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I want to take the devils advocate position here and ask: why shouldn't a vendor be allowed to charge more for tiered service? With FANG and other tech compani
by aswanson 8y ago
I want to take the devils advocate position here and ask: why shouldn't a vendor be allowed to charge more for tiered service? With FANG and other tech companies sitting on so much cash, why cant they build out competing networks if the prices get too high or the services they want to deliver require them? Wont the consumer benefit from this?
- ocdtrekkie 8y agoThe standing argument tends to claim there's not enough competition and therefore there aren't ways to get non-tiered service. Allegedly. Personally, I think there's a ton of possibilities for non-neutral Internet service. For instance, arguably, you could sell single-purpose wireless connections for some types of devices, say an IoT device, which has predictable data usage patterns, potentially subsidized by an IoT vendor. But with net neutrality, it'd likely be illegal to prevent someone from popping that SIM card in their phone and streaming Netflix with it. Right now, the choice for home users tends to be "low speed" or "high speed". Unfortunately, that means low usage users like my grandma, either have to pay as much as I do for Internet, or have slow-as-frozen-molasses Internet access. Whereas if she could pay for a plan that didn't work with Netflix and YouTube, but was delivered at high speed, she'd be all set since she doesn't use streaming video.
- smt88 8y agoNet neutrality didn't stop pricing based on the amount of bandwidth used, which solves the problem you're describing.
- swebs 8y agoOr you could just keep everything the same for end users, but start charging Netflix and Google for their share since they use up over 90% of all internet traffic.
- hexane360 8y agoHere's how you can tell someone knows nothing about the economics of the Internet.
- realusername 8y agoThis is achieved right now with net neutrality, you just get a low data plan for IoT, nothing will be improved by removing net neutrality in your scenario.
- ocdtrekkie 8y agoAh, but what if I needed high bandwidth, but at a predictable rate to a predictable destination. Say, I have a box at the edge datacenter (like Netflix often does) to handle my specific kind of IoT traffic. It may only be cost effective for me to offer this plan if it can only talk to that service.
- ebbv 8y agoThe consumer absolutely will not benefit from this. First of all, building out competing telco networks is nearly impossible. Look at the failure of Google Fiber and Verizon FiOS as examples. Second, the issue is mostly about how telcos are now the gatekeepers of the entire internet. They now decide if it's an even playing field for everybody, or not. They can now say "Hey if you want to have high speed access to our customers, you have to pay us." and that means that if I want to start up say, a competitor to Youtube, I need a lot more money to do it. I can't just build a platform, I now also have to pay the networks. And before you say "That seems fair, you're using their networks." Keep in mind the customers are already paying for those networks. So the telcos are double dipping. More than that, since we already know they reap huge profits just off of customers alone before they are able to levy these new fees against services as well. This is a huge blow to the internet, and historians will look back at this as the point where innovation online began to stagnate and the internet calcified and began to decline.
- moistoreos 8y agoTHERE AREN'T ENOUGH VENDORS. That's the problem. They got scooped up and bought out; then, they had implemented local laws that prevent community ISPs. WHERE HAVE YOU BEEN?!
- jovial_cavalier 8y agoIf that's the problem, then why don't we tackle that problem? Legislation should be geared entirely towards solving problems, not their second-tier consequences.
- dfxm12 8y agoWell, that's why so many people were against the FCC removing these rules in the first place: it doesn't solve any problem (and will probably create more). ISP's spend a lot of money lobbying congress to make sure that problem never gets tackled.
- jovial_cavalier 8y agoThe NN policy wasn't stopping any ISPs from lobbying anybody. If you're saying we need to incentivize politicians against taking corporate money, I agree.
- Retric 8y agoRedundant physical networks using the same technology are a vast waste of capital. It's the same reason we don't use separate networks of water or electricity. Internet really is the same thing, there are exactly 2 things that matter (assuming it's working) bandwidth and latency though you can easily degrade service via network design etc. Unfortunately, this results in monopolies which means either public utilities or wasting capital on redundant networks. Globally you see a wide range of approaches to the problem, the US seems to be basing things off of it's healthcare system aka mixing public funds with private enterprise.
- trendia 8y agoUtility companies usually enjoy both natural and state-granted monopolies for many reasons. The state grants them monopolies because cities don't want multiple companies laying conduits or having disputes over access to existing conduits. Imagine the difficulty of having 10 different cable companies, each wanting to lay cable throughout the city! Even without state intervention, utility companies tend to become local monopolies, duopolies, or non-competitive oligopolies because of the high barriers to entry. This makes it difficult for startups to compete with the incumbents. In this case, legislation is much more effective at handling the second-tier consequences of utility companies (e.g. the natural tendency away from competition) than handling the problem itself (the high barriers to entry)
- zoul 8y ago…why shouldn't a vendor be allowed to charge more for tiered service? Right now all content producers are roughly in the same position: it’s equally easy/hard for them to get the same amounts of data to the consumer. Once you make it possible to put some producers before others, the wealthiest producers will use whatever means possible to be the chosen ones. In other words, Facebook will do their first and last to be free & fast everywhere. Given the last few years of experience with big players, I don’t think that’s a good idea.
