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Net Neutrality, Schlocky Salesmen vs Monopolist Plumbers
Andy Kessler has written a short tongue-in-cheek summary of the net neutrality debate over on the Weekly Standard. Kessler identifies the two sides as the 'schlocky ad salesmen' (Google, Yahoo!, etc) and the 'monopolist plumbers' (Verizon, AT&T, etc) and when you add the politicians to the mix it creates a pretty untenable situation. From the article: "But the answer is not regulations imposing net neutrality. You can already smell the mandates and the loopholes once Congress gets involved. Think special, high-speed priority for campaign commercials or educational videos about global warming. Or roadblocks--like requiring emergency 911 service--to try to kill off free Internet telephone services such as Skype. And who knows what else? Network neutrality won't be the laissez-faire sandbox its supporters think, but more like used kitty litter. We all know that regulations beget more lobbyists. I'd rather let the market sort these things out."
Here is the Complete article, not a summary...as linked to above: http://www.weeklystandard.com/Content/Public/Artic les/000/000/012/348yjwfo.asp
Ick -- Slashdot is linking a blog post with the first two paragraphs of the real article. Go here instead:
c les/000/000/012/348yjwfo.asp
http://www.weeklystandard.com/Content/Public/Arti
I work in Michigan, and there are still areas that cannot get a better connection than the old 14.4 modems. This is because the major teleco's STILL have true monopolies here. There are Rural Carriers (different from Common Carriers) that do not have to open their networks, nor are they bound by most of the regulations that the Common Carriers (AT&T, Verison, etc) have to follow. When a simple PRI still costs the same in adjusted USD as they did in 1995 it makes it very hard for an ISP to offer anything there. No access for DSL, Dialup costs a fortune for the ISP, and the cities are small, there is one vity in Central Michigan that has 1, count them 1 dialup provider. Even teh Teleco (CenturyTel) does not provide dialup, or DSL in that area. Next comes Cable... The same area has one very monopolistic cable provider. Nobody is allowed to touch their network. They charge access fees nearly double than anywhere else in the country. These same Reps and Senators granted these companies, via the FCC, the ability to gouge the customer, ad now they are letting teh big ones get back into the game.
All current broadband providers hold their essentially monopolist positions by virtual of public franchising agreements. Where I live, only Comcast is allowed to supply cable to my door, and only Verizon is allowed to supply phone service. And these companies are happy for the regulation that has put them in this position -- witness Comcast's county-by-county holding action to try to stop Verizon from supplying cable TV via its new FIOS service.
Perhaps Congress wants to pass a law saying that any network provider is free to run a wire to my door. But if it doesn't, what we seem to have here is a group of government-sponsored monopolies claiming that if they leverage their monopoly to compete unfairly against nonmonopolists, it's the "market in action." Gimmie a break.
I just got a responce today:
June 20, 2006
Mr. XXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX
Dear Mr. XXXXXXX:
Thank you for contacting me with regard to the issue of net neutrality. It was good to hear from you.
The principle of net neutrality suggests that data from all Internet content providers should be treated equally, regardless of provider or content. In recent months, broadband service providers, including cable, telephone companies, and wireless providers, have expressed a desire to charge Internet content and application providers, such as Google, eBay, Amazon, and Vonage, for delivering content to Internet consumers.
Net neutrality is one of many issues that have been the subject of hearings held by the Senate Committee on Commerce, Science, and Transportation as it prepares to advance telecommunications reform legislation. Commerce Committee Chairman Ted Stevens (R-AK) has scheduled a meeting for June 22, 2006, where details of his proposed legislation will be debated among members of the Committee. Furthermore, you may be interested to know that Senator Ron Wyden (D-OR) introduced legislation, the Internet Nondiscrimination Act of 2006 (S. 2360), aimed at codifying the concept of net neutrality. According to Senator Wyden, S. 2360 would prohibit network operators from charging Internet content and application providers for faster delivery to consumers or from favoring certain content. Senators Olympia Snowe (R-ME) and Byron Dorgan (D-ND) have introduced similar legislation, the Internet Freedom Preservation Act (S. 2917). Both of these bills are pending consideration by the Commerce Committee. To keep track of future actions on this legislation, you can go to the "Bill Tracking" service at http://lieberman.senate.gov/issues/resources.
