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Does the FCC really not get it about the Internet? (washingtonpost.com)
130 points by seansh on Nov 2, 2014 | hide | past | web | favorite | 80 comments



It is difficult to get a man to understand something, when his salary depends upon his not understanding it!

— Upton Sinclair


This is true for both sides of the debate.

On one side you have the lobbyists and big cable companies (and telcos).

On the other you have the people who want more regulation because these companies are too big-- but who ignore the fact that the only reason these companies are so big is that they are state granted monopolies in the first place.

The "right" to run cable is a monopoly that the local municipality uses to extract money from the populace (via cable fees that the populace ultimately pays in cable bills)

The "right" to operate a cell tower is a monopoly (or tri-opoly- only three providers are permitted per metropolitan area) that the FCC created when it "auctioned" off the spectrum.

The reality is, both over cable wires and over the wireless airwaves, there is no natural monopoly. Spread spectrum technology (and the infinite variance in frequencies of light a single optical cable can carry) mean that there is no real scarcity of capacity. And while there are limits, there are huge swaths of spectrum that can be used, but that the government is keeping off the market to increase the revenue it gets from the "auctions". There's enough money in the industry to run separate cables. Many larger cities ran fiber rings and these could handle many, many competing providers. The cost of laying fiber to one cable complex is fixed, while the number of providers that could use it is pretty high (multiple providers per fiber and multiple strands per cable, and hundreds (thousands?) of wavelengths per fiber.)

Further we've already seen what the government has done with the internet-- they tapped it. They started recording everything. They weakened cryptography. They have forced people to give up private keys.

They have proven that they cannot be trusted with something as sacred as the internet.

So, while "regulating" the internet might seem like a savior now-- we all get the bandwidth we're paying for-- and I'd certainly like that[1]-- I believe the end result will be further consolidation into ever larger, and fewer players, all of whome are very closely tied with the government, and even less privacy or security.

Ultimately resulting in a return of an AT&T like monopoly which has no interest in innovation because it has no competition.

Back in the "old days" of the internet, the primary impediment to getting good connectivity was AT&T and its remains after it broke up (into smaller still highly regulated and not-at-all-interested-in-what-you-wanted-to-do-with-THIER-phone-lines.)

[1] I find it astounding that in south america, where the entire country has to share a single optical connection to north america I could watch netflix in HD, but here in a city that google is currently wiring for fiber, I can only get Netflix on SD over my "40 megabit" cable modem. So, yes, I've experienced this problem first hand. It pisses me off.


    but who ignore the fact that the only reason these companies are so big is 
    that they are state granted monopolies in the first place.
I disagree with that statement. Standard economics theory has long held that "natural monopolies" are possible, in markets with high barriers to entry [1]. Internet infrastructure, with the massive fixed costs of laying wires to every home, is one such natural monopoly. So it's not fair to say that the only reason these companies are so big is because of state granted monopolies. AT&T was a monopoly before it became a state sanctioned monopoly. Standard Oil, as well, became a monopoly without very much state aid. While state regulations may make natural monopolies worse, it's inaccurate to say that removing regulation (e.g. allowing anyone to run cable or put up cell towers) will automatically end the dominance of Comcast and Verizon.

[1] http://www.economicsonline.co.uk/Business_economics/Natural_...


Where I live we have a local telco that is rolling out fiber, neighborhood by neighborhood. They are successfully competing in this "natural monopoly". It is not infeasible for competing "last mile" providers to exist, just infeasible for any of them to immediately service any home in a given area. So you could imagine a situation where you have choice between the existing monopoly provider (Comcast, ATT, or Verizon who has their cable or copper everywhere) and a smaller provider who might just serve a couple of neighborhoods.


While it's not impossible to compete with natural monopolies (after all, there are upstart airlines), the amount of competition in a market with high barriers to entry is much lower than in a market with no barriers to entry. Imagine how many more choices you would have if companies didn't have to lay wires to your door in order to get your business.


Please stop spouting this "the free market is always the best solution" bullshit. The large cable companies have colluded to stay out of each other's markets with or with out local laws giving them a monopoly. There are plenty of states/local cities that don't have these laws. Why aren't those places internet utopias?

If you're opposed to common carrier regulations (I certainly am not) you should be pushing for what was done in the UK where all internet providers must lease out their wires to any competition that wants to use them. That will create something that is actually closer to a free market than expecting another company to come in and tear up every city in America with redundant wires.


Fast lanes are just one horrible side effect of our "everything capitalism" country.

The fact that most cities in the USA are duopolies when it comes to wired internet means essentially everyone is screwed.

Even if the FCC was strict with them, it wouldn't matter.

I pay $45/mo for 5mbps in 2014. Higher speeds are available but at much greater cost, because there is no competition.


>Fast lanes are just one horrible side effect of our "everything capitalism" country. The fact that most cities in the USA are duopolies when it comes to wired internet means essentially everyone is screwed.