- ocdtrekkie 8y agoThis isn't really true. Netflix, for example, strongarms ISPs into colocating their boxes for free, which bring massive amounts of their data closer to consumers, and guarantees them some of the best performance on the Internet. If ISPs were able to charge for this (they want to), Netflix would have to pay a lot more for this sort of premium placement, giving smaller players much more room to compete financially. (i.e., if Netflix's cost to provide this best-in-class service they currently get for free is much higher, either it's more financially viable for small companies to pay for the same service, or they'll be able to offer video on demand cheaper than Netflix does)
- zoul 8y ago…giving smaller players much more room to compete financially. I beg your pardon?
- jonbarker 8y agoI don't think the debate is over whether to allow Netflix to survive, Netflix will be OK and has a good bargaining position with regard to ISPs because they have content everyone wants. The more interesting question is are we creating a system that allows independent bloggers, vloggers, and other content creators to get discovered and be compensated either through ads or subscriptions or some other model.
- bootlooped 8y ago> If ISPs were able to charge for this (they want to), Netflix would have to pay a lot more for this sort of premium placement, giving smaller players much more room to compete financially. This sounds like you're claiming that greater barriers to entry make it easier for smaller firms. In economics I think the opposite is generally accepted as true.
- swebs 8y ago>why cant they build out competing networks if the prices get too high or the services they want to deliver require them? Probably for the same reason why there are so few cable TV providers. Artificial monopolies caused by restrictions on laying cable in residential areas.
- dominotw 8y ago> restrictions on laying cable in residential areas. So its #comcast4Lyfe for me :\? Also I am wondering whats stopping comcast from increasing the price by 500% tomorrow. How does the pricing work if they are just monopolies.
- pixl97 8y ago> How does the pricing work if they are just monopolies. City granted monopolies. Here's how your plan would work. >Comcast increases prices 500% (we'll ignore everyone cancelling their service). >People complain to the city, and they realize the city contracts that allowed them to do this were voted for by the politicians. >All public officials get replaced next election. Comcast contracts get nulled and they lose their monopoly. The key to raising prices is to do it slowly enough that only a small number of people are angry at any one moment. You raise prices, then wait till anger fatigue sets in, then raise them somewhere else.
- coldcode 8y agoI have lots of choices for an ISP, as long as I only chose Spectrum, or use passenger pigeons to transmit packets. Given that they are extinct, my choice is rather limited. A relative in another state has three fibers in her yard because of Google. Competition is what drives prices, no competition, prices are adjustable as long as its up.
- lovich 8y agoWe had the exact same arguments when rail lines were built out. The rail line operators could suddenly decide who won and who lost in _every other_ industry that required shipping goods, because they were changing prices based on their other businesses. This is bad for consumers and bad for competition. Now ISPs are effectively digital rail lines and with the repeal of net neutrality they can decide who wins and loses in every other industry that requires the internet. The exact same arguments apply, and the fact that the ISPs are already in the content market in many places and have been caught throttling competitors, shows that they are ready to abuse this position immediately Edit:added emphasis to first paragraph
- lovich 8y agoAre there bot rings on hackernews? I've gotten over 40+ upvotes but no comments. I've seen the behavior on Reddit, but never on hackernews in the few years I've been here
- roflc0ptic 8y agoBot rings aside, this is a topic many of us have deep feelings about. Your comment provides a historical example of something we feel in our bones. I don’t know the history so have nothing to add, but I support pointing out the extant absurdity of Comcast getting to fix a market, so I upvote.
- mikestew 8y agoIt happens once in a while. I think my post about participating in the 2013 Boston Marathon garnered over 100 points and only one or two comments. I have other examples. Sometimes a post can be very informative and worthy of a quick click of the mouse, without requiring further comment.
- swasheck 8y agoI upvoted you but have nothing salient to add to the conversation above what you've articulated.
- e_proxus 8y ago
- sonnyblarney 8y ago"why shouldn't a vendor be allowed to charge more for tiered service?" Vendors should be able to charge whatever they want for aspects of 'Quality of Service'. However, they should not be able to arbitrarily single out customers. If there is a lack of competition then this can create a systematic collusion problem among vendors, i.e. they all know to charge really high for specific scenarios because it's better to do that then get in a price war with competitors. This is why aspects of critical infrastructure in many nations are nationalized or heavily regulated: the 'power lines' in Ontario are managed by the government (single point of access) but power generation is 'privatized' and 'competitive'. (Not really, but it's supposed to be. To really play the devil's advocate, one might argue that there is really no 'net neutrality' in things like social and search because of the incredible incumbency that Google and FB has, and that they are in almost unassailable positions, moreover, they have considerably more power to leverage their de-facto monopolies into other ares. It's Google's strategy to basically commoditize everything around them (browser, maps, email, mobile OS) to protect their core business. I worked for BlackBerry and left just before the deluge - one could make the argument that Google's giveaway of Android is a massive subsidy from one layer of the business to another that ultimately hurt competition by putting many other vendors out of business. It's not unfeasible they may knock out Apple some day. This would be viewed as anti-competitive were it to be done in any other industry really. As a historical note: remember that Standard Oil did not get it's power from making great deals - they bought up railroads and charged competitors a tiny bit more for moving their own, which caused competitors to struggle. Then Standard bought them up one by one. So it was a railroad monopoly (single point of access for transport) that enabled a much bigger monopoly in Oil, a commodity. So yes, we should Net Neutrality for sure, but we should be equally as vigilant in looking at 'monopolies' in other parts of the value chain, specifically those that use that power to creep into other parts of the value chain.
