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Cato Institute: The Case Against Net Neutrality

58 points by zacharyvoase 16y ago

zdw 16y ago
No firm or industry has any sort of “bottleneck control” over or market power in the broadband marketplace; it is very much a competitive free-for-all Uh, last I checked, I had one viable, reasonably priced internet provider (local cable company) - all the others are either much slower (DSL) or much more expensive for equivalent service (ptp wireless). Seriously, I'd be willing to give up "network neutrality" in a heartbeat for a free market system, provided that I get plenty of viable, competitive choices for the last mile to my house, which I think would solve additional problems rather than just the one being discussed...
- juiceandjuice 16y ago
  FYI, the paper was written in 2004.
- akozak 16y ago
  So then are you willing to give it up in the wireless space? Because there appears to be plenty of competition there.
  - zdw 16y ago
    Sure, as long as the competition is: 1. An equal playing field - ie, no one carrier has a technical or legislative advantage over any others. 2. Carrier lock-in is eliminated - any device allowed on any network, no long term contracts. 3. There are little to no barriers for new carriers to enter the market. This would increase competition, in the favor of wireless customers.
    - num1 16y ago
      1) Technical advantages are welcomed, just not legislative. 2) Arguing from the perspective of the Cato institute, who are you to place restrictions on the phones carriers sell? The root issue is whether providers have a monopoly or not. But keeping a distinguishing feature just as phones to yourself is just good business. 3) Completely agreed. This paper (circa 2004) was written from the perspective that internet service is not a monopoly. In this situation the answer is clear; (to a libertarian) government has no business dictating how we should do business. A large debate within libertarian circles is what to do when monopolies happen. The reflexive answer is no government interference allowed no matter what, the market will figure it out. Obviously in certain situations that doesn't work too well, as far as I know it's still an open question.
      - wtallis 16y ago
        Would you count patent protections as technical or legislative? Patents are supposed to be used only to encourage technological progress, but all too often they screw up the competitive landscape on an entire market in ways that are obviously unfair. If we could reform our patent system to get rid of software patents and raise the bar for physical inventions, then it might be okay to say that technical advantages [protected by patents] are fair.
        Symmetry 16y ago
        This is sort of a divisive issue for Libertarians. On the one hand, patents extend the reach of Capitalism into new places, which some libertarians who are reflexively pro-Capitalism like. On the other hand, patents are government restrictions on what you can do with your property, so more consistent (imho) Libertarians tend to be against them.
        num1 16y ago
        I would personally list patent protections as legislative. There was an article posted to HN recently about patents and what I took away was that they do little to protect someone who isn't a large corporation. I believe this is related to http://news.ycombinator.com/item?id=2034262 http://news.ycombinator.com/item?id=2034262 , patents (in any form not just software but also physical) are just another way to prevent a free market from forming. And libertarianism is based on a firm belief in the free market.
      - shrikant 16y ago
        IMO, the presence of (3) from that list will go a long, LONG way in eliminating (1) and (2). Given an easy way for competitors to enter the market, carrier lock-in wrt devices and features will decrease dramatically. Citation: See the UK and (to an extent) Indian telecom markets.
    - natch 16y ago
      Wow. The idea that profit-motivated corporations would voluntarily do what you describe is an idealistic fantasy. That's why some regulation is needed.
      - zdw 16y ago
        Exactly - everywhere there's a natural monopoly, it should be regulated into being a common carrier, when possible. This allows innovation to flourish on top of a commodity service - fundamentally, the only thing that this kind of provider offers is the last mile, just like the water or electric company.
        jpadkins 16y ago
        Can you give examples of natural monopolies? The only ones I can think of government granted (including US broadband, because of the local city/muni exclusive contracts purchased).
        zdw 16y ago
        See here: http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly Personally, I think their definition is a bit broad - I tend to think of natural monopolies are where the universe's physical limitations cause obvious problems either physical or practical for competition. For example, in a totally libertarian society where you would pay a toll to drive on any road, you wouldn't want hundreds of companies trying to making their own roads between points A and B - it wouldn't be an efficient use of space, and just imagine that turnpike. Still, someone needs to manage the road to your house, power/cable/telephone/etc. thus the government manages the companies that manage that service. The reason that these monopolies are "natural" is that there's a physical limitation involved - it just also happens to be codified with a contractual agreement.
      - kiba 16y ago
        Regulatory capture.
  - hristov 16y ago
    Not really. As far as the bandwidth, latency and reliability required for a decent desktop connection the current competition is none at all. I had a friend that had one of those services where you use wireless internet for the house, she did nothing but complain. Of course there are things in the future, there is 4g and all of that, it is yet to be seen whether 4G will be doable if everyone in your building is using 4g at full speeds.
- nickpinkston 16y ago
  I was actually expecting a net-neut. sucks because we need a freer market - this paper is just ridiculous. Sounds more like the Federalist Society to me... I agree though that a better market is preferable to NN and the current system. The issue here is how to solve the network effects / physical monopoly problems that plague the industry. On the one hand, no one is going to run a fully parallel system - even the incumbents didn't. They bought it from companies who bought it from companies that went bankrupt in the process of doing it. This means we'd need to either nationalize the existing system or put it into some type of co-op with the internet users as the voting group (via the gov't) - or less drastically we could mandate a certain bulk rate discount (w/ indexing to some of the known variables) so that new players could instantly begin competing without needing to overcome the massive infrastructure issues. ...or we could just do net neutrality which is a good stop gap - which is what it seems is the current pragmatic solution. Let's hope a better market-based system can eventually replace the monopolies, but until now it seems like NN is the way to go.