The duopolies you describe are definitely terrible. They are cronyism and corporatism operating under the guise of capitalism, but they are very far from the free markets of capitalism. It's worth noting that these monopolies could not exist without government regulation. More ISP's can't run fiber to your house because the local law prevents them. I'd rather get rid of those bad laws instead of piling more bandaid laws on top of them.


How many times to you think companies would pay to run a connection to a house? After the first, or maybe even the second time, does the financial payback for laying additional redundant physical lines make sense?

City gov't is a minor problem, but remove that and you still have strong natural monopoly conditions.

It seems like the only way to get competition in the last mile is that the entity which owns the last mile infrastructure must be required to provide competitive access to that network. Ideally that might have been government owning the infrastructure, with a market of multiple competitors running services across the last mile. It seems like many nations with competitive last-time ISP markets got there by starting out with national ownership of much of that infrastructure, but when much of that network is privately owned - it's much harder to get there.


> How many times to you think companies would pay to run a connection to a house? After the first, or maybe even the second time, does the financial payback for laying additional redundant physical lines make sense?

I think that depends on the current market. If there's room to make money in the long run by either offering better service or cheaper service, then I think companies will take the plunge and run the cables. In my area, we had DSL over phone lines and cable internet over coax for years. That didn't stop Verizon from laying all new fiber to nearly every house in the area. They smelled profit in doubling existing internet speeds in my area. What did nearly stop them was intense lobbying by the existing players to deny them access to run cable.

What bothers me is that it required huge lobbying muscles to get through the red tape. What about all the other less politically connected companies with innovative ideas that could revolutionize our connectivity in ways most people have never considered? That's the beauty of the Internet. Got a great idea for a new web service? There's no government wheels to grease, no need to lobby the FCC for broadcasting permission. You just do it and let the consumer decide your fate.


You mean the Verizon fiber service whose expansion was halted in 2012ish time frame because it wasn't paying back, and was recently reiterated that they wouldn't be investing more into for some time?

http://www.fiercetelecom.com/story/verizons-shammo-well-look...

Or actively trying to reverse rollout agreements in NJ http://www.philly.com/philly/business/Will_Verizon_be_allowe...

I'm no expert analyst of Verizon, but even during the expansion many wall street analysts were skeptical of the ROI of Verizon's FIOS rollout.

If companies are going to be digging up the street in front of my house, I want a certain amount of red tape to ensure it's not multiple separate times instead of fewer times with better coordination to minimize inconvenience. I also don't want some undercapitalized startup to start digging, run out of funding, go out of business and leave a bunch of open trench - so I'm fine with cities verifying plans and funding too.


Cronyism and corporatism are a very common failure mode of capitalism, though. Perhaps it's time to recognize that capitalism can also fail, as opposed to just be failed, and deal with the world as it is, and not just as we wish it to be.


> More ISP's can't run fiber to your house because the local law prevents them.

Wouldn't these companies need some kind of affirmative government assistance, not only the lack of government prohibition? Very few (if any) potential new entrants into the market actually own land or rights of way sufficient to run "last-mile" cables to residential homes. At the very least it seems like they'd need permission to dig up streets (which they don't own) and get some kind of easement rights across property they don't own. Or are there really utility companies that 100% own all the land (or delegated rights such as an easement) needed to do a run, and are still being prohibited by local law from running the cables on their own land? I could imagine the latter situation existing in a few cases, but not many; more or less only in the case of a greenfield development where the developer owns the entire subdivision.


I agree - the socialist solution we have in my country of having multiple private companies compete a relatevily free market (as opposed to one where local governments have passed laws to limit competition, like the US has) is much better.


This thread is all backwards. Cronyism/corporatism is being called capitalism, and capitalism is being called socialism. The socialist solution would be public ownership of one firm without private competition, and would be (at least in my opinion) disastrous.


My post was sarcastic :)


Oh good. I wondered if that was the case, but suppressed the urge to ask since people often don't take kindly to assumptions that their actual views must be sarcastic. There are also plenty of inaccurate conceptions of capitalism/socialism, and people tend to ascribe successes to their own preferred system, regardless of reality. I'm glad that's not the case here.


How can you have any pudding if you don't eat your meat?


I want some sockpuppets just to upvote this more times.


I am glad the article mentions discrimination. I think the net neutrality debate should be framed this way.

There are no fast lanes. We don't want slow lanes designed to segregate and discriminate against traffic from individuals content or demanded content, essentially creating a virtual caste/class system. What class are you in? What class will areas/countries be put in? Who will be our privileged new kings? What part of the internet bus can you sit in?

People don't realize what they have until it is gone sometimes. When you have some freedom, hold onto it because it takes fighting to get it back. Nothing we have on the internet now would exist like it does with internet segregation.


I think the FCC is responding to industry pressure that the Internet, in its p2p form, is a dead experiment. Cable worked better. Never had to worry about Napster before, just descramblers (but switched networks eliminate that). Read-only, receive-only, don't produce anything, just consume. Put the content distribution servers next to the backbones, but squeeze the small players & independent creators. (Netflix, Twitch..) Charge them more for slower access to the same fiber. Throttle any peer-to-peer protocols, encourage server->client protocols and traffic. Merge content creation & distribution into large conglomerates. Crush the companies who won't be acquired.

