Net Neutrality? Does this really matter?

I’m having a hard time getting worked up over the defeat of the net neutrality bill in Congress. Yes, I think that net neutrality is a good idea; but I find it hard to see why the market won’t provide this. I assume consumers will holler bloody blue murder if their ISPs start throttling their YouTube bandwidth or their World of Warcraft games.

There’s enough competition in the high bandwidth marketplace right now that any effort to throttle sites people want should lead to mass consumer defection. In fact, if the cable company was stupid enough to limit Google’s bandwidth, I expect to see ads from the phone company advertising how much faster they are when accessing Google (or vice versa). Similarly Google and Yahoo can start targetting ads at the customers of evil ISPs telling users how much faster their connection would be with a different ISP.

Bottom line: bandwidth is a commodity. You can get it anywhere. All that matters is the reliability, speed, and price. The content providers are in a much stronger position. There’s only one Google. There’s only one BBC. There’s only one Amazon. I very much doubt that my ISP will pull this sort of stunt, but if they try I’ll immediately switch to one that promises not to do this.

8 Responses to “Net Neutrality? Does this really matter?”

  1. Scott Ellsworth Says:

    Actually, I think you missed one key point – the exclusive contracts many cable providers have with many communities.

    Cable providers have a tremendous advantage in providing bandwidth, and they have exclusive agreements in most municipalities. Thus, if cable providers start throttling skype or youtube, then the purchaser is kinda SOL.

    If we see improvements to DSL speeds and the rise of powerline bandwidth, then this might change. I would love to see that, as it would finally force the cable providers to get better QoS.


  2. Bob Herrmann Says:

    I believe that in nearly 100% of the US there is a monopoly in both cable and telephone service. Most people dont have multiple options for highspeed Internet or phone service.

  3. Elliotte Rusty Harold Says:

    There’s no monopoly in phone service anymore. Cell phones and VOIP have slain that beast.

    The cable monopoly has been severely damaged by satellite, the Internet, NetFlix, and HDTV over the air. In some places there are even multiple cable providers.

    However, neither of these is at issue. The question hand is not phone service or cable TV. It’s Internet access; and in many parts of the country that leaves open the option of DSL or cable. In the Northeast at least, wireless is also a real possibility. Satellite is aan option too. In some places, there are multiple DSL and multiple cable providers.

    We do need to be wary of collusion and outright mergers between the various providers, but so far I don’t see evidence of that on a significant scale.

  4. Michael Powers Says:

    With respect, I wish I had as much faith in the market as you do. As Gov. Tarkin says, you’re far too trusting. What if what ‘should’ happen doesn’t?

  5. Scott Ellsworth Says:

    I believe you misread my comment. I said nothing about cable video or telephone-for-voice services. I was referring entirely to broadband choices.

    DSL and cable currently provide a far better broadband experience than satellite, while wireless and power line internet are not available in many areas. In most areas, there is only one DSL and only one cable internet provider. Further, based on the experiences of the people around here – Orange County, with Cox and AT&T as your provider choices – DSL has serious problems in both speed and uptime compared with cable internet. These last can be addressed, but they are real problems right now.

    I live fifty miles from the Los Angeles city center, and there is not a break in the suburbs, office parks, and urban/suburban sprawl between me and downtown. I am not convinced that a wireless carrier is going to get all the way out here any time soon. Would be nice, but I will believe it when I see it.

    Thus, without a net neutrality provision in these many markets without competition, it is quite easy for the cable vendor to prioriize their VPN, VOIP, video, and other v-services over ones provided by third parties. Why not, after all, as this can become a revenue source.

    I have no problem with them making a buck, but I do have a problem with them doing it when there are no alternative providers. With alternatives, a substandard marketing decision drives customers away, and a superior one attracts them. Without, customers suffer whatever the vendor chooses to provide, and it is rarely ideal. If DSL reliability and speed improves, and powerline internet become feasible, and citywide wireless become ubiquitous, then such protection will not be needed, but until that time, it seems unwise to trust in a competitive market that does not yet exist.


  6. Frank Wilhoit Says:

    “I assume consumers will holler bloody blue murder…”

    You also appear to assume that someone will be listening, an assumption that flies in the face of everything that we know about corporations.

    “…I’ll immediately switch to one that promises not to do this….”

    There won’t be any. This is a statement that could only be made by a blind fool, which you are not: so what is going on?

  7. VHF Says:

    When was the last time you dealt with either your cell phone company or the cable provider. No easy task and we are heading back towards monopolies already in these areas or at least much less choice in vendors. In most areas there are only two broadband providers and so there is already limited choices in either price or service levels. Second all require long contracts to get the best value, so where and how do you think the providers will make up that cost – new services….

    The reality is that it is likely already a silent issue. There is no reason once the broadband providers got into other services that they wouldn’t provide their own services a 5 or 10 or more percent benefit over those from their rivals. This wouldn’t be noticed by most and could provide enough to sway the market towards their services. They don’t need to charge extra for the bandwidth for them to already benefit by customers switching to what seems like a better service that is owned by the broadband provider.


  8. Russel Says:

    Ok first a note. I’ve been following cafeaulait etc for some years and I’ve generally enjoyed Elliotts politics. Secondly I’m an Australian and the COPE act scares me enough to finally venture a comment. We have our own near-monopoly telecom here named Telstra. A former government monopoly that was sadly coorporatised, and now simply refuses to allow competition to function at the wholesale level.