  - specialist 16y ago
    > Sounds more like the Federalist Society to me... Bingo.
  - wtallis 16y ago
    What kind of benefits would we expect a magical solution to the inefficiency of the broadband market to provide as compared to what a comprehensive net neutrality law would provide? Or, to put it another way, if we get a good net neutrality law passed, what techniques are left for the cable/dsl duopoly screw us with? We already have laws against price fixing, so if those are enforced in addition to net neutrality, most consumers would get pretty close to the quality of service they would get out of a properly competitive market. I would be wary of the government trying to indirectly prevent the shady practices net neutrality would outlaw --- it could too easily end up providing screwed up incentives the way agricultural subsidies do.
    - nickpinkston 16y ago
      I think this is a question that isn't discussed enough. So you've formed the question as: "how can they screw us through X more", and that's certainly part 1 of the question, there's also the second part of "how can this reduce innovation - and screw us in the long term". I approach this from the incentive alignment that drives politics. I assume that both big biz and gov't are in Part 1: Corporations influencing the law Laws are written by/for lobbyists on each side. Making a new law will inherently draw out the lobbys of each side (certainly has here). If corporations are allowed to play with the laws regulating them - you can imagine that they'll try to gain as much power as possible. Think about the banking regs and how the banks just raised the fees on other things instead - same problem. Part 2: Law Slowing Innovation Even if NN didn't have the influence issues, it'd still be regulating the way the internet is today - not how it might be. Just as we've seen in banking, when you put restrictions on the bad guys, you also hurt the good guys. Look at what happened to Prosper.com, etc. when they tried something innovation in banking. Look at how there are no progressive banks - only progressive services using the banking system. I'd like to avoid this issue at well so the internet so can further refined. By regulating the source of the issue, the natural monopoly of the fiber network itself, can we allow innovative firms to get in the market quickly and have incentives to innovate - or at the very least encourage the big guys to keep up.
- marknutter 16y ago
  I think you've lost perspective. You have chosen the product that best suit your needs from a variety of different products. You have your opinions about what "reasonably priced" means, but don't mistake that as meaning that a "reasonable price" actually exists. There are different levels of quality for all products. You don't see people calling for legislation to regulate Google search because its competition isn't as good. Most people don't mind slower/cheaper DSL service, so long as they can access email and Facebook. As far as I can tell, the free market has worked really well up to this point. Here in Saint Paul, MN, I have a wide variety of options to choose from: Comcast, Qwest DSL, dial-up service, AT&T 3G wireless, Verizon/Clear/Sprint 4G wireless, satellite internet, etc. I do business with Comcast because they offer the fastest connection I can get and at a price that I consider "reasonable."
  - isleyaardvark 16y ago
    > You have chosen the product that best suit your needs from a variety of different products. But there's no competition within the product categories themselves. Say there's only one breadmaker allowed to make bread in your city. The fact that you can still buy potatoes or pasta doesn't mean that you're dealing with a free market.
    - marknutter 16y ago
      The way I see it, the product category we are dealing with here is "internet access."
japaget 16y ago
FYI, the Cato Institute is a well known libertarian think tank. I upvoted this because like to hear both sides of an issue.
- afterburner 16y ago
  FYI, the Cato Institute was founded partly by Charles Koch, and you can research that yourself if you want.
  - anamax 16y ago
    ad hominem
    - _delirium 16y ago
      I think funders are generally fair game to consider when looking at someone expressing an opinion that directly impacts the funders. There are good reasons that conflict-of-interest rules exist for folks like judges and even schoolteachers. We don't have legislatively-mandated conflict-of-interest rules for pundits and think-tanks, but imo it's still fair for individuals to consider whether conflicts of interest might exist.
      - anamax 16y ago
        > I think funders are generally fair game to consider when looking at someone expressing an opinion that directly impacts the funders. You mean like folks pushing the net neutrality proposal?
    - deleted 16y ago
      [deleted]
    - specialist 16y ago
      You're kidding, right?
- detcader 16y ago
  http://www.sourcewatch.org/index.php?title=Cato_Institute http://www.sourcewatch.org/index.php?title=Cato_Institute
Xuzz 16y ago
(This is from 2004, so please add a (2004) tag to the end of the title nobody else misses that.)
gojomo 16y ago
Plain HTML version: http://www.cato.org/pubs/pas/pa-507es.html http://www.cato.org/pubs/pas/pa-507es.html
detcader 16y ago
Just a little information on the source from http://www.sourcewatch.org/index.php?title=Cato_Institute http://www.sourcewatch.org/index.php?title=Cato_Institute - The Institute states that it favors policies "that are consistent with the traditional American principles of limited government, individual liberty, and peace." In 2006 Cato raised approximately $612,000 from the following 26 corporate supporters: Altria (the report identifies Altria Corporate Services as the contributor) American Petroleum Institute Amerisure Companies Amgen Chicago Mercantile Exchange Comcast Corporation Consumer Electronic Association Ebay Inc ExxonMobil FedEx Corporation Freedom Communications General Motors Honda North America Korea International Trade Association Microsoft National Association of Software and Service Companies Pepco Holdings Inc. R.J. Reynolds Tobacco Company TimeWarner Toyota Motor Corporation UST Inc Verisign Verizon Communications Visa USA Inc Volkswagen of America Wal-Mart Stores
- anamax 16y ago