The question is: is the open nature of the Internet worth preserving at all? We're already forbidden to run 'servers' on domestic IPs. Can they now destroy the notion that the Internet was ever a peer-to-peer thing?


The FCC gets it. They also know where lobbying dollars come from, and its not consumers (individuals or companies other than carriers).


"Last week, the Obama administration announced its choice to lead the Federal Communications Commission: Tom Wheeler, who is not only a former telecom lobbyist but also a huge bundler for the Obama campaign. The New York Times Editorial Page today explains that this choice is "raising serious questions about [Obama's] 2007 pledge that corporate lobbyists would not finance his campaign or run his administration." It also notes that "given his background, it is almost certain that [Wheeler] raised money [for Obama] from people whose companies he would regulate, creating potential conflicts of interest."

Last week, President Obama named another big bundler of his, the billionaire heiress Penny Pritzker, to be his Commerce Secretary; at the Nation, Rick Perlstein details just some of the interesting questions about that choice that need to be explored. At this point, the only surprising thing is that there are any more bundlers left for Obama to appoint to important administration positions." - Glenn Greenwald, http://www.theguardian.com/commentisfree/2013/may/09/hawking...


Exactly. And to ensure they get a cushy job at these companies when they leave FCC. The revolving door continues on.


They do get the internet. But the future income of the top brass depends on not getting it right for the consumers.


Maybe the general public can gofundme Tom Wheeler 40 or 50 million dollars to compensate him for for the bribe we're asking him to sacrifice.


I've had this thought before. I feel like if you changed the mechanism of donating to PACs to only be drawn if a goal is reached (like kickstarter) you'd have much more engagement. No one wants to donate a dollar if they feel like it is going to be alone.

But I imagine something like this already exists?


Like Lessig's Super-PAC? https://mayday.us/


You have to actively prevent money getting from those with it to the politicians they want to bribe. Simply having other funding sources won't stop the cartels from installing their own puppets.

*edit, this was actually directed @rectang


"You have to actively prevent money getting from those with it to the politicians they want to bribe. Simply having other funding sources won't stop the cartels from installing their own puppets."

Exactly wrong. The solution to lies is not censorship, it is more truth. If censorship -- or prohibition of campaign money -- is the law, only the interested liars will control the machinery of censorship and they're not going to use it to promote truth.

If all personal campaign donations were illegal, the telecom monopolies would be even more powerful and unaccountable. They have armies of employees, ex-employees, influential executives, relationships with regulators, no-show jobs for pols' shiftless cousins, charitable foundations for networking paid for with your fees, and everything it takes to exercise influence without campaign cash. Only the existence of public spirited and ideologically motivated and unrelated agenda private donations can empower the leaders that do question the insider power of the telecoms.


I agree, in part. Politicians do need to have a glass bank account. It was a metaphorical prevention, like not getting a job in an industry you just regulated. Corruption is American politics runs so deep, I don't know of an acceptable way to handle it.


Bribe is a dirty word. I think consultancy contracts are the appropriate terms lately.


This article doesn't get the internet.

I think it's spurious and mendacious to suggest that consumers upload amounts of data that are in any way comparable to the amount downloaded by people who stream HD video for live consumption.

I'm not particularly pleased about putting content consumers and content producers into two separate boxes, but the classifications of internet endpoints definitely exists in the usage patterns we have today.

Unless the security and privacy problems of the cloud are fixed, people are unlikely to upload the kind of data required to make them comparable - the only thing I can think of that could make it happen is life streaming or continuous security footage across multiple cameras. But I think cloud storage's problems are increasing, not decreasing, and they'll continue to increase until we get to the bottom of the tension with government spying and commercial exploitation of user privacy.

I think net neutrality, as it's naively presented, is highly unfair and subsidizes people who consume a lot of content at the expense of people who only use the internet occasionally. Flat rates for all you can eat downloads, combined with necessarily oversold capacity (since most people don't use all their available capacity all the time), inevitably means that high usage consumers are subsidized by low usage consumers.

There's two ways to make this fairer. Charge people based on how much they download - i.e. caps and overage charges, as horrible as that sounds - or charge companies that upload data more, who can then pass on those costs to their customers. The market has generally rejected the first solution. It's now trying the second solution. But either way is better than network neutrality.

And I say that as a person for whom "network neutrality" is in their interest. But I can see that it's plainly and patently unfair.


> Flat rates for all you can eat downloads, combined with necessarily oversold capacity (since most people don't use all their available capacity all the time)

What does this have to do with net neutrality? Net neutrality is not about how much data gets transferred. It's about not privileging some data types or data sources over others. Charging higher fees for more bandwidth usage is fine, and completely consistent with net neutrality. Charging someone who streams 100 GB/month from Netflix more than someone who streams 100 GB/month from Redbox or Hulu is not.

> The market has generally rejected the first solution.