I strongly support efforts to promote broadband deployment, but we must remain vigilant to ensure that congressional efforts to promote deployment by reforming telecommunications law maintain the openness of the Internet that has fueled economic growth and has reinforced our nation's commitment to free speech. Please be assured that I will keep your views in mind should legislation affecting net neutrality come before the full Senate for debate. I also want to review the materials and testimony from the Committee hearings and actions. My official Senate web site is designed to be an on-line office that provides access to constituent services, connecticut-specific information, and an abundance of information about what I am working on in the Senate on behalf of Connecticut and the nation. I am also pleased to let you know that I have launched an email news update service through my web site. You can sign up for that service by visiting http://lieberman.senate.gov/ and clicking on the "Subscribe Email News Updates" button at the bottom of the home page. I hope these are informative and useful.
Thank you again for letting me know your views and concerns. Please contact me if you have any additional questions or comments about our work in Congress.
Sincerely,
Joseph I. Lieberman
UNITED STATES SENATOR
Is there a place for fresh thinking and new recommendations in the infamous "network neutrality" debate?
Seth Johnson, David P Reed, Siva Vaidhyanathan, Pamela Samuelson, David Weinberger, Andy Oram and others [including me] have issued a new proposal on designed to "Preserve the Internet Standards for Net Neutrality."
The authors point out that "IP-layer neutrality is not a property of the Internet. It _is_the Internet." Then go on to say that "Providers certainly should be allowed to develop services within their own networks, treating data any way they want. But that's not the Internet."
Explanations are provided for CongressCriters, lawyers and lawmakers and human folks.
Certified Black Helicopter Pilot *** Unwitting Dupe of One World Gov'ment
Question about Net Neutrality:
If net neutrality passes, what if I need a connection with QoS (quality of service) for two-way video or VOIP communication?
In order to implement QoS in a workable way, my packets need priority. But if my packets need priority, that's not "neutral". And it seems like network neutrality is designed to prevent me from buying any kind of QoS from network providers.
How is this a good thing?
Two things:
1) Net neutrality doesn't imply that no prioritization of packets is happening, only that no prioritization is done based on the origin of those packets. E.g. Verizon et al can prioritize voice or video streams coming across their network over web traffic, but it can't prioritize Google web packets over MSN web packets, or Skype voice packets over Vonage voice packets, etc. So you can still buy QoS for various services over your connection, but you can't pay more to prioritize your particular traffic over their network, as opposed to your competitors' traffic, except inasmuch as you're paying for a faster connection than your competitors are.
Which brings us to the second point...
2) If you need a guaranteed quality of service between two particular points, you'll need to buy high-end connections at both ends anyway, net neutrality or none. If you've got a high-bandwidth line with QoS for video traffic, and I've got my dinky home DSL connection with no such QoS (other than what my ISP might apply standard), I'm not going to get the full quality of your full-screen streaming video feed.
So you can still buy two high-speed uplinks to the network and even prioritize certain kinds of traffic over those connections to get a high-speed video conference going. And you can buy a faster connection on your end if you need to send out traffic faster. But you can't bribe the network to give your traffic higher priority than your competitors to me, the typical home user.
-Forrest Cameranesi, Geek of all Trades
"I am Sam. Sam I am. I do not like trolls, flames, or spam."
This isn't so much about google as it is about TV. The value of most internet traffic ($40/month for a 3 mbps unique connection) is nearly an order of magnitude below the value of TV ($60/mo for shared access to stream equivalent to ~27 mbps)
You're absolutely right.
And, you bring up an interesting point.
The cable and telcos have been arguing that without the ability to charge Google/Yahoo/MSN for access, they won't be able to deliver the next generation of HDTV on demand video streaming services. This is a bullshit argument , and here's why:
I used to work at a cable ISP and I learned that a cable modem segment only occupies one 6 mhz. band, or a single analog cable channel, and contains 27 megabits of broadcast ability a second. Basically there are ~80 or so analog channels available (forgot how many). This means that the cable company only takes a single analog channel on their network to deliver broadband Internet to an entire neighborhood or small town. They also deliver digital cable by compressing about 3 or 4 channels down to another 6 mhz. analog channel. That's why the big push to get people off of analog cable... each one of those channels is worth about half a T3 worth of digital bandwidth from the central office to the customers.