  > In 2006 Cato raised approximately $612,000 from the following 26 corporate supporters: From http://en.wikipedia.org/wiki/Cato_Institute http://en.wikipedia.org/wiki/Cato_Institute "According to its annual report, the Cato Institute had fiscal year 2008 income of $24 million." In short, the "list of funders" is both ad hominem AND misleading.
  - dmix 16y ago
    You could also look at any big non-profit/think tank and find a similar list of corporate donations.
  - detcader 16y ago
    I understood that; but the fact that these are the type of entities that supported this enterprise is telling enough.
    - anamax 16y ago
      > I understood that; You understood that you were making an ad hominem argument that was misleading? > but the fact that these are the type of entities that supported this enterprise is telling enough. I note that you didn't bother to tell us who supported the other side.... Wouldn't that also be "telling enough"?
A1kmm 16y ago
The article, when read carefully, seems quite disingenuous, because given the way the points are carefully phrased to sound sensible while actually being wrong, it is hard to believe that the author actually believes the argument themselves. Going through it point by point: * Their first argument against is that it is hard to define network discrimination. But it really isn't, and I can define it in one sentence: routing network packets differently depending on anything other than header information specifically designed for routers to process (IP headers in the case of Internet Protocol), or routing outgoing traffic based on destination addresses with the intention of deliberately slowing traffic to some destinations but not others. * 2 - to paraphrase "Internet access is not a right, so we shouldn't protect it". The reality is that so much human communication, including participation in democratic processes and a huge part of the economy happens online, and so it is reasonable to consider it a human right. The fact that it is relatively new doesn't change that. * 3 - To paraphrase "Network discrimination can be good, because it lets operators: Stop immoral practices like spamming or 'hacking'" (presumably they mean cracking). That some people might do bad things not a good reason to censor the Internet. Favouring downloads over uploads for technical reasons - that is not really within the scope of network neutrality. Conserve bandwidth - they give examples about usage caps, which are content neutral so outside of the scope of network neutrality. Specifically trying to slow certain applications, relative to another, is not necessary to limit bandwidth usage in a neutral way. Promote brands - this is exactly why network neutrality is needed - network operators shouldn't be able to exploit their market position as gatekeeper to the Internet to favour one company over another. Preventing 'theft' of service - except that if I pay for bandwidth, it is not theft to use it however I like, including allowing others to use it. Another good argument for network neutrality, not against. Implementing a variety of network access charges to help to recover costs - ISPs can make money charging users for bandwidth in a non-discriminatory fashion, so there is no need for them to exploit their market position to charge people who aren't even connected to the network as well - and stopping them from doing that is a legitimate aim of network neutrality. * 4 - to paraphrase "consumers might want more than a dumb pipe from their ISP, and if they go too far, the market will take care of it"; ISPs can offer services which are optional to consumers - that isn't a network neutrality issue, it only is when they become compulsory (e.g. you must use our nameservers) that it is. No consumer wants to be forced - at best they will tolerate it or it will make no difference. * 5 - to paraphrase, "the market will sort it out". The market can't sort it out, because there are high barriers to entry, it is a finite market, and so the market is not infinitely efficient (and in some areas approaches a monopoly), and in practice there is little room for consumer choice influencing Internet markets except with regards to price, advertising, and to some extent reliability. While consumers benefit from network neutrality, very few are in a position to take this into account when choosing services. * 6 - To paraphrase "ISPs should be free to put whatever they want in their contracts". The reality is that 'freedom of contract' is not fair when there is a huge difference in bargaining power, the markets can't sort it out for the reasons discussed above, and government intervention is appropriate. * 7 - To paraphrase, "Network operators own their equipment and should be able to do what they like with it". That is like saying gun owners should be able to do what they like with their gun, even shoot people. It is reasonable to put in place laws against certain types of unreasonable exploitation of a market position, and property rights don't extend to using the property to break those reasonable laws. The argument here seems particularly disingenuous. * 8 - To paraphrase, "network neutrality will discourage innovation and investment". The reality is that network operators can still profit from charging users for access - and that is enough to encourage investment. The main limit on ISPs profits is likely to be competition, and all ISPs are subject to the same laws - so no service that was profitable without network neutrality is likely to become unprofitable because of network neutrality. * 9 - to paraphrase "introducing laws around the Internet will encourage players with a special interest to try to game the system". There is an obvious and simple solution to this one - transparency and openness in decision making. Gaming works both ways - gaming to not introduce network neutrality because it is in corporate interests anyway. * 10 - to paraphrase - "putting in place Network Neutrality laws will start down a slippery slope towards government control of the network". Nothing specific to any network neutrality law makes it easier to change laws around the Internet later, so the argument is wrong. Unjustified corporate and government interference in network neutrality are equally big issues, and network neutrality fixes one of the problems and makes no difference to the other one. All in all, none of their arguments stack up.
kevinpet 16y ago
This is a very poor article that does nothing to provide any insight into network neutrality. That's not too surprising, though, since it's 7 years old. If the knee-jerk fans of benevolent government want to criticize their position, it would at least be appropriate to criticize their current position, such as found in this recent paper: http://www.cato.org/pubs/pas/pa-626.pdf http://www.cato.org/pubs/pas/pa-626.pdf
- wtallis 16y ago