No, ISPs have generally rejected the first solution, because if people who only used small amounts of bandwidth only got charged for small amounts of bandwidth, the ISPs would get less revenue. They are able to get away with this because the market for internet access in most places in the US is not free: ISPs have sweetheart deals with local governments giving them exclusive access. (And every time a local municipality tries to build out broadband as a public utility, with equal access for any ISP, the big ISPs have kittens and take them to court.)


> ISPs have generally rejected the first solution

I think ISPs like segmented pricing models. Segmented pricing models let them extract more profits from sections of the market that can afford more. But segmentation by bandwidth cap doesn't seem to be very successful.

> Charging someone who streams 100 GB/month from Netflix more than someone who streams 100 GB/month from Redbox or Hulu is not.

Just to get some reality into these figures; on a 5Mbit line, 300G/month was typical for our house. Now that we have an 80Mbit line, I would expect our home usage is now well in excess of 1T/month. (I live in the UK.) This should tell you that I have no self-interest in bandwidth caps, especially joke 2-figure ones.

Given that, I agree that there shouldn't, in principle, be a distinction between packets from company A vs company B. But without being able to efficiently price the scarce resource via bandwidth caps and segmented pricing models on the consumer side, the ISP is reduced to negotiating with the upstream providers of packets that are consuming the scarce resource on behalf of their customers. It then becomes a business negotiation problem, with contracts, leverage and relative power. So naturally there will be variance in which company pays what.

Somebody has got to pay for the scarce resources being exhasuted. That person will be the consumer who downloads more. The only question is how the payment will be routed.


> I would expect our home usage is now well in excess of 1T/month. (I live in the UK.) This should tell you that I have no self-interest in bandwidth caps, especially joke 2-figure ones.

Ah, so you're on the receiving end of the subsidy, in a big way. Wow! That's what, five or six people streaming a full-length movie apiece, every day?

The structure that ISPs seem to like, of a cap with a fairly stiff charge for exceeding it, doesn't appeal to me either. But I don't see what would be wrong with a baseline connection fee plus a modest charge per GB, such that streaming a whole movie would cost on the order of $2.

(Message heavily edited after I realized you agree that the subsidy is unfair.)


My GF usually works from home and has video on one screen 10-16 hours a day, and concurrently streams to a tablet for about 2-6 hours a day - some of that is concurrent usage, but she also likes to fall asleep with the tablet on (and plugged in).

Netflix HD "best quality" apparently uses 2.3G/hour, as of 2012. If all the streaming was Netflix HD in best quality, she'd be using over 1.5T all by herself.

However, it's not all Netflix HD, so her actual usage is lower. And she's also a fan of various talent reality shows, which she sometimes acquires from other sources.

Increased bandwidth is similar to increased road capacity. Just like road capacity makes longer and more car trips feasible, increased bandwidth encourages accessing large files remotely and reduces the incentive to cache locally.


Good grief. That's a pretty good argument for metering. I guess people just don't get that it's not the same as TV. Why should they, when it's billed at a flat rate?


> without being able to efficiently price the scarce resource via bandwidth caps and segmented pricing models on the consumer side

First of all, the situation in the US is different than in the UK, as I understand it. I don't know the details of how ISPs are able to price in the UK, but in the US, the ISPs can price however they want to, and many of them have what is essentially monopoly access to their markets, so the pricing scheme that is in use in the US, with mostly flat rates and very little segmentation, is, I am sure, to the ISPs' advantage, whatever their publicity might say. I suspect that the flat rates are set so that, while people who use full video streaming bandwidth regularly might be subsidized to some extent, people who use much less bandwidth (like me), are paying far more than we would in a true free market, so that on net, the ISP is making much more profit than they would if they truly had to price by bandwidth actually used.

>the ISP is reduced to negotiating with the upstream providers of packets that are consuming the scarce resource on behalf of their customers.

No, they are "reduced" (at least in the US--again, I don't know what the situation is in the UK) to trying to get upstream providers to pay for bandwidth that their downstream customers, on net, have already paid for (as above). The logic of giving ISPs exclusive access to particular geographical areas (in the US) in the first place was that they would be able to count on a steady revenue stream to fund buildout of the necessary bandwidth. They have now had that benefit (in the US) for at least a couple of decades. If they are complaining that they need upstream providers to pay to fund more bandwidth, that tells me that at least one of two things is true:

(1) The ISPs have not used their monopoly revenues for the purpose intended: instead of keeping pace with bandwidth needs, they have just been pocketing the cash; or

(2) The ISPs actually have the bandwidth, but they are using their monopoly position to control access to it in order to get paid twice for the same thing.

(My personal opinion is that it's a combination of both.)


If they sell you a 100Mbit/s line with unlimited data, it should be illegal to charge you again if you use all that potential... either directly or indirectly.


> If they sell you a 100Mbit/s line with unlimited data

No ISP that I'm aware of does that. They might sell you a line with a "nominal" bandwidth of 100 Mb/s, but when you read the fine print, that really means "as long as nobody else is using the network at the same time", or something like that, plus a lot of other qualifications and hedges and disclaimers. The ISP actually is making no guarantee whatever about the actual data rate you will get.


