I have different Net Neutrality worries.

I admit to being somewhat confused about net neutrality, but that probably means I’m only slightly less confused than any of my friends who feel confident they understand it.  My instinct is that (once again) the Internet industry is sowing a bit of fear that (once again) the Internet is in grave danger of not working as it should for “the people.”  I say this because the headlines, cartoons, and editorials most often shared by my generally progressive-leaning friends all convey some variation on the theme that without net neutrality, we will wind up with two Internets — a very very fast Internet for big entities with deep pockets, and a very very slow Internet for the rest of us.  On this matter of the extremely bifurcated web alone, I say hogwash if for no other reason than the fact that no entity stands to benefit from “slowing us down” as it were.  Instead, it is more likely that the fear of being disenfranchised is being dangled in front of consumers because Silicon Valley corporations would like us to subsidize their enterprises — that is more than we already do.  Writes the Chairman of NewCompetition Scott Cleland in an editorial on The Daily Calller:

“The rub here is that what big video streamers, like Google-YouTube & Netflix, really want is for the FCC to ban “paid prioritization” — i.e., the prioritizing of Internet traffic that depends on real-time delivery ahead of traffic that does not.

Translation: Silicon Valley covets a proverbial free lunch on Internet consumers’ tab.”

So, regarding the prospect of the “two Internets” rhetoric, suppose we have an entity called Netflix, which is presently the largest consumer of bandwidth worldwide.  And suppose there are other services just like Netflix, all of which expect to grow in terms of volume, in terms of image and sound quality, and in terms of consumer demand.  Now, suppose we have an ISP or some other entity considering the prospect of making stranded investments in the infrastructure required to enable continued delivery to meet increasing demand for more data-intensive content (e.g. 4K video).  The first question is why it would be unreasonable to propose that the Netflixes or the YouTubes or the Hulus of the world pay rates commensurate with their demand on this infrastructure; and the more important question for consumers is why such a proposal would necessarily result in a lack of access to high-speed connections at affordable prices?  In such a scenario, both the Netflix (content distributor) and the ISP (infrastructure investor) will lose their shirts.  It is in nobody’s interests anywhere to disenfranchise consumers from high-speed access to the web; it would be like filling a store full of expensive inventory, locking the doors, and expecting to make sales.

We do see stories from time to time of a more conspiratorial nature, invoking ideological motivations when implying that a not-for-profit or a start-up will be slowed into extinction on the dusty wagon trail of the “slow” Internet while the big, corporate interests and well-funded political organizations race along the sleek superhighway.  But, again, this doesn’t make any sense from a technical or a policy perspective per se.  The mall across the river from my house has a whopping electric bill in contrast to mine because it demands much more from the power plant than my house ever could.  Nevertheless, the lights in my house come on just as instantly as the lights in the mall.  There is no reason why a major user of bandwidth paying more for that use should slow down a relatively small user of bandwidth.  Moreover, we already have a precedent for “uneven” access in place, and it’s actually more fair than in years past.  ISPs in most, if not all, markets offer tiered pricing for access at different speeds, and this makes sense.  If your neighbor wants to play video games online and needs top speed, why should you subsidize his use, if all you want is email and basic website loading?  We can argue whether or not the prices in place are reasonable, but the principle that consumers pay for what they actually need or want or can afford is hardly unfair. And, again as Cleland points out, this is how the technology works:

‘”Virtually every Internet user also understands that different broadband technologies — fiber, coax, copper, satellite, fixed wireless or mobile wireless — all naturally generate a range of broadband speed lanes because of physics.

The technology one chooses to use naturally creates faster and slower Internet lanes.”

Setting aside overlapping concerns about mega-mergers (I honestly believe that’s a separate issue), one of the interesting aspects of this hotly-contested kerfuffle over net neutrality is that it is so typically American with its many ideological contradictions.  One the one hand, we like to believe that “the internet belongs to everyone,” but of course the only way to make that manifest with regard to investment in maintaining and upgrading the system would be to do so exclusively with public funds.  Such an approach would likely rankle conservatives and progressives for different reasons — free-market, anti-socialist arguments on one side, and keeping the government from “controlling the Internet” on the other.  Thus, ironically enough, by insisting that the “internet belongs to the people,” we functionally insist that it belongs to private enterprise and hope that the people’s government can create a regulatory structure to protect our common interest in having a “free and open internet,” whatever that means.  But not too much regulation, mind you, because again, we don’t want the government to have control;  but we also don’t want the corporations in charge either because all they care about is money and ruling the universe.