  So, it looks like they now admit that neutrality is a good thing, but they say not to worry, because it's impractical for ISPs to actually discriminate. The documented cases of anti-p2p traffic shaping, large-scale deep packet inspection, and the eagerness of ISPs to secure their rights to do those things without even telling consumers all prove that the Cato Institute's analysis has not yet converged with reality.
  - dnautics 16y ago
    ...and the eagerness of the government to 'regulate' wikileaks out of existence proves that the statist's analysis will never converge with reality. Look, if ISP wants to fuck with packets, then all you have to do is encrypt them, on onion route them, or whatever. If you are being regulated by the government, though, you just might get a friendly knock on the door. Or maybe the government will raid you with a swat team. Hope you don't have any pet dogs.
grellas 16y ago
The FCC is way out of its league on this one. Basically, it is a creature of statute. It can do whatever Congress has authorized it to and no more. Nothing in its authorizing statute expressly permits it to impose the rules now known as net neutrality. Therefore, it sought to justify its ability to do so under the doctrine of so-called "ancillary jurisdiction," meaning that it had an implied power to do so in aid of its expressly granted powers. Unfortunately, a definitive federal appeals court ruling held that no such ancillary jurisdiction existed, leaving the matter for Congress to decide. Rather than deferring to Congress, the FCC chose to adopt a new rationale for its assertion of this authority. Congress overwhelmingly balked at the idea of any broad assertion of such authority and, in the back and forth, the FCC came up with the toe-in-the water approach just adopted to the satisfaction of almost no one. Even this assertion of jurisdiction will certainly be challenged in the courts in cases that will take years to decide, leaving this whole issue in a pathetic state of uncertainty for all concerned. Nothing good will come of this except for lots of employment for the lawyers who will be litigating whether this or that action is "reasonable" and whether the internet is really like a public utility or not. All in all, a royal mess. This article, and the comments on this thread, attempt to address the principled issues relating to net neutrality both pro and con. The sad reality is that, at the moment, principle has little to do with any of what has been implemented and only lawyers and lobbyists will be driving this process for the near future.
pedanticfreak 16y ago
You know, this is totally ad hominem but Cato is a free market think tank. They couldn't come up with an article in support of net neutrality if they wanted. It is completely against the free markets holy scripture they have vowed to protect. Likewise, the Economist is similarly tainted with the defense of the free markets in its charter. Which isn't to say free markets are wrong or bad. I'm just saying they lose some credibility when they tell you the answer before you've told them the problem. I kind of feel like I'm just being trolled whenever someone posts something by Cato or Heritage. That said, freedom to contract treads a fine line across all aspects of our lives. And that line is continually being adjusted by the government to fit the needs of the times which hopefully they understand or at least address properly by dumb luck. Because of the importance of the internet and the inherent monopoly of network providers, net neutrality may be wise to implement so problems do not arise as Cato so optimistically asserts they do not exist now and will not exist in the future.
iwwr 16y ago
I think Net Neutrality is profoundly a US issue. Unlike in the US, in Europe one usually has his choice of 4-5 ISPs and several good mobile bandwidth providers (plus, there is no such thing as tethering). While in the vast US suburbs there is usually just one ISP, providing tiny bandwidth and terrible service. In the US, bandwidth is much more scarce and therefore either ISPs, content providers and individual customers are more urged to economize it. Consumers want to do it through Net Neutrality out of a fear of being stuck on a "slow lane" and ISPs want to gain the maximum value possible from their assets. Perhaps an environment more friendly to new ISPs (less rules, more tax breaks etc) could solve this problem. Of course, established companies (semi-local monopolies) have political power. The push should be rather toward breaking this political power. Over the long term, even without Net Neutrality, having a fast growing infrastructure will prevent the sort of abuse customers are currently being threatened with. With Net Neutrality, but still with a quasi-monopoly, I don't think people would necessarily get a better service.
berntb 16y ago
I'm coming in so late, that few will see this. Which is good for an irrelevant question, I guess. I wonder a bit about Cato Institute. As people have noted, this 2004 report is too old to build an opinion from. The arguments were less sophisticated then. It is hard to have an opinion. From the Wikipedia page, Cato is one of the more influential think tanks in the US. The US political life is a strange animal to me, so some basic information would be nice re Cato? (-: Mainly since I was flamed and called troll by a couple of left wingers for referencing a Cato report :-). So... How much "work for hire" does Cato do? Or the average US think tank? Can you trust anything from a US think tank? Appendix: The report I was flamed for: http://www.cato.org/pub_display.php?pub_id=9626 http://www.cato.org/pub_display.php?pub_id=9626 (Afaik there are not even attempts to answer this slaughter of 'The Shock Doctrine", which seemed to be why the "arguments" got personal. But, certainly, credible references as to why you can ignore arguments form top think tanks would be interesting?)
- anamax 16y ago
  > How much "work for hire" does Cato do? Or the average US think tank? Can you trust anything from a US think tank? What makes you think that think tanks are different in this respect? Heck - what makes you think that think tanks are only on one side of this issue? > But, certainly, credible references as to why you can ignore arguments form top think tanks would be interesting? Yes, if you've got any. Hint - "they got paid" isn't one. Very few people work for free, and their record is pretty bad. A "think tank" is just one mechanism for funding folks making arguments. There are many others.
  - berntb 16y ago
    I'm not arguing a point, I'm just checking if some idealists might have been correct in disqualifying an argument, just because it came from someone affiliated with Cato. From the lack of good answers, I infer they just couldn't answer the argument -- and lacked the integrity to admit that. Not exactly surprising, for people with fixed political world views. (Being called "troll" by a favorite author hurt. :-)