> If they sell you a 100Mbit/s line with unlimited data, it should be illegal to charge you again if you use all that potential... either directly or indirectly.

(QFP) It's "thinking" like this that's responsible for a good 40% of the outrage over net neutrality, IMO.


The argument about whether "unlimited data" really means unlimited data is a completely different discussion. It has nothing to do with net neutrality, it's a discussion about false advertising.


Only a child could read "unlimited data" and think it meant unlimited data. Your network speed is finite; multiply it by time and you get the maximum amount of data you can possibly download. This is a hard limit that cannot be exceeded, and it is well short of "unlimited".

What grown ups understand "unlimited" to mean is that there is no bandwidth cap. There is no hard limit on number of bytes downloaded, beyond which the connection stops working until the next rebilling period.

But this doesn't get rid of the underlying problem. Thinking that it does, that it's just an advertising lie, is magical thinking unfit for adults.

Without a bandwidth cap, other mechanisms need to be used to deal with the fact that consumer internet is sold via contended lines. Some packets will need to be dropped; available bandwidth must shrink when there is more contention. What decides which packets get dropped and which ones get priority - complete randomness, or should your phone call be less important than the difference between a 1.9M/sec video stream and a 2M/sec stream? This is exactly where network neutrality comes in. It's a different way of dealing with the scarce resource, the contended lines.

So it is not a completely different discussion. It is in fact the same discussion, from a different angle.


Here's an alternative viewpoint.

Power companies have the exact same problem. That being said: how do power companies solve it? They make absolutely sure they have enough extra capacity - because if they don't people complain, loudly.

So: Here is what I read "unlimited data" as: The service provider has enough capacity that a customer has access to at least their full subscribed service normally.

In other words, I am challenging the preconditions of your response: I do not believe that consumer internet should be sold via lines that are contended to the point that "brownouts" (that is having bandwidth of < subscribed rate) are a normal occurrence.


> Power companies have the exact same problem.

Not to anywhere near the same extent. The range of power consumption of residences probably covers less than an order of magnitude. The range of bandwidth consumption of residences probably covers several orders of magnitude.

> how do power companies solve it?

By charging people for power consumed, directly. Power companies don't have flat-rate, unlimited-use plans. Everyone knows that if they use more electricity, they pay more, and if they use less, they pay less.

> if they don't people complain, loudly.

Yes, because electrical power is a necessity in a way that Netflix-level internet bandwidth is not.

> I do not believe that consumer internet should be sold via lines that are contended to the point that "brownouts" (that is having bandwidth of < subscribed rate) are a normal occurrence.

ISP's do have customers that get that kind of service. Those customers are called "businesses", and they pay significantly more than residential customers do, because they insist on actual service level guarantees.


I think it is connected since it is all the same network traffic... they do false advertising on bandwidth, which is like the first hidden charge (using small prints, maybe) & and then try to do a second hidden charge for every bit by charging clients first and servers later (Netflix for example)...


edit: missed the "unlimited" bit, i agree if you're buying an "unlimited" service, there shouldn't be an artificial cap

why not? if I only want to use a small amount of bandwidth per month, why should I pay the same as someone who uses 10 or 20 times as much? (I don't only use a small amount, but that's why i sprung the extra $10 a month to go from 500GB to unlimited)

having grown up with segmentation on both speed and quota, i struggle to understand why there's such opposition to the idea


Your argument has absolutely nothing to do with net neutrality.

Charging people for consumed volume is something that can and does already happen, and continues to happen in places where net neutrality is law.

Net neutrality is about not discriminating in what people consume or send.

BTW, high volume traffic companies like Netflix and YouTube are outliers. Many ordinary end users create way more upstream traffic than the average commercial non-video content provider.


It has everything to do with net neutrality. See my reply to eli for the reason why (https://news.ycombinator.com/item?id=8547054).


> I think it's spurious and mendacious to suggest that consumers upload amounts of data that are in any way comparable to the amount downloaded by people who stream HD video for live consumption.

How much of that is a result of the existing infrastructure? My available upload bandwidth is just 10% of my download bandwidth, which makes it pretty much useless for all but tiny amounts of data. There are many things I would love to upload, but it is just not feasible, so you learn to deal with it.


10% of my upload bandwidth is a megabyte a second. That's enough for most of my upload usage - backup primarily, and the occasional youtube video.

Your perspective on upload vs download may change a bit when your connection gets better. I think a 9:1 ratio of download to upload is the right thing for most consumers. Ideally, the connection would rebalance based on demand, but I don't know enough about xDSL technology to know why that isn't possible.


Net neutrality does not preclude metered access. Two different things.


Let me try and explain why these things are related with some economics.

There is a scarce resource, consumer bandwidth. We normally use pricing to communicate information about scarce resources. This has the advantage of increasing the profitability of investment in increasing the supply of the scarce resource.

The explosion in growth in streaming HD video services has meant that the statistical variance of consumer bandwidth consumption from mean consumption has increased.

If most pricing models assume a mean usage, that means that heavy users are now being subsidized more than before by light users.