So, if you think you’ve got net neutrality all sussed, my hat’s off to you; but if you prefer as I do not to have your day ruined trying to track the many players and their various agendas, my instinct is that I wouldn’t worry too much about the “fast lane/slow lane” thing because none of the big stakeholders has anything to gain from this outcome.  I’d be much more concerned about who’s disseminating this over-simple explanation and what it is they’re after.

© 2014, David Newhoff. All rights reserved.

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11 comments

  • Great article and right on point!

  • David –
    The reason that your lights come on the same as the mall across the way is because there are laws in place (have been for many years) that govern how a public utility has to serve the public. If there were two sets of wires running to your house (or more), you might have the ability to compete for a lower price in a free marketplace. Would a lower price guarantee the same level of service? Maybe, maybe not…but over time, what would be likely to happen is that well run electric companies would survive and the bad ones would go away…kind of like my Pollyanna-ish view of record labels.

    The question may be asked another way…Is the internet a public utility? In my view, it has become (or is fast becoming) an essential part of out lives. Why are the same types of laws that determine how it should serve the public NOT already in place? One answer is that, in the world-changing leap that the online world has made in the last 30 years, government could not keep up with what was happening…But another view is that ISP’s are greedy bastards and have seen that they can line their pockets if they confuse the public.

    Netflix may be the 800 pound gorilla, but go almost anywhere else in the “first” world, and your internet connection is much better. That’s because governments in many of those places actually serve their citizens, and the citizens demand a better level of service. Net Neutrality in those places is a given…not an issue.

    Competition is always a two-edge sword. Netflix would like the bandwidth to stream their content, but they would also like to kill off any other company that might be so bold as to intrude on their turf…so it is in their interest to have a pipeline that is expensive (they can well afford it) because it will keep other players off the field. So if I make a bunch of deals with indie filmmakers to stream their content (which Netflix may not carry – and they regularly cull their library and do not put up many things), and it costs me too much to get the pipeline I need to get in the game…my business will go nowhere unless I’m capitalized at the same (or similar) level as Netflix.

    In my view, the result of this will be a kind of censorship I would not like to see. It is economic in nature, but it is the same type of censorship that is responsible for the type of news we see…which contains little real information, but tells us about the lives of celebrities…Well, I guess I need to know about Kaley Cuoco’s haircut…My point is that it may ultimately be more useful to have a set of much stricter regulations, build a fiber-optic network paid for by taxpayers, and take private enterprise out of the equation altogether.

    I see this as being very similar to the break-up of Ma Bell. For a time, the fact that there were many players in the game was very good for the public…but slowly, the FCC allowed companies to consolidate and get bigger again…until now we only have a few companies in the telecom game. It is no accident that Sprint, Verizon, T-Mobile, and AT & T all sell almost exactly the same cell plans…this is not in the public’s interest…

    • Overviper, with the caveat that I remain confused (as clearly stated in the post) by a handful of apparent contradictions in this debate, I’ll try to respond. First of all, it’s true that Internet speed is better in other countries than here in the US, where we invented the damn thing. Typical of us, but I suspect this has something to do with our aforementioned aversion to the S-word in contrast to many of our European and Asian friends who will build infrastructure for society with public dollars and not blink because it makes sense.

      The lights go on instantly in my house because of the laws of physics, but to dig a bit deeper on power generation, it’s an interesting comparison. At the time before the US was electrified, there were proposals on the table to build a distributed system with smaller, cogenerating plants around the country. This would have been more efficient, more competitive, and safer, so we didn’t do it. Instead, members of congress insisted that we build a centralized system using limited, massive and inefficient power plants tied to a complex distribution network we call The Grid. Building the power infrastructure this way created monopolies, of course, on the grounds that the businesses making the long-term, stranded investments had to recoup those investments. So, rates were set and regulated but consumers didn’t have any choices with regard to where they could buy their power.

