught or implied to be preferring their own content over competitors, drawing political attention. In some areas, net neutrality laws (not just "rules") are passed, which is a draw for startups. Meanwhile, many who had no home connectivity in the past are now able to afford the "subsidized/sponsored" service level.
What irks me about the middle-class idealogues raising a fuss about this now is that they arbitrarily draw the line of equality around big corporations, with little attention given to the fact that service is tiered at all. If it doesn't make sense for small publishers to be penalized for not ponying up, it should make even less sense for certain individuals in society to be penalized for not being able to afford anything more than dial-up or basic DSL. Going further, it should be more appalling that the most financially under-resourced can't even afford the most basic service level, and live without any internet participation. Instead, they prefer corporations to carry the costs of keeping the level field artificially level, while doing nothing to help those below them have the same level of access they do.
The only thing that needs to be enforced is anti-trust law. Monopolies are what give ISPs the ability, and perhaps the incentive, to filter and editorialize the Internet. The FTC should be involved in defending consumers against those behaviors.
Net neutrality arises naturally. It didn't need enforcement 30 years ago. In some contexts, like exotic network protocols, it may not even make sense.
I wouldn't care much if it was a limited authority granted to the FCC, but they are claiming an authority which is limitless in scope and using net neutrality as an excuse to exercise it.
Wait, 30 years ago? Actually, net neutrality needed substantial government help. The parallel at the time is the long distance market. Read about the history of Sprint, MCI, and the like.
And it goes back further. At one point, you weren't even allowed to connect your own phone to the network, let alone an answering machine; AT&T claimed it was too dangerous. So you had to rent everything from Ma Bell. It wasn't until the Carterphone case in 1968, where the FCC told AT&T to knock it off, that you saw things get better: http://en.wikipedia.org/wiki/Carterfone#Landmark_regulatory_...
As much as I would like anti-trust law to help here, you don't need collusion or a monopoly to ruin net neutrality. As long as you have an oligopoly, which is the general state of the US residential ISP market, then that's plenty. As we see in the article as soon as one ISP starts a shakedown, the other big ones will try the same thing.
I suppose using it as a claim for unlimited authority isn't a good situation, but I don't know if I see breaking net neutrality as being a trust.
Considering where the term anti-trust came from, ISPs who block certain sites without customer consent aren't really being monopolistic in nature. Which makes, to me, defending net neutrality a separate issue than breaking trusts and monopolies...
> why we would give the government, which has shown itself to be terribly incompetent with technology issues, the ability to enforce net neutrality?
Because we have no free market in the ISP business. It's close to a sick monopoly, or to cartels which agree on fixing high prices. If the government won't reign it, who will?
Because telcos are in bed with government. We don't really have a free market, it is virtually illegal to compete with the telcos. Some cities have tried and have been sued over it.
Yes the free market should decide, but we just don't have one. Net neutrality is an imperfect remedy at best, but letting the telcos run wild with artificial privilege isn't the answer either.