For fairness, heavy users should be charged more.

That can be done via metered access with higher allowances costing more, or it can be done by charging more for the streams of data that are consuming the scarce resource. That means Netflix and their ilk. But of course Netflix will pass on any extra cost on to the customer.

These are two sides of the same coin. If metered access with segmented pricing can't solve the pricing problem, then contracts with suppliers of data streams will be used instead.


Are you suggesting a system where, instead of settlement-free peering, peering between networks is on a pay-per-bit basis? I suppose that would also be consistent with neutrality, as long as there is no discrimination between networks. In no instance should Netflix have to pay anything to anyone except their access provider.


The trouble is that the cost of a packet is a function of its entire route, not simply size or quantity.

The more packets that flow through a congested hop, the more that flow should be charged (whether to the sender or recipient). Peering with a network where the packets are not due to go through heavily contended routes shouldn't be a big problem, and nor should peering with a network where the routes for packets being interchanged have similar constraints.

Probably, a totally fair system would involve so much accounting that most of the cost would be dominated by it.

Let's not also forget that Netflix et al. don't always rely on peering. They can give their customers a better experience by directly attaching hardware to the ISP's network, i.e. edge caching, which itself involves contracts and negotiation, independent of any network neutrality concerns around packets swapped at peering.


But let's look at the economics from the ISP's perspective. What incentive does the ISP have to charge Netflix less, regardless of whatever costs they have?

First of all, most big ISPs are competitors to Netflix. Directly so through online streaming services, but I think focusing on those is missing the big picture, which is cord-cutting. For cord-cutters, Netflix and other services add up to a replacement for the ISP's expensive TV service, and while not a lot of people do this today, the trend over the last few years seems pretty clear. Thus the ISPs have little reason to be particularly invested in general in making high bandwidth transfers on the Internet actually work.

Aside from that, they could be incentivized by competition from other ISPs. But 75% of American homes have only one ISP providing at least 25/3 [1], and even at 4/1 the majority only have two choices, so this is pretty limited. While I am very far from an expert in this field and I know there are many factors involved, it's hard to see this as not a large factor in the high prices Americans pay for Internet service compared to other countries, independently of the inherent scarcity of the resource (which, after all, can be expanded with enough investment).

And when it comes to charging content providers, the situation is worse, because the cost is hidden. Even in a competitive market for ISPs, fees charged to Netflix don't affect the sticker price - admittedly, at the moment it seems to be all of $1, which is a significant part of Netflix's price but not the Internet connection's [2], but that just reinforces the arbitrariness of it. And if negotiations fail and the ISPs slow down Netflix connections by neglecting to upgrade equipment, they can still advertise 100Mbps or whatever on their website, regardless of the fact that on one of the most popular destinations (bandwidth-wise) on the Internet you can't even get 5Mbps! This is such an enormous asterisk to the speed promise that even given the inherent variability of speeds on the Internet, it feels very much like false advertising.

This used to affect me personally: being in the minority that has two high-speed options, somewhat less than a year ago I switched my home's Internet connection from Optimum Online, cable service which AFAIK is not trying to charge Netflix a fee, to FiOS. For the same price it promised faster download (150 vs 100), much faster upload (now symmetrical, yay), and there were faster options potentially available in the future if we were willing to pay even more money. As it turned out, for most of the internet FiOS really was better - even if I could rarely ever download anywhere near 20 MB/s, 10 wasn't out of the question for CDNed content, significantly better than the previous service. But the result was to the significant displeasure of my family, because instead of downloading games from Steam, they watch Netflix a lot, and it started frequently degrading quality or failing altogether. As someone aware of the issue I honestly should have know that would happen... IIRC, since the connection was far from perfect under the old ISP I thought it wouldn't make that much difference, but I was wrong. My fault - I think largely resolved now that Netflix is paying up - but the vast majority of consumers are completely unaware of this! Any non-tech-enthusiasts choosing service during the time had little way of knowing about this giant caveat, giving Netflix no bargaining power even in this competitive segment of the market.

I suppose this part at least could potentially be changed without government intervention: Netflix could raise its price only for users of certain ISPs, or ISPs could start advertising their Netflix speeds. But with all these factors combined, the whole thing is a mess and in no way represents an efficient market. Thus while I hope for competition to some day make net neutrality-like regulation unnecessary, I strongly support such regulation.

[1] http://www.fcc.gov/document/fcc-chairman-more-competition-ne...

[2] http://arstechnica.com/business/2014/05/netflix-comes-throug...


> Unless the security and privacy problems of the cloud are fixed, people are unlikely to upload the kind of data required to make them comparable

You vastly overestimate people's concern over privacy and security. We still use email, http and insecure credit cards yet they have huge security and privacy holes.

People will use what appeals to them and worry about security and privacy generally later.


Here's a similar situation that turned out much better than expected.

Back when I grew up in Texas in the 80s, the power utilities were regulated monopolies (like pretty much everywhere else). They owned both the power plants and the wires going down the street. Then in the 90s, the utility lobby convinced the state that it would be much better for "competition" if utilities were "deregulated". The state went along with it, split utilities in to "wires" and "production", and deregulated production[1] (i.e. let anyone build a power plant and sell power at any price).