58 points by zacharyvoase 16y ago

zdw 16y ago

No firm or industry has any sort of “bottleneck control” over or market power in the broadband marketplace; it is very much a competitive free-for-all Uh, last I checked, I had one viable, reasonably priced internet provider (local cable company) - all the others are either much slower (DSL) or much more expensive for equivalent service (ptp wireless). Seriously, I'd be willing to give up "network neutrality" in a heartbeat for a free market system, provided that I get plenty of viable, competitive choices for the last mile to my house, which I think would solve additional problems rather than just the one being discussed...

juiceandjuice 16y ago
FYI, the paper was written in 2004.
akozak 16y ago
So then are you willing to give it up in the wireless space? Because there appears to be plenty of competition there.
- zdw 16y ago
  Sure, as long as the competition is: 1. An equal playing field - ie, no one carrier has a technical or legislative advantage over any others. 2. Carrier lock-in is eliminated - any device allowed on any network, no long term contracts. 3. There are little to no barriers for new carriers to enter the market. This would increase competition, in the favor of wireless customers.
  - num1 16y ago
    1) Technical advantages are welcomed, just not legislative. 2) Arguing from the perspective of the Cato institute, who are you to place restrictions on the phones carriers sell? The root issue is whether providers have a monopoly or not. But keeping a distinguishing feature just as phones to yourself is just good business. 3) Completely agreed. This paper (circa 2004) was written from the perspective that internet service is not a monopoly. In this situation the answer is clear; (to a libertarian) government has no business dictating how we should do business. A large debate within libertarian circles is what to do when monopolies happen. The reflexive answer is no government interference allowed no matter what, the market will figure it out. Obviously in certain situations that doesn't work too well, as far as I know it's still an open question.
    - wtallis 16y ago
      Would you count patent protections as technical or legislative? Patents are supposed to be used only to encourage technological progress, but all too often they screw up the competitive landscape on an entire market in ways that are obviously unfair. If we could reform our patent system to get rid of software patents and raise the bar for physical inventions, then it might be okay to say that technical advantages [protected by patents] are fair.
      - Symmetry 16y ago
        This is sort of a divisive issue for Libertarians. On the one hand, patents extend the reach of Capitalism into new places, which some libertarians who are reflexively pro-Capitalism like. On the other hand, patents are government restrictions on what you can do with your property, so more consistent (imho) Libertarians tend to be against them.
      - num1 16y ago
        I would personally list patent protections as legislative. There was an article posted to HN recently about patents and what I took away was that they do little to protect someone who isn't a large corporation. I believe this is related to http://news.ycombinator.com/item?id=2034262 http://news.ycombinator.com/item?id=2034262 , patents (in any form not just software but also physical) are just another way to prevent a free market from forming. And libertarianism is based on a firm belief in the free market.
    - shrikant 16y ago
      IMO, the presence of (3) from that list will go a long, LONG way in eliminating (1) and (2). Given an easy way for competitors to enter the market, carrier lock-in wrt devices and features will decrease dramatically. Citation: See the UK and (to an extent) Indian telecom markets.
  - natch 16y ago
    Wow. The idea that profit-motivated corporations would voluntarily do what you describe is an idealistic fantasy. That's why some regulation is needed.
    - zdw 16y ago
      Exactly - everywhere there's a natural monopoly, it should be regulated into being a common carrier, when possible. This allows innovation to flourish on top of a commodity service - fundamentally, the only thing that this kind of provider offers is the last mile, just like the water or electric company.
      - jpadkins 16y ago
        Can you give examples of natural monopolies? The only ones I can think of government granted (including US broadband, because of the local city/muni exclusive contracts purchased).
        zdw 16y ago
        See here: http://en.wikipedia.org/wiki/Natural_monopoly http://en.wikipedia.org/wiki/Natural_monopoly Personally, I think their definition is a bit broad - I tend to think of natural monopolies are where the universe's physical limitations cause obvious problems either physical or practical for competition. For example, in a totally libertarian society where you would pay a toll to drive on any road, you wouldn't want hundreds of companies trying to making their own roads between points A and B - it wouldn't be an efficient use of space, and just imagine that turnpike. Still, someone needs to manage the road to your house, power/cable/telephone/etc. thus the government manages the companies that manage that service. The reason that these monopolies are "natural" is that there's a physical limitation involved - it just also happens to be codified with a contractual agreement.
    - kiba 16y ago
      Regulatory capture.
- hristov 16y ago
  Not really. As far as the bandwidth, latency and reliability required for a decent desktop connection the current competition is none at all. I had a friend that had one of those services where you use wireless internet for the house, she did nothing but complain. Of course there are things in the future, there is 4g and all of that, it is yet to be seen whether 4G will be doable if everyone in your building is using 4g at full speeds.
nickpinkston 16y ago