      The Internet is unquestionably integral to our lives, which makes it at “utility” for the sake of discussion, but comparisons to other utilities become either bad or good depending on whose doing the talking. Regardless, the problem of stranded investment still exists because we Americans are simply not going to do it here with public money. As such, it seems impossible to avoid an oligopoly at best because there is a finite number of companies that can get into the ISP game. And so, we have the small number of “utilities” that will be charging for access, competing but not very aggressively. And we still have the matter of the institutional-scale user vs the household user, only in this case it’s generally a distributor and a consumer rather than two consumers at different scales. Hence a break from my mall/house analogy. Netflix is a user/distributor that, as I understand it, wants cheap access not expensive access. After all, bandwidth is a cost. And I wouldn’t be so sure Netflix wants to be the only game in town; that can be a very unhealthy strategy and doesn’t really fit with their natural expansion into original production. As for your fledgling indie-film service, I still don’t see which vested interest forces the market to be cost-prohibitve for that kind of venture. You can’t compete with Netflix on licensing fees; bandwidth would be the least of your concerns. But if you’re carving out a niche Netflix doesn’t want, as some services have done, they aren’t a threat.

      • To be specific…
        The power grid came about with the best of intentions. It was conceived of so that if it broke down in one sector, the rest of the grid could take up the load…as Audionomics says, that grid has now become a cause for grave concern. It is like much of our other infrastructure…it is two generations old, and I see very few signs of any investment in new infrastructure to replace the old. And we have an ever growing population and more stress is put on it every day.

        Will we still be using this infrastructure in another two generations? Remember that it takes a long time to roll it over.

        Yes, your lights come on because of the laws of physics, but also the laws of economics…and specifically the laws passed a century or so ago that insured that a municipal utility had to provide power to everyone if they wanted the monopoly. I think this concept is at the root of the discussion of Net Neutrality, and I think that if you want to be in the ISP business, you play by the rules of providing high quality service to everyone…or else get out and let someone else invest their money so that they can make the profits. Maybe they aren’t as greedy…

        As for Netflix, possibly you are correct, but the nature of corporate-think is that if I am getting the customer’s eyeballs onto my content, he’s not watching yours…so let’s see how that shakes out…

      • In a distributed power system breakdowns would be more localized at the outset and, in theory, about as inconvenient to repair as a present localized blackout. We would not, however, have a situation that could blackout the entire East Coast as we did several years back. With investment in alternative energy, we’re finally seeing examples of distributed power generation, even examples that most efficient in some cases is to have every home make its own power. But I agree that there seems to be little interest in America’s aging infrastructure — not only energy, but bridges, rails, highways, certain public transit systems, and even social systems I consider equivalent to infrastructure like healthcare and education. Admittedly, though, social systems are harder to quantify than assessing a bridge that’s rusty enough to fall down. Still, all this is why I can’t help but mock most of the fears ginned up over the “two internets” we’re going to have.

        A power utility had to/has to provide power to everyone who pays his bill and can shut off power to anyone who does not (unless they can prove a serious hardship). And ISPs provide the best available Internet access to everyone who can pay his bill, but just like electricity, the draw on bandwidth is not even. If your neighbor is using AOL email while you’re playing Xbox live, you’re using a lot more bandwidth than he is. If your fees were identical (as they were in the 1990s), he’d technically be subsidizing your use; but now we have tiered pricing so he can pay a little less and you a little more. Meanwhile, the prices overall for increasing speeds has gone down since the 1990s, both in terms of inflation and nominal prices. If you invest in next gen ISP, whatever that is, there is no motivation for not wanting every customer you can get. Meanwhile the content distributors, without which there is no point in the next gen of ISP, exert their own pressure to build affordable access for everyone. At the end of the day, ALL of the big, corporate interests in the contemporary market, and across several sectors, need the consumer market to be online without a hitch in service. That’s never been true for any utility before. This is why I say there is nothing in the market (forget altruism) that fosters a “two internet” future. Everybody loses in that scenario.

        I think you have to think of Netflix as a cable network — builds market share based on syndication, then migrates into original programming. That’s been hugely valuable for producing what many of us see as a real Golden Age of television. Look at AMC and Mad Men. But while it’s temping to think each network wants a monopoly on our eyeballs, the reality is that such a monopolistic environment would stagnate. Competing for our attention by virtue of the creative work developed pushes quality, and producers learn from one another and respond to what others are doing. And unlike a temporarily stranded purchase like a car or mobile phone, asymmetrical TV/Film viewing means that Netflix and HBO can both win the same audience because there’s no longer any counter-programming restricted by time slots. We don’t have to choose between House of Cards and Game of Thrones because we have the technology to watch both according to our schedules. Thus we have more pure competition among the programs themselves because nobody needs to win Thursday night at 8pm anymore. Logically, Netflix will invest in opening up more markets worldwide and in developing more original programming, not in trying to “own” customers, which would be radically out of step with the way the market has evolved.

