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Net Neutrality and Carrier Incentives To Invest

An anonymous reader writes "In policy debates before Congress and the FCC, the big ISPs and wireless carriers (Verizon, AT&T, Comcast, Cox, Sprint) argued that net neutrality rules would give them less incentive to upgrade their networks. The reality is just the opposite, says Infoworld's Bill Snyder, citing a game-theoretic work done by two researchers at the U. of Florida's business school. If carriers can charge premium prices for expedited service, they have an incentive not to invest. Hmm, this reminds me of the agriculture business, where prices are sometimes propped up by paying farmers not to grow crops."

27 of 170 comments (clear)

  1. Premium service.. by Anonymous Coward · · Score: 5, Insightful

    ...is what you used to call 'regular service' yesterday.
    Case in point: Data caps. there were no data caps before, services wee running just fine...and somehow, a couple of years later, you need to pay more for the same data transfer.
    It's artificial shortage is what it is.

  2. Glad to hear it, but a big "duh!!!" by MobyDisk · · Score: 5, Insightful

    I am glad that someone did some academic research to prove this, but it seems unnecessary. Isn't the entire point of eliminating network neutrality just so that carriers can charge more for their existing bandwidth? They slow down a site, then charge you to restore the speed back to what it originally was. Or they charge you a fee to make your packets a higher priority than your neighbor's. Either way, no infrastructure changes were required. The highway analogy the article uses is spot-on.

    Can someone explain to me why Republicans keep spewing this illogic about Net Neutrality? Why all the hate and rhetoric? It's really a very simple, and should be a non-partisan issue.

    1. Re:Glad to hear it, but a big "duh!!!" by 0racle · · Score: 4, Insightful

      They slow down a site, then charge you to restore the speed back to what it originally was.

      Actually, it's worse than that. In addition to the above, they could introduce internet tiering packages where they went to the content providers and charge them for getting preferential treatment or at least slightly less throttling. They charge you for access, charge you again for faster access and charge the content providers for letting them get your traffic in the first place.

      Can someone explain to me why Republicans keep spewing this illogic about Net Neutrality?

      You seriously have to ask this? It's about money. Also, I don't believe anti-net neutrality is a partisan issue, R and D are both for it.

      --
      "I use a Mac because I'm just better than you are."
    2. Re:Glad to hear it, but a big "duh!!!" by Bloopie · · Score: 4, Informative

      Also, I don't believe anti-net neutrality is a partisan issue, R and D are both for it.

      If both parties are against net neutrality, how do you explain the Senate vote last week where the Democrats voted against repealing it and the Republicans voted for repealing it? And Obama threatened to veto a repeal? Link

  3. Incentive, incentive, this is capitalism? by Anonymous Coward · · Score: 4, Funny

    Industry is a bunch of spoiled children these days. They cry and scream and throw a tantrum, threatening to take their ball and go home unless they get bribed with candy to behave. Remember a time when all it took to get a business to make a wise move was prove it would make them more money? Neither do I.

    1. Re:Incentive, incentive, this is capitalism? by shentino · · Score: 3, Insightful

      Being rich enough to buy laws that keep everyone else poor is a profitable move indeed.

  4. Re:Open source internet? by Ash-Fox · · Score: 5, Insightful

    With wireless technology developing as it is, is there any chance that some day we can create our own ad hoc internet without relying on expensive cables and thus expensive carriers?

    Not without a decent spectrum allocated for it. The 2.4 GHz and 5 GHz band at our current power restrictions don't allow for very good distances, unless you have a very clunky antenna that you wouldn't find on a mobile device.

    Developing an ad-hoc mesh network has many issues to take into consideration, including dealing with the fact that there will be people who are using an unfair amount of resources and no single transmitter can be trusted to keep any information secure or even 'truthful' about who it is.

    --
    Change is certain; progress is not obligatory.
  5. You mean the ISPs lied to congress? by JustAnotherIdiot · · Score: 4, Funny

    I, for one, am totally shocked.
    Shocked I tell you.