I was actually expecting a net-neut. sucks because we need a freer market - this paper is just ridiculous. Sounds more like the Federalist Society to me... I agree though that a better market is preferable to NN and the current system. The issue here is how to solve the network effects / physical monopoly problems that plague the industry. On the one hand, no one is going to run a fully parallel system - even the incumbents didn't. They bought it from companies who bought it from companies that went bankrupt in the process of doing it. This means we'd need to either nationalize the existing system or put it into some type of co-op with the internet users as the voting group (via the gov't) - or less drastically we could mandate a certain bulk rate discount (w/ indexing to some of the known variables) so that new players could instantly begin competing without needing to overcome the massive infrastructure issues. ...or we could just do net neutrality which is a good stop gap - which is what it seems is the current pragmatic solution. Let's hope a better market-based system can eventually replace the monopolies, but until now it seems like NN is the way to go.
- specialist 16y ago
  > Sounds more like the Federalist Society to me... Bingo.
- wtallis 16y ago
  What kind of benefits would we expect a magical solution to the inefficiency of the broadband market to provide as compared to what a comprehensive net neutrality law would provide? Or, to put it another way, if we get a good net neutrality law passed, what techniques are left for the cable/dsl duopoly screw us with? We already have laws against price fixing, so if those are enforced in addition to net neutrality, most consumers would get pretty close to the quality of service they would get out of a properly competitive market. I would be wary of the government trying to indirectly prevent the shady practices net neutrality would outlaw --- it could too easily end up providing screwed up incentives the way agricultural subsidies do.
  - nickpinkston 16y ago
    I think this is a question that isn't discussed enough. So you've formed the question as: "how can they screw us through X more", and that's certainly part 1 of the question, there's also the second part of "how can this reduce innovation - and screw us in the long term". I approach this from the incentive alignment that drives politics. I assume that both big biz and gov't are in Part 1: Corporations influencing the law Laws are written by/for lobbyists on each side. Making a new law will inherently draw out the lobbys of each side (certainly has here). If corporations are allowed to play with the laws regulating them - you can imagine that they'll try to gain as much power as possible. Think about the banking regs and how the banks just raised the fees on other things instead - same problem. Part 2: Law Slowing Innovation Even if NN didn't have the influence issues, it'd still be regulating the way the internet is today - not how it might be. Just as we've seen in banking, when you put restrictions on the bad guys, you also hurt the good guys. Look at what happened to Prosper.com, etc. when they tried something innovation in banking. Look at how there are no progressive banks - only progressive services using the banking system. I'd like to avoid this issue at well so the internet so can further refined. By regulating the source of the issue, the natural monopoly of the fiber network itself, can we allow innovative firms to get in the market quickly and have incentives to innovate - or at the very least encourage the big guys to keep up.
marknutter 16y ago
I think you've lost perspective. You have chosen the product that best suit your needs from a variety of different products. You have your opinions about what "reasonably priced" means, but don't mistake that as meaning that a "reasonable price" actually exists. There are different levels of quality for all products. You don't see people calling for legislation to regulate Google search because its competition isn't as good. Most people don't mind slower/cheaper DSL service, so long as they can access email and Facebook. As far as I can tell, the free market has worked really well up to this point. Here in Saint Paul, MN, I have a wide variety of options to choose from: Comcast, Qwest DSL, dial-up service, AT&T 3G wireless, Verizon/Clear/Sprint 4G wireless, satellite internet, etc. I do business with Comcast because they offer the fastest connection I can get and at a price that I consider "reasonable."
- isleyaardvark 16y ago
  > You have chosen the product that best suit your needs from a variety of different products. But there's no competition within the product categories themselves. Say there's only one breadmaker allowed to make bread in your city. The fact that you can still buy potatoes or pasta doesn't mean that you're dealing with a free market.
  - marknutter 16y ago
    The way I see it, the product category we are dealing with here is "internet access."

japaget 16y ago

FYI, the Cato Institute is a well known libertarian think tank. I upvoted this because like to hear both sides of an issue.

afterburner 16y ago
FYI, the Cato Institute was founded partly by Charles Koch, and you can research that yourself if you want.
- anamax 16y ago
  ad hominem
  - _delirium 16y ago
    I think funders are generally fair game to consider when looking at someone expressing an opinion that directly impacts the funders. There are good reasons that conflict-of-interest rules exist for folks like judges and even schoolteachers. We don't have legislatively-mandated conflict-of-interest rules for pundits and think-tanks, but imo it's still fair for individuals to consider whether conflicts of interest might exist.
    - anamax 16y ago
      > I think funders are generally fair game to consider when looking at someone expressing an opinion that directly impacts the funders. You mean like folks pushing the net neutrality proposal?
  - deleted 16y ago
    [deleted]
  - specialist 16y ago
    You're kidding, right?
detcader 16y ago
http://www.sourcewatch.org/index.php?title=Cato_Institute http://www.sourcewatch.org/index.php?title=Cato_Institute