This was great for the current utilities because they were the only ones with existing power plants, so they could collude and jack up the rates[2]. However, in the early 2000s oil companies/prospectors started realizing that all this natural gas they were fracking could be used in power plants, and they could be the ones who owned the power plants.

So there was a huge boom[3] of gas power plants in the 2000s as many non-utilities built and competed on the wholesale market to provide power. This drove the price in the late 2000s and early 2010s down significantly since gas was so cheap. Deregulation actually worked in eventually driving down the price due to competition!

The difference between Texas utilities vs. FCC/ISPs is that the grid operators were still regulated and had to let anyone who sold power to use their grid. This effectively created the equivalent to the "Title 2" common carrier for the electric grid. The competition is fierce on the power production side, and the parts of the old utilities that were split off to compete are starting to go bankrupt[4].

So if the FCC wants competition, they need to follow the Texas system and split the cable company into regulated "wires" and deregulated "ISP" parts. Unfortunately, the existing monopolies have seen what happened in Texas, so I don't think they'll push for deregulation.

[1]: http://www.ercot.com/about/profile/history/

[2]: https://en.wikipedia.org/wiki/Deregulation_of_the_Texas_elec...

[3]: http://www.poweracrosstexas.org/wp-content/uploads/2013/01/P...

[4]: http://www.nbcdfw.com/news/business/TXU-Oncor-Owners-Vote-fo...


I disagree with your assertion that deregulation has been good for the Texas power market. (I lived through that same transition and have been participated in it for most of my adult life.) For one, still-regulated cooperative and municipal power utilities still have lower rates than fixed-term "competitive" utilities.

That said, I wholeheartedly agree with the idea of splitting data delivery into poles/wires and content parts. This is where I want municipal broadband to go. Have the county or the city or what-have-you own the physical plant and run it like the city water system (yes, I know, Texas has private water systems; don't get me started on Monarch Utilities). Any competitive provider that wants to hook up to the system and provide services would be welcome to do so.


The problem is that cities and municipalities are poor stewards for these resources. They use the maintenance of the infrastructure as black holes for patronage employment. Had a water line break (on the city utility side of the meter) and the city turned up to fix it with three trucks and six men, for a job that a private plumbing contractor and excavator would have needed one or at most two workers to complete.


If the Internet were more mesh friendly this would make sense, but as long as you need to pipe all the data in a town through a backbone provider someone holds way too much power in the relationship. With power companies third parties can run their juice over lines that goes to homes without touching another plant. The state can maintain the switching stations, but otherwise power never needs to pass through another third party.

Or in a state like PA, you may never get power from your choice provider, because you get to pick your power company here. So I can buy from some business out of Erie who is only serving power locally while I get all my juice from another company, but state regulation says that I get metered billing from my service and not power provider.

That can't really work with the Internet. Fundamentally, if the state owned the wires and the switching stations, they would own all the infrastructure. There is no equivalent to power plants in IP - unless you want private switching stations, which means you are not emulating the electrical grid (usually). It is kind of brain dead simple for a municipality to provide a dumb wire and routing, though.

I think it is worth noting that where I live (a town in PA called Kutztown) the borough a decade ago started a township owned telecommunications business subsidized by taxpayers. It operates as a semi-private entity, and since the huge township investment (it is still paying off the 15 million investment) the data rates have never gone up once, and the pricing has only gotten worse - it started at 10 / 10 mbps for $25, and today the rates are 10 / 1 for $30 and 10 / 8 for $60. The company has no incentive to improve their infrastructure and bureaucracy guaranteed the deployment was hugely inefficient for taxpayers to foot the bill. The only benefit was that the traditional telecom giant in the region, Service Electric, dramatically slashed prices in the borough in response to the town sponsored option - but their service now stays just as expensive as HomeTown Utilicom, and neither improve service or reduce pricing because now it is just a duopoly where one only expands through taxpayer money and the other has more lucrative markets to leech dry where they are the only cable provider.

So what I am saying is that the public option may not be the sunshine and rainbows everyone dreams of. The state is dramatically inefficient at building anything. They will spend ten times the money and get a tenth the return because they have only tertiary cost pressure and massive bureaucratic bloat. The perfect scenario is where you can somehow get infrastructure at private enterprise prices (and that means you had to get a profit motivated cost deferring entity to initially deploy the infrastructure to keep the expenses low) while somehow having the state pay off the business, and then give away wire access to its constituents for free or cheap. And then you have to constantly figure out a way to apply market pressure to improve the infrastructure, rather than just stagnate on the first attempt.


The reason government is inefficient is that it has a monopoly and no competitive pressure. But the incumbent ISPs are in the same situation. There is a reason Verizon stopped rolling out FiOS and it's not that nobody wants it.

> Fundamentally, if the state owned the wires and the switching stations, they would own all the infrastructure.