    --
    What do I know, I'm just an idiot, right?
  6. Re:Farmer subsidies need to STOP by Oswald+McWeany · · Score: 3, Interesting

    The crazy thing about the subsidies is that they encourage the growing of things like maize over vegtables and healthy alternatives.

    Maize- yes that wonderful grain that contains almost no healthy nutrition compare to other grains that is often served instead of vegetables.

    From which at subsidized prices we get artificially low sweetners such as corn syrup, and because it is used as animal feed (cattle, pigs)- meat prices drop.

    Not that there is anything wrong with protein- but it is the high fat that goes along with it that would be missing from more veggies instead of a 99cent ham burger- or a steak.

    The subsidies, especially the ones tilted towards encouraging farmers to grow maize of all things does nothign but encourage the obesity epidemic.

    Cut the maize- grow healthier grains, healthier fruits and veggies- why are my tax dollars going towards making my neighbours into fat pigs?

    --
    "That's the way to do it" - Punch
  7. Re:Farmer subsidies need to STOP by stephencrane · · Score: 3, Insightful

    The main problem is that the US -does- sell much of our food overseas, but that price point is based on the subsidized price. The price gap isn't recaptured in the form of tariffs. Many countries don't invest in agricultural and associated legal infrastructure at home because there's no way for anyone to grow crops cheaper than the US can sell them.

  8. Re:Farmer subsidies need to STOP by Aqualung812 · · Score: 4, Insightful

    Cut the maize- grow healthier grains, healthier fruits and veggies- why are my tax dollars going towards making my neighbours into fat pigs?

    It gets better. Wait until the USA has national healthcare. They they'll use tax money to make people fat (maize), then use tax money to deal with the health issues from being fat! PROFIT!

    --
    Grammer Nazis - I mod you "troll" unless you actually add something on-topic. Yes, I know I have mispellings in my sig.
  9. Manufacturing scarcity by Catbeller · · Score: 5, Insightful

    They aren't providing a service; they are manufacturing a scarcity of service. Any producer or provider will ultimately do this if they are not regulated in some fashion. They will build out a minimum of infrastructure for a maximum of profit. And they will never stop raising fees. Our great-grandparents understood this, so electrical utilities and such are government-regulated monopolies. Some things can't be covered by free market economics. Wiring all homes is one of those things.

    1. Re:Manufacturing scarcity by cobrausn · · Score: 3, Insightful

      Any producer or provider will not 'ultimately do this' as long as the market barrier-to-entry is not too high. This can occur for a few reasons, one of which is actually the existence of regulations that favor the existing businesses (e.g., Regulatory Capture). Another reason is that the infrastructure required to support the service is incredibly expensive, which serves as a 'natural' limitation to the number of players. It seems in this case we have a bit of both. The only viable solution I see (solution being something that benefits both the market and the consumer) is to not allow the person who owns the lines to also provide service, only rent out the lines in a neutral fashion.

      --
      How does it feel to be a liar with pants constantly on fire?
    2. Re:Manufacturing scarcity by slimjim8094 · · Score: 3, Insightful

      I'm almost a socialist, but you're right on. The classic example is the electrical market - when the utility owned the plants, transmission, and distribution, they made their money by convincing the regulators they had to raise rates. Plant inefficiency actually helped them do this.

      And in that form, they were a natural monopoly. But simply splitting up the three parts made everything vastly better, as long as the split was handled properly. But now that production is competitive and the transmission companies are common carriers, a company can pay for power to be created and transmitted to them - and there's competition for that business, so reliability has gone up and prices have fallen.

      For anyone who hasn't read up on it, basically there's a graph of quantity vs marginal $/MW, sorted by $/MW so it's monotonically increasing (though not linearly). Things like solar and wind are at the very bottom (since they cost nothing to run), hydro, then nukes, coal, gas, oil, peakers (jet turbines), etc. Every day, they predict how much they'll need for the next day (plus a margin) and tell all the plants below it to be ready. The key is that everybody gets the market rate. The last plant to turn on makes no profit, and the solar plants make (near) 100% profit at any load. So there's an enormous incentive to move down that graph.