Xuzz 16y ago

(This is from 2004, so please add a (2004) tag to the end of the title nobody else misses that.)

gojomo 16y ago

Plain HTML version: http://www.cato.org/pubs/pas/pa-507es.html http://www.cato.org/pubs/pas/pa-507es.html

detcader 16y ago

Just a little information on the source from http://www.sourcewatch.org/index.php?title=Cato_Institute http://www.sourcewatch.org/index.php?title=Cato_Institute - The Institute states that it favors policies "that are consistent with the traditional American principles of limited government, individual liberty, and peace." In 2006 Cato raised approximately $612,000 from the following 26 corporate supporters: Altria (the report identifies Altria Corporate Services as the contributor) American Petroleum Institute Amerisure Companies Amgen Chicago Mercantile Exchange Comcast Corporation Consumer Electronic Association Ebay Inc ExxonMobil FedEx Corporation Freedom Communications General Motors Honda North America Korea International Trade Association Microsoft National Association of Software and Service Companies Pepco Holdings Inc. R.J. Reynolds Tobacco Company TimeWarner Toyota Motor Corporation UST Inc Verisign Verizon Communications Visa USA Inc Volkswagen of America Wal-Mart Stores

anamax 16y ago
> In 2006 Cato raised approximately $612,000 from the following 26 corporate supporters: From http://en.wikipedia.org/wiki/Cato_Institute http://en.wikipedia.org/wiki/Cato_Institute "According to its annual report, the Cato Institute had fiscal year 2008 income of $24 million." In short, the "list of funders" is both ad hominem AND misleading.
- dmix 16y ago
  You could also look at any big non-profit/think tank and find a similar list of corporate donations.
- detcader 16y ago
  I understood that; but the fact that these are the type of entities that supported this enterprise is telling enough.
  - anamax 16y ago
    > I understood that; You understood that you were making an ad hominem argument that was misleading? > but the fact that these are the type of entities that supported this enterprise is telling enough. I note that you didn't bother to tell us who supported the other side.... Wouldn't that also be "telling enough"?

A1kmm 16y ago

The article, when read carefully, seems quite disingenuous, because given the way the points are carefully phrased to sound sensible while actually being wrong, it is hard to believe that the author actually believes the argument themselves. Going through it point by point: * Their first argument against is that it is hard to define network discrimination. But it really isn't, and I can define it in one sentence: routing network packets differently depending on anything other than header information specifically designed for routers to process (IP headers in the case of Internet Protocol), or routing outgoing traffic based on destination addresses with the intention of deliberately slowing traffic to some destinations but not others. * 2 - to paraphrase "Internet access is not a right, so we shouldn't protect it". The reality is that so much human communication, including participation in democratic processes and a huge part of the economy happens online, and so it is reasonable to consider it a human right. The fact that it is relatively new doesn't change that. * 3 - To paraphrase "Network discrimination can be good, because it lets operators: Stop immoral practices like spamming or 'hacking'" (presumably they mean cracking). That some people might do bad things not a good reason to censor the Internet. Favouring downloads over uploads for technical reasons - that is not really within the scope of network neutrality. Conserve bandwidth - they give examples about usage caps, which are content neutral so outside of the scope of network neutrality. Specifically trying to slow certain applications, relative to another, is not necessary to limit bandwidth usage in a neutral way. Promote brands - this is exactly why network neutrality is needed - network operators shouldn't be able to exploit their market position as gatekeeper to the Internet to favour one company over another. Preventing 'theft' of service - except that if I pay for bandwidth, it is not theft to use it however I like, including allowing others to use it. Another good argument for network neutrality, not against. Implementing a variety of network access charges to help to recover costs - ISPs can make money charging users for bandwidth in a non-discriminatory fashion, so there is no need for them to exploit their market position to charge people who aren't even connected to the network as well - and stopping them from doing that is a legitimate aim of network neutrality. * 4 - to paraphrase "consumers might want more than a dumb pipe from their ISP, and if they go too far, the market will take care of it"; ISPs can offer services which are optional to consumers - that isn't a network neutrality issue, it only is when they become compulsory (e.g. you must use our nameservers) that it is. No consumer wants to be forced - at best they will tolerate it or it will make no difference. * 5 - to paraphrase, "the market will sort it out". The market can't sort it out, because there are high barriers to entry, it is a finite market, and so the market is not infinitely efficient (and in some areas approaches a monopoly), and in practice there is little room for consumer choice influencing Internet markets except with regards to price, advertising, and to some extent reliability. While consumers benefit from network neutrality, very few are in a position to take this into account when choosing services. * 6 - To paraphrase "ISPs should be free to put whatever they want in their contracts". The reality is that 'freedom of contract' is not fair when there is a huge difference in bargaining power, the markets can't sort it out for the reasons discussed above, and government intervention is appropriate. * 7 - To paraphrase, "Network operators own their equipment and should be able to do what they like with it". That is like saying gun owners should be able to do what they like with their gun, even shoot people. It is reasonable to put in place laws against certain types of unreasonable exploitation of a market position, and property rights don't extend to using the property to break those reasonable laws. The argument here seems particularly disingenuous. * 8 - To paraphrase, "network neutrality will discourage innovation and investment". The reality is that network operators can still profit from charging users for access - and that is enough to encourage investment. The main limit on ISPs profits is likely to be competition, and all ISPs are subject to the same laws - so no service that was profitable without network neutrality is likely to become unprofitable because of network neutrality. * 9 - to paraphrase "introducing laws around the Internet will encourage players with a special interest to try to game the system". There is an obvious and simple solution to this one - transparency and openness in decision making. Gaming works both ways - gaming to not introduce network neutrality because it is in corporate interests anyway. * 10 - to paraphrase - "putting in place Network Neutrality laws will start down a slippery slope towards government control of the network". Nothing specific to any network neutrality law makes it easier to change laws around the Internet later, so the argument is wrong. Unjustified corporate and government interference in network neutrality are equally big issues, and network neutrality fixes one of the problems and makes no difference to the other one. All in all, none of their arguments stack up.