    Its sad to see the net neutrality debate get lost on misunderstandings of what exactly net neutrality is. If you want to see what is actually being asked for there is no better reference than the act itself (Internet Freedom and Nondiscrimination Act of 2006) and it contains provisions such as this:

    If a broadband network provider prioritizes or offers enhanced quality of service to data of a particular type, it must prioritize or offer enhanced quality of service to all data of that type (regardless of the origin or ownership of such data) without imposing a surcharge or other consideration for such prioritization or enhanced quality of service.

    You see, this is not about stopping those who are in control of routers from slowing down or speeding up any paritcular class of data. It’s about being non discriminatory wrt the source or sink of that data.

    One other misconception is that there is competition in bandwidth. Um. NO. There is competition at the retail level. But the internet backbone is now essentially in the hands of a near-monopoly. Here, and in the US. Ask AT+T and verizon to show you their fibre maps. What this is essentially about is using routers to extract monopoly profits. Pure and simple.

    And the threat is very real. Why do you think phone companies cross-invest in internet backbone? Because they’re scared of voip. And guess what, if they can make you pay you something more like the prices they’ve been charging for voice calls, for using voip, they will. Real voice calls cost the carriers a fraction of a cent per minute. So why do they charge you many times what it actually costs to provision? Because they can. Now what would you do if you were AT+T? You’d throttle voip in a *discriminatory* fashion and make your customers pay 10c a min cross country when they could have paid effectively 0.1c . Aint monopoly wonderful :-)

    The threat of the monopoly telcos then leveraging their power to favour their own content is very real too. Why do you think microsoft spent so much money trying to outdo google. Its not just the search and ad revenue they were chasing, its about owning eyeballs. Its about the dream of owning the portal that the world sets as its home page. And all the profits that come from that. AT+T, Verizon won’t do this. Instead they will cross invest with a partner. Yahoo for breakfast, anyone? ick.

    And I’m surpised Elliotte hasn’t picked up on all the political and privacy issues that come with power drunk companies that are now in control of major routers. China figured this out a while ago. The internet isn’t that free or censorproof if you control the routers. I’m not saying the telcos really care that much about whose point of view they censor. They probably don’t care. But there remains the potential for someone to do it. We don’t like your union -> there goes your web-site. The gun-lobby paid us lots of money -> oops there goes your web site. All this is possible without basic non-discrimination. And even this reasonable amendment didn’t find it’s way into the current legislation.

    I should also comment that a lot of FUD had been committed on the part of the telco lobbyists. One egregious lie is that web sites dont have to pay. They do. What the net neutrality bill was supposed to do though was make it clear that whatever you charge a web site to connect to the internet backbone, you have to charge in a non discriminatory way. That is, you can’t charge someone X for a GB and someone else 2X for that same GB. Unless you have that basic principle in place, the telcos can and will seek commercial advantage.

    Another line I find amusing is that they are trying to convince consumers this is all neccesary to fund a ‘fast lane’.. so the happy little consumers can go and get their Disney videos off the net. Um.. right. The reality is that the internet backbone is basically about 5% utilised. And there is no way that that backbone can be utilised if that data is sold at the current tarrifs. There just isn’t that much money.

    I’ll give you a concrete example. Here in Australia, someone decided that the internet was going to grow exponenitally and so they built a whole new fibre network. A brilliant bit of work it was too. Technically. It was then named nextgen. The fibre goes past the end of my street as it hapens. Unfortunately.. only a few customers used it because there was no way to pipe that data to those who would use such a quantity of data (potentially terrabits). That is, ordinary households. Why? Becuse our Telstra overprices the last mile copper. Funny that. Anyhow Nextgen went bust. But back to my point. If you were to actually use some fraction of the capability of that cable (I think its 20 single mode fibres).. lets say a terrabit, and then charge at the rate that Telstra charges wholesale. It woud cost you per annum something like the entire GDP of the country.

    And what Im saying is, this is precisely what’s going on in the US. There isn’t enough money n the country to pay (at the retail level) for future high volume internet traffic, video etc *unless* the price of data drops. All else is simply managed artificial scarcity. They aren’t interested in providing data/voice/video at anything near the cost of provision. Instead, its about getting consumers to part with currency. Simple as that. Bandwidth is not yet a commodity and to the extent it’s heading that way, the telcos want to do everything to lock you into paying, somehow.

    As for the comment about providing wireless to the outskirts of LA. Yes I agree. Terrestrial wireless isn’t going to cut it. The sad thing is that in places like LA, providing fibre to every house isn’t that expensive. Not when you amortise it over 30 years or so. The real reason iwe dont have bandwidth is that it suits the telcos to spend money on marketing and ‘content’. Have a look at the internet broadband league table internationally…,2340,en_2649_34225_36459431_1_1_1_1,00.html

    See how badly off places like Australia and the US are? Why.. monopoly.

    Have a look at the countries that lead the world in broadband. Common theme: Government vision.

    Anyhow back to the topic. The behaviour of the US monopolies is a (bad) inspiration to the rest of the world. We see it here in Australia – with a timelag. I fear a future Telstra cutting off my voip or redirecting my google to their telstra/msn/yahoo site. Consumer backlash? It’ll happen gradually. We consumers aren’t that smart ya know :/

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