- jonbarker 8y agoThey are already tiering their service based on customer bandwidth requirements (gamer internet, casual occasional streaming, or super slow).
- pdpi 8y agoThe point is precisely that FANG-style companies are in a position to pay for the faster tiers, leaving their would-be competitors stuck with the slow lanes — this is one of the arguments for why removing net neutrality stifles competition.
- SlowRobotAhead 8y agoI’ll just sit by and wait for Facebook Amazon Netflix and Google to “do the right thing” and subsidize my internet for free. I’m sure that would be a welcome plan at their shareholder meetings.
- mcguire 8y agoLike Google Fiber? "The estimated cost of wiring a fiber network like Google Fiber into a major American city is $1 billion." https://en.wikipedia.org/wiki/Google_Fiber?wprov=sfla1 https://en.wikipedia.org/wiki/Google_Fiber?wprov=sfla1
- EpicEng 8y ago>Like Google Fiber? Which is being scaled back and on indefinite hold for future expansion?
- bo1024 8y agoYou should have asked that question at some point in the last 2 years while NN was being debated. You would have heard 100 good answers. It's a bit late now.
- Pigo 8y agoThis issue is important, but it seems trivial compared to the complete lack of ISP competition in my opinion. To me it feels like a bunch of businesses want me to be upset about this, but it doesn't effect me as much as the Spectrum/Time Warner monopoly in my area. If there were competition, it would be harder for them to enact any of these doomsday scenarios I read about. Besides, the web that I grew up loving has been long dead because of self-imposed censorship or being required to be in the good graces of Cloudfare. There are incredible services available today, but people have forgotten what the wild west age was like. There used to be simple web pages with amazing content, ran by one or two guys. I use to follow this amazing blog (before blog was even a thing) of a guy who was convinced the government was controlling his mind with microwaves. There used to be endlessly fascinating destinations. I'm just disappointed people haven't gone back underground with things like IRC as I assumed they would.
- Azeolus 8y agoBuilding a wired network to residences is prohibitively expense. So much so that the only way cable was originally run was by the government heavily subsidizing it. In return for their investment cables companies received local monopolies on their service. DSL became a thing because the phone company already had access to the house, thus only the cable company and the phone company was allowed to run physical wire into your house. So, today we'd have to repeal these monopolies, and then new companies would have to run all new infrastructure, or somehow get the incumbents to allow new companies to use their infrastructure, which is unlikely. Frankly, new highspeed wired ISPs are highly unlikely, what we'll probably see is wireless because it's more economical to install.
- tzs 8y ago> I want to take the devils advocate position here and ask: why shouldn't a vendor be allowed to charge more for tiered service? The ISPs are allowed to charge more for different service tiers under the 2015 rules, and under the earlier 2010 rules. They regularly do so. Most offer multiple tiers differentiated by speed and/or data volume and/or quality of service guarantees. What the rules are trying to deal with is the following scenario. You and I are both end users on the same ISP. We've signed up for the same tier, along with numerous other people. Consumer ISP plans are almost always oversold, so if too many customers at once try to use their plan to its full capacity there is may temporarily be slower speeds, higher latency, or increased packet loss. The ISPs keep track of how often this happens, and if it happens too often they are supposed to increase their network capacity. If you and I have similar internet use habits in terms of the kind of things we do and when we do them, then the periods of congestion hit is about equally on average. One night maybe your Netflix movie has some problems, and my Amazon Prime Video movie is fine. Another night, maybe it is the other way around. To reduce extraneous variables, let's assume that the Netflix servers that server your movies and the Amazon servers that serve my movies happen to be in the same city, and are connected to the same backbone provider, and let's assume that you and I are neighbors, so that your Netflix packets and my Amazon packets are going over the same infrastructure except at the very ends of the routes. Now suppose our ISP talks to Amazon and says "If you pay us, we'll make sure that when we are congested and have to slow down or drop packets, we'll slow or drop Amazon Prime Video packets last". Amazon agrees. Even though you and I are on the exact same tier, and paying the exact same amount to our mutual ISP, now I have fine movie nights every night of the week, and you get slowdowns and dropouts. That's what the rule is trying to stop.