  • Yeah I don’t get the big deal either. Personally I would like it if my Skype call or for those that have IP Phone services are prioritized more then my goofing off on facebook or even watching a movie on Prime. I buy a more expensive router in my own home just to have this QoS but for the most important part of the trip its OMG hands off it makes no sense. Never mind the rise of Internet of Things. Who knows if in 5 or 10 years that if I will have some device from my doctor that needs or should have priority over anyone elses Netflix marathon.

  • I’m more worried about our electric grid.
    A master electrician friend of mine tells me our electric infrastructure is aged and decrepit, and I happen to believe him. If/when the power grid fails, it renders all these other discussions moot.

    I don’t see how paying a bit extra for using massive amounts of bandwidth harms the average person. If you’re a business that’s hogging enough bandwidth that it’s measured in the 10’s of percentages… why should we average Joe’s subsidize that if we aren’t a customer?

    • Hahaha! You’ve all ready be filleted like a kipper.
      [In January 2008, when the Federal Communications Commission auctioned off the “700-MHz” spectrum, a prime portion of the US airwaves, Google was among the bidders. But the company later said that actually winning the spectrum was not its top priority.

      After heavy Google lobbying, the FCC had agreed to attach an “open access” requirement to the spectrum if bidding reached a $4.6bn reserve price, and it was a Mountain View bid that took the auction past this magic threshold – before the company’s bids petered out]

      So basically they hiked the price of the spectrum and you’ve all been paying higher access fees ever since.
      http://www.theregister.co.uk/2010/02/17/google_on_carriers

  • Owning the copper is the argument that AT&T makes whenever someone tries to pass a law that allows other entities to become ISP’s or tries to break up the monopolies that have been given to the telecom and cable industries…”We built it, it’s ours, we made the investment…go away…” In fact, AT&T is required by law to allow other companies to use their wires to provide DSL to users. I know this because I have their DSL. It’s awful. I do not get the speeds I pay for (up or down), I have complained at length…the best I can get is someone trying to sell me an upgrade.

    If you look at the people who use their wires to provide internet service…the only thing that jumps out at you is that people think they’re worse than AT&T. Might it be possible that AT&T is deliberately shorting their bandwidth? Surely not…they wouldn’t do that, would they?

    When AT&T needs to improve its bottom line for some future quarter, who will assure me that they won’t slow the pipe even more in order to force me to buy more bandwidth?

    I don’t even like the idea that government should use tax monies to build out a better internet, but I see few other choices that I can believe will benefit the public. If you do not own a car, your taxes still go to keep the roads in good repair (well…kind of…), if you are healthy, your taxes go to provide care for someone who is sick…if you have no children, you still pay taxes to support schools…

    These are all things that we have decided collectively should happen in order that our society can benefit, and can serve the public better. Is the internet worth that kind of commitment and investment?

    Who do you trust more…a corporation whose interest is the bottom line, or the government…who has proven time and again to come down on the side of monied interests? Is it in fact, any choice at all?

    At the end of the day, the FCC charter says that the airwaves belong to the people…not to the corporations. In my opinion, the Net Neutrality issue is the tip of the iceberg. Trying to have a tiered internet will inevitably lead to all kinds of shenanigans that work against the public interest. You can see how de-regulation has worked against the public trust in many areas…starting with the mortgage melt-downs, and going all the way thru the 5 or 6 giant media companies that control 99% of the content that we can watch.

    The internet is one of the last places where THEY do not rule…WE do. I’d like to keep it that way in spite of some of the problems we all know about…spam, piracy, phishing…and my personal favorite…that guy in Nigeria who keeps telling me that I’m the beneficiary of a hidden fortune in gold certificates. I still trust him more than I trust AT&T, if only for the reason that his scam is more obvious…

    • As I say in the post, Overviper, if we spent public money on the infrastructure, we could call the Internet “ours,” but I don’t think we’re going to do that. So, we get the same tussle with monopolistic corporations we always get, including the inconsistency of service region for region and supplier by supplier. But as stated in the other response, I don’t see anyone gaining from disenfranchising the market or pricing access out of control. I’d like to agree with you that THEY (telecom) do not rule the Internet, but since it is a different THEY (Silicon Valley) who keep telling everyone that, I’m a bit cynical.

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