The part of a communications network which is a natural monopoly is the part that creates a path between a central location and every subscribing household in the region. From there you can find plenty of competing providers to sell transit to the rest of the world.

The optimal model goes like this: The regulated or municipal last mile provider runs a fiber pair from the central office to every household in the service area. That is the totality of their business. The fiber pairs and rack space for terminating equipment are leased at a regulated rate by competing ISPs. The ISPs provide (and individually upgrade) their own terminating equipment on both ends and from there provide connectivity with the rest of the internet.


Wow! I take the absolute opposite conclusion from your story that you do: you're getting the best rates I've heard of anywhere in the US, and you're complaining that it's somehow reflective of inefficiency!

I've lived in extremely rural, suburban, and inner-urban areas all over the US and I've never paid less than $60/month for 10/1. That your bandwidth isn't increasing doesn't sound to me like a bug, it sounds like they're amortizing their equipment over a long time horizon and giving you a great deal!


Count your blessings -- I would be quite happy to pay $30 for 10/1. Where I live, $30 with AT&T gets you 3 Mbps down, and that's the promo price.


I get the impression that the equivalent to that would be for the FCC enforce that ISPs can not discriminate based on content origin, and content creators must be left unregulated. Or, in other words, net neutrality.

The idea that one entity owns the wires, and rent to another that connects the wires into the network is madness. Both entities will fight to no end, and bad service will always be caused by "the other one".


Whether we get Title II or not, the last mile needs true competition. YC Pres Sam Altman has a good blog post on it:

http://blog.samaltman.com/net-neutrality


Except that it actually works just fine, see BT OpenReach in the UK.


So in this model, you are saying we should have companies that are responsible for just laying literal wires to connect houses to some type of neighborhood switch and then from the switch side on is "ISP" territory and they are responsible to connect to the "greater internet"?

I'm just wondering how the physical roles would be split and literally where.


Yes, the physical wires running to your home is the cost-prohibitive thing that is stopping competitors from entering the market (i.e. running a second set of wires to your home).

The ISP should be responsible for your service to the rest of the internet, since there's many ways you can manage that side of the network. If an ISP wants to offer a non-net-neutral plan, they can, but there should be little barrier preventing another ISP from entering and competing with a net-neutral plan.

This is very similar to the way the UK currently does it[1]. It always baffles me that the FCC thinks that it's in uncharted waters. This sort of thing has been hashed out and is working well in other infrastructures.

[1]: http://arstechnica.com/tech-policy/2010/03/uk-regulators-off...


It works in the UK, and a lot of other places: http://en.wikipedia.org/wiki/Local-loop_unbundling


The reason for the split is that you don't want to have a bunch of companies trying to lay wire everywhere. It's very easy to build 10 power plants to connect to the grid vs. trying to run 10 sets of power lines everywhere.

The problem is that internet wire technology moves so much faster than power wire tech. Even in just the last 20 years we've gone from copper phone lines to cable to fiber. As long as the last-mile tech continues to improve it will be hard to work this scenario because what incentive does the "wires" company have to re-do all their infrastructure from fiber to the next big thing?


Even in just the last 20 years we've gone from copper phone lines to cable to fiber.

Is there any reason to suspect that today's fiber (albeit possibly "lit" by tomorrow's fiber modems) will be insufficient twenty years from now? Are we approaching some sort of theoretical limit to the number of beams of light that one glass fiber can transmit?


> Is there any reason to suspect that today's fiber (albeit possibly "lit" by tomorrow's fiber modems) will be insufficient twenty years from now? Are we approaching some sort of theoretical limit to the number of beams of light that one glass fiber can transmit?

No. And the premise that we've gone from twisted pair to coax to fiber in a period of 20 years is similarly silly. Telephone wire is essentially telegraph wire and has been in use since before the American civil war. Coax is from the same century and had been in use for cable TV before the internet was even a thing. Even modern fiber optic cable is older than, say, TCP/IP. The only reason fiber wasn't used to begin with is that the other cable was already in the ground before the internet existed.


Coax was running to houses more than 20 years ago, DSL still works fine over copper, and many places aren't wired for fiber. Not saying your point isn't valid, just that it's a smaller problem.


This is what we have in Israel, and it works nicely IMO. We have a duopoly of "infrastructure" providers, where the wires go from homes to the local Internet eXchange Point, and from there it's a free market of ISPs. We don't pay a lot (and the bulk of what we pay is to the infrastructure providers), and user experience is mostly very good.


They get it, they're just corrupt. What I want to know is why mozilla pushed such a proposal.


The ISPs seem just as mad about the proposal as we do. I'm convinced after watching Wheeler that he isn't so much corrupt as he is some combination of stupid and corrupt. I guess that's what makes him an "inspired choice" as Comcast put it.

As for Mozilla, it's possible they were convinced the FCC was going to go for section 706 entirely at the time, and pushed for something to increase the chance that they wouldn't be completely fucked.


I think the converse can also be asked: Does the Internet really not get it about the FCC?

Time and again, these government agencies (e.g. FDA) have shown that they care more about the companies than the general public.


Their paid to not quite get it.




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