      It works. It really does, for the past 10-15 years. Prices fall, reliability rises, plants get cleaner. It's because they're not making money by convincing regulators, they're making money by moving down that graph.

      I should note that the company with the wires is still regulated, but even they've been split into physical maintenance and procurement divisions - you can swap out the procurement side and the small line fee is still present, but you're not buying your electricity from the local utility any more. You're buying it from someone else. The reason it's cheaper is because the local utility has to be the "provider of last resort"; they pick you up if you don't pay your bill to the other one, so they need to buy a little bit extra. And yes it's all the same power, but the dollars match everything up and if you go through it, it does actually make sense to think about paying for those exact megawatts to get to you (since they're all the same) and it simplifies things.

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  10. Let's try logic by brxndxn · · Score: 5, Insightful

    Here's simple logic on 'carriers' or ISPs:

    ISPs either have a monopoly or pseudo monopoly (in practicality) or they have competition. Therefore, there are two types of situations:

    1. Monopolistic - Upgrading networks not necessary
    2. Market-based - Carriers must upgrade networks to compete or lose customers

    In either situation, there are two types of sub-situations:

    1. Net-neutral - Carriers must upgrade networks to satisfy bandwidth demand, content decided by individuals
    2. Prioritized - Upgrading networks not necessary, low-priority traffic dropped, content decided by corporations

    What we have now in most of America is Monopolistic, Net-neutral. Carriers are arguing for Monopolistic, Prioritized. Consumers demand Market-based, Net-neutral. What should we get? Market-based, Either. What will we get most likely? Monopolistic, Prioritized.

    The fact we even need a study to prove that the carriers are lying is ridiculous. The best incentive to force ISPs to upgrade their networks is MORE and DIVERSE competition. It is not free-market competition when the only 'normal bandwidth' Internet access at home for a consumer is a choice between either the local cable company or local telco. It is not free-market competition when the only cellular bandwidth is a choice of 1 of 3 major carriers that control hardware and software of the devices and lobby in unison to our government. Carriers are essentially arguing to continue a monopoly and ignore advances in technology that allow unlimited upgrades in bandwidth.

    Instead of arguing net neutrality at all, if our lawmakers started making it easier for some competition in the marketplace, ISPs that do not deliver all traffic quickly would die off.

    --
    --- We need more Ron Paul!
    1. Re:Let's try logic by fermion · · Score: 4, Insightful
      There is one other thing, a thing that most in the US have lot sight of. All mobile operators use the public space to generate a profit and as such should be required to use that space for the public good. If they cannot make a profit using the public space for public good, that public space should be given to someone who can. Nowhere is it written that profit is a fundemental right, although some conservative wackos want profit to be a fundemental right, I am talking about bush and reagan and the bailouts. Profit is merely something we have the right to persue.

      We lost this when TV and radio took over our government and decided they were entitled to the bandwidth loaned to them by the people. The people have every right to take that bandwidth back. Even the cable operators, whose cable runs though and limits the use of public space, has a duty to the public though they too believe they can take from the people without giving anything back.

      The argument for net neutrality is simply that the airwaves are public property and the public should make the decision on what it is used for, not the firms who are borrowing them. Like I said, if the mobile companies can't make a profit, then take the bandwidth away and attempted to be let to a new firm that can make a profit. This is what is done in real life. When a firm rents a space and does not make enough money to pay for that space, the space is taken back and rented to someone else. In the US we do say that they space is theirs forever just because they squatted on it and no one else wants it. We let the market work, except when a firm is so big they can corrupt the market by creating regulation to favor them. Which is the purpose of many regulations. To keep competition out.

      And as far as sig goes with Ron Paul, remember that instead of letting the market work and allowing his constituents to suffer for bad housing and car choices, or to allow the public to decide what food was best for them, he used tax payer money to build a million dollar bus stop and gave untold hundred of thousands of dollars to his fishing buddies so they could be hired as consultants to push shrimp. This is what is wrong with the market. Even those that claim be hands off will not be able to avoid the temptation of free money and helping their friends steal from the poot.