So, if the cable company is already streaming Hidef and standard def movies to me on a different channel than my 10 megabit cable modem service (I have OptimumOnline, YMMV), and watching an "on-demand" movie on my TV doesn't interfere with my BitTorrent download in the next room, then why even bring up this idea that Google and MSN and Yahoo somehow interfere with that. It's a Straw Man Argument...
They want the uneducated Congress-Critters to think that if Google video or YouTube takes up too much bandwidth... "the gosh 'dern TV might stop werking!!! Oh NOES!!!!!11!1!1One!1!!1"
The truth is, the cable companies (and telcos) have tons of bandwidth; way more than they could ever use at the last mile. This argument that internet, which only occupies a single ~27 mpbs channel, can possibly interfere with any of the 80+ other ~27mbps data streams is laughable at best.
I hope this sheds some light on the situation. I started to put 2 and 2 together on my own...
"When the president does it, that means it's not illegal." - Richard M. Nixon
The National City Lines exploit involved much more than just trollies in California. It also involved buying bus lines throughout the country and systematically putting them out of business. A part of the story can be found on Wikipedia http://en.wikipedia.org/wiki/National_City_Lines
Unfortunately, many places in the US only have one provider. They don't need any monopoly enforcement.
All that fiber is useless if it doesn't cover the last mile to people's homes. If a monopoly (or duopoly) still controls that (which they do, pretty much everywhere) then Google is screwed.
It's not enough to bash in heads, you've got to bash in minds. - Captain Hammer
This is true with some markets -- even many markets -- but not with all markets by any stretch of the imagination. I would suggest reviewing your university Economics text. Economies of scale are not significant in all markets -- some markets actually experience diseconomies of scale (usually related to bureaucratic overhead, which increases with organization size), no scaling effect, or some combination of these.
In actuality, all of this is far more complex than it seems. DragonWriter (the OP) hit the nail on the head exactly -- perfectly competitive markets with non-existant or very low barriers to entry regulate themselves beautifully but in the real world many markets are not of this type, something that Libertarians seem to constantly overlook -- not out of malice, I think, but out of a desire to see the world in simplified and elegant terms (a prejudice I fully understand, and one I think geeks in particular are easily seduced by). In reality things are very messy and not at all as simple as they should be.
My personal view is that in cases where the market is likely to regulate itself, it should be allowed to regulate itself. However, in this case, we are looking at a market with extremely high barriers to entry (to become a telco you have to lay your own fiber, be in bed with the government, etc) and one which is essentially non-competitive (most areas are served by only one or perhaps two providers). This market is inherently oligopolistic, and will not self-regulate. Price fixing is easy and there is great incentive for the companies to do it. Barriers to entry are high so you and I cannot realistically express our dissatisfaction with the status quo by starting a new telco to compete with the existing one (notice my use of the singular here).
It is clear, in this instance, that the market will not regulate itself.
Economists disagree on how to best serve the economy in this situation, but regulation is a widely accepted (and proven) method. It has drawbacks, certainly (government inefficiency, possible legislative loopholes, etc) but is overall far preferable to the alternative.
Some markets are not free markets by their nature -- in this situation, for the magic of western economics to work, the playing field must be artificially evened.
Hey has anyone noticed that hidden in the so called Nework Neutrality bill (S. 2686: Communications, Consumer's Choice, and Broadband Deployment Act of 2006) http://www.govtrack.us/congress/bill.xpd?bill=s109 -2686 are provisions to create digital video and audio copyright flags, to implement analog watermarking, and to force all hardware and software to respect them? What a ticking time bomb!
and they made promises of fibre to the home. Read all about it at http://www.newnetworks.com/scandals.htm Get it straight it's another something for nothing deal for big business...
Just a littie summary...
