Net Neutrality: Complicated

by PB @ BON on Jun 7, 2006 1:20 PM CDT in News Comment 11 comments

Before bloggers erupt in outrage over the impending "net neutrality" brouhaha, I think it important to try to learn more about it. It's not as cut and dry as some are positing. I'm in the process of trying to learn more about it, but with a limited economics background, I'm not sure I'm the one to properly frame this debate.

However, if the topic interests, you can read about the potential harms of a net neutrality regulation from J. Gregory Sidak's February 2006 testimony to Congress. Sidak argues that the supposed anticompetitive risks that would accompany a departure from net neutrality obligation are implausible. Regulation, he argues, would severely disrupt the market's ability to recover infrastructural costs. Over-regulation of broadband providers' ability to recover these costs will ultimately result in a deterioration of the market for all involved.

On the flipside, take Stanford University Law Professor Lawrence Lessig's testimony at the very same hearing. Lessig argues that if the FCC doesn't regulate broadband providers' ability to access-tier usage of their networks, which is essentially an additional charge on specific services (e.g. streaming video), the decidedly negative result would be an essential auctioning of bandwidth to the highest bidders.

The crux of his argument is that "the internet's growth is a crucial part of the nation's economic growth." He urges Congress to take steps that assure "that the current concentration in broadband access does not translate into reduced application competition on the Internet."

So, there you have it.

As always: nuance. Super.

So before my head explodes from painful memories of economics classes, I'll retire this thread. It's not totally clear yet (to me, anyway), which of these arguments is correct, though the first argument seems to me to rely on a more generous view of the word "competition" as it applies to telecommunications. In that light, FCC regulations governing what broadband providers can (consumer-tiering) and cannot (access-tiering) seems proper.

So... back to sports.

For more: Original MZone post here.

Bruins Nation with substantive breakdown here.

--PB--

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The problem I see with

allowing providers to charge internet sites is that the larger established businesses will have the cash to pay for the extra bandwidth. Giving your Google, Microsoft, and Amazons a huge advantage over say youtube to create and innovate new ideas over the web that require more bandwidth, but also create new services over the web.
Also, most Americans today have 1 or 2 choices of broadband connections. This is not exactly competition. Companies like Verizon and Comcast could use their subscribers as hostages to force Google to pay exuberant rates, or get slow connections compared to yahoo, effectively forcing their subscribers to pick yahoo over Google to get their broadband products.
Personally I am against most regulation and believe in the principles of a free market economy without government regulation. The problem is that with out competition there is no free market, so until there is more choice in broadband connections, the best way to allow for innovation and free markets on the internet is through net neutrality.

The Harbinger of Deleted Diaries

by Wells on Jun 7, 2006 2:18 PM CDT reply actions 0 recs

I think that's right

While I clearly don't understand the telecommunications industry enough to speak with too much authority, I do think that the competition remains too limited for an unregulated market right now. Given the potential consequences of unregulated, anticompetitive behavior, I'm inclined to believe Congress should intervene.

by PB @ BON on Jun 7, 2006 2:23 PM CDT up reply actions 0 recs

Right

Now the telecom industry as a whole is rapped up in so much red tape between county, state and federal laws that it needs fixing too.
Trying to figure out what is best for that industry is a whole nother issue, but at least net nutrality will keep the mess contained to the telecom industry and not extend onto the internet.

The Harbinger of Deleted Diaries

by Wells on Jun 7, 2006 2:32 PM CDT up reply actions 0 recs

It's a total snow-job

The telcos are trying to argue that the use of TCP / IP means that their transmission lines are being clogged with something distinctly different from voice traffic. It's a technically stupid argument but of course it's gained traction. It's also not difficult to manipulate traffic based on packet data to create the impression of a problem.

Basically, I think this is total rentier nonsense -- the telcos are trying to double dip for use of the same infrastructure, and it has too great an impact on the economy in general to be allowed.

I didn't want to put my entire rant in here so the rest can be found at http://dctrojan.wordpress.com/2006/06/07/a-note-on-net-neutrality/

by DC Trojan on Jun 7, 2006 2:39 PM CDT reply actions 0 recs

Thanks

Much better explained.

by PB @ BON on Jun 7, 2006 2:46 PM CDT up reply actions 0 recs

A request

would you please cross post your post in our diary section?