      --
      "She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
  11. heres how this works. by nimbius · · Score: 3, Interesting

    you start a business, and we impose regulations to prevent you from abusing your tacit monopoly be it global or regional. Comply with them or spend more lobbying dollars.

    do not threaten the customers hoping they will back you. verizon and AT&T subscribers enjoy some of the shittiest wireless service in the first world, comcast customer experience is comparative to that of an internet subscriber in rural india. cox service, if it ever gets installed, is just as bad. Sprint does nothing more than bait-and-switch its customers hoping they remember the CEO chortling about some amorphous unlimited everything plan on paid advertising.

    --
    Good people go to bed earlier.
  12. What about latency? by jopsen · · Score: 3

    Today most homes is either hooked directly up on fiber or hook up on cobber with translation to fiber not very far away... I'm guessing here, but I think ad hoc wireless networks, would be crazy unreliable, slow, insecure and have an extreme latency...

  13. Re:Farmer subsidies need to STOP by Oswald+McWeany · · Score: 5, Informative

    Ahh-well the government will love then that not only do corn fed cattle have higher fat contents then grass fed cattle- they also require higher levels of antibiotics.

    These antibiotics in farming is what leads to super bugs and antibiotic resistance in bacteria... which leads to... ... higher health costs and prescription costs.

    Government should double subsidies on maize immediately to help make the loop complete.

    --
    "That's the way to do it" - Punch
  14. Not hard to incentivze them by silas_moeckel · · Score: 3, Interesting

    Require some truth in advertizing from them. Enact legislation where if they do not meet there advertized speeds one average during peek times they are fined and eventually loose there monopolies. There networks are cash cows network upgrades are a simple matter of trending and re engineering for wired networks. They want to suck all the money they can out and avoid capx purchases to make there bonus bigger. Honestly most monopoly services should be bid out where the carrier offering the most for the least gets the contract. I would love to see AT&T loose out on DSL and have to give up that franchise, they have no cost of bandwidth (paying your sister company does not count) but aggressively limiter there subscribers.

    --
    No sir I dont like it.
  15. The difference with agriculture by rsilvergun · · Score: 4, Insightful

    is that there's a good reason to prevent over farming. Over farming tobacco turned Virginia into a desert in the 1800s. Plus in agriculture you sometimes have to get people to grow food that's not profitable but that people need to eat, e.g. it might be a bad year for potatoes, but we still need potatoes.

    The trouble with net neutrality, indeed with any concepts on the Web, is that we're brushing up against a post-scarcity economy here. There really isn't any analogy that works because we've never done that before.

    --
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  16. Re:Open source internet? by jellomizer · · Score: 4, Interesting

    The internet is Open. The specs to communicate over TCP/IP are quite clear. The problem is who owns the infrastructure. Cables, Satellites, and the ability to bring them to peoples location costs money. Then they have the cost of maintaining their routing to other providers.
    An Add Hock network can only go so far, once you scale larger then you get into more issues.
    100 people all maintaining their own routers is fine.
    1000 people you may need to find a good techie and pony up to give him a good router.
    10000 More techies that you need to maintain the router. And you are start having complains on who's cable go where. Or crazy nuts afraid that their house is getting too much wi-fi radation.

    The bigger it gets the most it costs and the more issues that happen. You will start to need Full time people working on this stuff, and they can't starve for the glory of keeping your internet up, they will need to be paid for their work...
    Then when you are done you either have a set of big ISP that you probably need to pay $20-60 a month too or a government controlled internet, where you will get think of the children people yelling at the government to block whatever seems bad information to them at the time.

    --
    If something is so important that you feel the need to post it on the internet... It probably isn't that important.
  17. Re:Open source internet? by Ash-Fox · · Score: 3, Interesting

    Certainly correct me if I'm wrong, but I'd think trust is something you'd deal with at the presentation layer. We've dealt with spoofing at lower levels in our existing setup after all.