This book documents the largest fraud case in American history The case is simple: Do you have a 45 Mbps, bi-directional service to your home, paying around $40? Do you have 500+ channels and can choose any competitive service? You paid an estimated $2000 for this product even though you did not receive it and it may never be available. Do you want your money back and the companies held accountable? Background: Starting in the early 1990's, the Clinton-Gore Administration had aggressive plans to create the "National Infrastructure Initiative" to rewire ALL of America with fiber optic wiring, replacing the 100 year old copper wire. The Bell companies -- SBC, Verizon, BellSouth and Qwest, claimed that they would step up to the plate and rewire homes, schools, libraries, government agencies, businesses and hospitals, etc. if they received financial incentives. The Commitment: * By 2006, 86 million households should have already been wired with a fiber (and coax), wire, capable of at least 45 Mbps in both directions, and could handle 500+ channels. * Universal Broadband: This wiring was to be done in rich and poor neighborhoods, in rural, urban and suburban areas equally. * Open to ALL Competition: These networks were to be open to ALL competitors, not a closed-in network or deployed only where the phone company desired. * Each State: By 2006, 75% of the state of New Jersey was to be wired, Pennsylvania was to have 50% of households by 2004, California to have 5 million households by 2000, Texas claimed all schools, libraries, hospitals....Virtually every state had commitments. * Massive Financial Incentives: In exchange for building these networks, the Bell companies ALL received changes in state laws that gave these them excessive profits, tax savings, and other perks to be used in building these networks. * This was not DSL, which travels over the old copper wiring and did not require new regulations. * This is not Verizon's FIOS or SBC's Lightspeed fiber optics, which are slower, can't handle 500 channels, are not open to competition, and are not being deployed equitably. * This was NOT fiber somewhere in the network ether, but directly to homes. The Harms and Outcome * Costs to Customers -- We estimate that $206 billion dollars in excess profits and tax deductions were collected -- over $2000 per household. (This is the low estimate.) * Cost to the Country -- About $5 trillion dollars to the economy. America lost a decade of technological innovation and economic growth, about $500 billion annually. * Cost to the Country -- America is now 16th in the world in broadband. While Korea and Japan have 40-100 Mbps at cheap prices, America is still at kilobyte speeds. * The New Digital Divide -- The phone companies current plans are to pick and choose where and when they want to deploy fiber services, if at all. * Competitor Close Out -- SBC, BellSouth and Verizon now claim that they can control who uses the networks and at what price, impacting everything from VOIP and municipality roll outs to new services from Ebay and Google. The Truth: This is a Fraud Case * Fraud: There is a dark secret -- the networks couldn't be built at the time the commitments were made and are still not available. If someone pays thousands of dollars for a service and doesn't get it, isn't that fraud? * Collusion and Cover-up: TELE-TV and Americast, the Bell companies' fiber optic front groups, spent about $1 billion and were designed to make America believe these deployments were real in order to pass the Telecom Act of 1996 and enter long distance. How did every major phone company in America not know that these fiber-based services couldn't be built and were able to defraud over 40 states? * The mergers killed fiber optic deployments in over 26 states and harmed competition.
Google: Uh, I don't think so. I think we'll just make google.com inaccessible altogether to your pipes, and buy a few ads supporting your competitors who provide full service at normal prices. Take a minute to think about how your customers might react to that before you try to throw your weight around against us.
Telco: We don't have any competitors.
Google: Oh.
Telco: Pay up, bitches.
Google: Okay then, we'll become your competition.
Partering with Earthlink, Google is setting up wireless access in San Francisco. The service is called MetroFi and is advertizer paid for, there isn't a subcriber fee. The Wall Street Journal has an article that mentions it:
Cities Shop
For Lower Prices
In Wi-Fi: Free
Also mentioned is Portland, OR's plans. MetroFi is waiting for city council approval and they will offer ad supported as well as paid for services.
FalconShould there be a Law?
There is currently an advertisement on slashdot that is very clever. It's a flash animation saying "To see the future of the internet". If you follow the link www.internetofthefuture.org you'll see a cartoon advocating the people to rise up and protest against the net neutrality bill. It's a very misleading cartoon, yet entertaining. There's no credits or contact info associated to this ad, and at one point they even boil the argument down to an issue of "the people" vs. "the government".
This banner ad can be found at the top of the slashdot home page (hit refresh many times)
Some people die at 25 and aren't buried until 75. -Benjamin Franklin
You're kidding right? Hit wikipedia and look up antitrust law. That will get you started, anyways.
Also see: FTC, Department of Commerce, SBA.