I'd think this is the perfect issue where the Bruins and Trojans can work together. The only time.

by Nestor16 on Jun 7, 2006 5:01 PM CDT up reply actions 0 recs

It's amazing...

what you can learn from the other parents at the playground when you live in DC. I'm aware of packet-filtering etc., for work purposes and it was another father at the local park who clued me in that the telcos were using transmission protocol as their basis of argument in the case. (He was on the losing side, but this conversation happened before the loss.)

by DC Trojan on Jun 7, 2006 2:58 PM CDT reply actions 0 recs

cnn chimes in...

sorta

http://www.cnn.com/2006/TECH/internet/06/07/net.neutrality.ap/index.html

Destroyer!

by DestroyerUT on Jun 7, 2006 5:37 PM CDT reply actions 0 recs

Games and Rules

Most Americans neglect to take into account the nature of powerful corporations. They are Legally obligated to in all cases look after the interests of their stock holders first and foremost and other competing interests like public good are secondary. In a hyper-competitive market place some corporate entities will go to extremes trying to meet that obligation. Enron is a classic example, with deregulation of the electrical delivery market they gamed the system to drive PG&E, the largest utility in the US out of business. The result was it drove the 10th largest economy in the world (California) close to chaos and burdened it with billions of dollars in debt to make up for the wealth siphoned off by Enron. Then take PG&E if you know the Erin Brockovich story you remember how it knowing poisoned the ground water of their neighbors that resulted in grave illness and death of hundreds. So it is imperative that the citizens and our representatives protect our interests through regulation because looking out for our interests is not corporations responsibility.
To use a sports analogy the more powerful the players in a game the more their needs to rules to protect those left vulnerable in the game. Think of rules protecting the quarterback, or those prohibiting low or chop blocks, spearing, the use of hands to the head. In a football game you have winners and losers just like in the market place but you have to control aspects of the game so it remains competitive other wise a few powerful and successful teams dominate the play.

xerxes

by Xerxes on Jun 8, 2006 9:18 AM CDT reply actions 0 recs

Enron is not a classic example

They were not trying help their stockholders, they were bailing them selves out at the expense of the stockholder, and through their example corporate America has cleaned up.
Government regulation is not the answer to life's problems. Open information is. As long as we have a free press and companies are open with what they are doing, then the market will regulate it self. California's energy crisis is not the fault of Enron, it is the fault of over regulation, then trying to open markets while still handicapping profitability with regulation.
Just as in football, their are laws that if broken, need to be punished. But that does not mean that we should fix the game so everyone wins, because then no one wants to play.

The Harbinger of Deleted Diaries

by Wells on Jun 8, 2006 9:55 AM CDT up reply actions 0 recs

I'm a pro-business republican in most areas

However, this isn't really a business vs. consumer issue. It's a big business vs. small business issue.

And in this climate ALL job growth is coming from small and mid-sized businesses in this country. Big companies are firing their way to hirer profits. Not growing via innovation and service.

And this administration (that I helped put in office) has done more to protect big businesses than little.

Anyway....If we were working in a "perfect market" with fair and open competition across the telecommunications industry, I would say "no regulations on either side. Let the market fix itself."

However....

We don't have perfect competition. There is usually one cable provider option per home.
Telcos stopped innovating years ago.
Telcos stopped providing great customer service years ago. Ever tried to get up and running with Comcast? Ever called with a problem?
With less innovation and worse service than their more nimble, smaller counterparts, the entrenched telcos can only protect marketshare by denying access to emerging tech solutions in the VOIP and entertainment arena.

The opportunity for the little guy to innovate and service his/her way to success in the telco world will be virtually non-existant without some net neutrality protection.

And it's not just a telco problem. Imagine a company like Salesforce.com stealing away market share from Oracle and MSFT in the CRM space.....until MSFT buys off the major ISPs and destroys Salesforce.com's user experience.

It's a complicated issue to be sure, but it's one that's critical to the internet's future.

pwd

by Paulwesterdawg on Jun 8, 2006 4:40 PM CDT reply actions 0 recs