    The problem with talking about the OSI model is that our current networking technology doesn't even respect that model. I will note that I didn't say it wasn't impossible to deal with untrusted nodes, but it's something that we should take into consideration when developing a new networking environment such as this.

    Back to your original comment, I think dealing with it in the presentation layer is a bit too high in my opinion, as it would require reworking essentially every application to offer some form of encryption. There wouldn't be a clear way to ensure that every application developer even ensures there is encryption. I would suggest producing something similar to IPsec which sits in the 'network' layer of the OSI model, where by user applications would need little knowledge of what network they're operating over to function and ensure some form of security by default.

    The issue however is having some sort of global authority system that hands out registered assignments to devices to ensure no spoofing. An authority system like this would likely cause a new slew of problems however, mainly the faults of having to deal with a centralized system.

    Dealing with this sort of system with issues such as a netsplit (where the authority is on the otherside of the split and new devices are added to the side you're on, unable to get assignments ends up being rather a complicated matter.

    --
    Change is certain; progress is not obligatory.
  18. Re:Farmer subsidies need to STOP by geekoid · · Score: 3, Interesting

    Wrong.
    Many starving areas don't invest because they have no stability to invest. Food is't a problem, delivery to the people who need to east it is.

    --
    The Kruger Dunning explains most post on /. http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
  19. Re:Open source internet? by Ash-Fox · · Score: 3, Interesting

    802.22

    802.22 requires dedicated 'towers' to be setup, which can really only be done by big money, this does not work with the idea of "creating our own ad hoc internet without relying on expensive cables".

    and limit the hogs.

    What if the hogs are providing a very useful service? How do you distinguish between a torrent and a game server?

    And someday the interference problem will be licked and we will have multiple users on the same frequency;

    To be honest, a mesh network could be done far better using frequency-hopping spread spectrum radios, you could build the addressing scheme into the frequency hopping, this would allow software defined radios to listen in on specific broadcast messages, as well as provide a new form of security measures for dealing with secure communications between any single node or to a select many without much of an issue with interception.

    802.22 doesn't really seem that developed for a technology for constantly changing mesh network, especially since it seems to expect some kind of dedicated infrastructure setup.

    it's a software problem we haven't solved yet, not a physical one.

    If it's 802.22, it's both for this specific circumstance of "creating our own ad hoc internet without relying on expensive cables".

    --
    Change is certain; progress is not obligatory.
  20. Re:Farmer subsidies need to STOP by BranMan · · Score: 4, Informative
    I'll take a shot at it. In essence, subsidies are an insurance policy so that we always have plenty of food. Without subsidies, farming would be subject to the ups and downs of the free market. Consider this - with subsidies, farms can, regardless of how much of what they produce, KNOW what they are going to have for income, more or less. The subsidies make sure the prices they get are STABLE. With that we can make sure we're always producing the right amount - i.e. too much for us here at home, so we sell the excess overseas - regardless of climate or droughts, since we'll always make sure we have excess capacity.

    That works out really well. Without that, the market rules. If one year there is a drought, for instance, prices will jump as there will be shortages. The next year, all kinds of new people will try to get 'in' on the high prices and end up with a bumper crop, which will depress prices instead. Maybe to the point of bankrupting farmers, closing farms, etc. The next year after that, not enough of a crop is produced, and we have more shortages. Up and down, up and down. Not something we want happening to our food supply.

    I'm probably not explaining it well enough, but that's the general idea - simple economics, lots of players looking for an edge - if we leave prices unsupported, we'll have chaos. And hunger. And if we end up hungry here, what about all the places depending on our exports?

  21. Re:Farmer subsidies need to STOP by hedwards · · Score: 3, Insightful

    Precisely, if those nations are unable or unwilling to invest in the infrastructure to feed themselves then it's rather unlikely that they'll invest in the infrastructure to produce goods to trade for food. It's not a lack of people or ability so much as the corruption and war that prevents it from happening. Few populated parts of the world are genuinely incapable of producing their own food for long periods of time.