kevinpet 16y ago

This is a very poor article that does nothing to provide any insight into network neutrality. That's not too surprising, though, since it's 7 years old. If the knee-jerk fans of benevolent government want to criticize their position, it would at least be appropriate to criticize their current position, such as found in this recent paper: http://www.cato.org/pubs/pas/pa-626.pdf http://www.cato.org/pubs/pas/pa-626.pdf

wtallis 16y ago
So, it looks like they now admit that neutrality is a good thing, but they say not to worry, because it's impractical for ISPs to actually discriminate. The documented cases of anti-p2p traffic shaping, large-scale deep packet inspection, and the eagerness of ISPs to secure their rights to do those things without even telling consumers all prove that the Cato Institute's analysis has not yet converged with reality.
- dnautics 16y ago
  ...and the eagerness of the government to 'regulate' wikileaks out of existence proves that the statist's analysis will never converge with reality. Look, if ISP wants to fuck with packets, then all you have to do is encrypt them, on onion route them, or whatever. If you are being regulated by the government, though, you just might get a friendly knock on the door. Or maybe the government will raid you with a swat team. Hope you don't have any pet dogs.

grellas 16y ago

The FCC is way out of its league on this one. Basically, it is a creature of statute. It can do whatever Congress has authorized it to and no more. Nothing in its authorizing statute expressly permits it to impose the rules now known as net neutrality. Therefore, it sought to justify its ability to do so under the doctrine of so-called "ancillary jurisdiction," meaning that it had an implied power to do so in aid of its expressly granted powers. Unfortunately, a definitive federal appeals court ruling held that no such ancillary jurisdiction existed, leaving the matter for Congress to decide. Rather than deferring to Congress, the FCC chose to adopt a new rationale for its assertion of this authority. Congress overwhelmingly balked at the idea of any broad assertion of such authority and, in the back and forth, the FCC came up with the toe-in-the water approach just adopted to the satisfaction of almost no one. Even this assertion of jurisdiction will certainly be challenged in the courts in cases that will take years to decide, leaving this whole issue in a pathetic state of uncertainty for all concerned. Nothing good will come of this except for lots of employment for the lawyers who will be litigating whether this or that action is "reasonable" and whether the internet is really like a public utility or not. All in all, a royal mess. This article, and the comments on this thread, attempt to address the principled issues relating to net neutrality both pro and con. The sad reality is that, at the moment, principle has little to do with any of what has been implemented and only lawyers and lobbyists will be driving this process for the near future.

pedanticfreak 16y ago

You know, this is totally ad hominem but Cato is a free market think tank. They couldn't come up with an article in support of net neutrality if they wanted. It is completely against the free markets holy scripture they have vowed to protect. Likewise, the Economist is similarly tainted with the defense of the free markets in its charter. Which isn't to say free markets are wrong or bad. I'm just saying they lose some credibility when they tell you the answer before you've told them the problem. I kind of feel like I'm just being trolled whenever someone posts something by Cato or Heritage. That said, freedom to contract treads a fine line across all aspects of our lives. And that line is continually being adjusted by the government to fit the needs of the times which hopefully they understand or at least address properly by dumb luck. Because of the importance of the internet and the inherent monopoly of network providers, net neutrality may be wise to implement so problems do not arise as Cato so optimistically asserts they do not exist now and will not exist in the future.

iwwr 16y ago

I think Net Neutrality is profoundly a US issue. Unlike in the US, in Europe one usually has his choice of 4-5 ISPs and several good mobile bandwidth providers (plus, there is no such thing as tethering). While in the vast US suburbs there is usually just one ISP, providing tiny bandwidth and terrible service. In the US, bandwidth is much more scarce and therefore either ISPs, content providers and individual customers are more urged to economize it. Consumers want to do it through Net Neutrality out of a fear of being stuck on a "slow lane" and ISPs want to gain the maximum value possible from their assets. Perhaps an environment more friendly to new ISPs (less rules, more tax breaks etc) could solve this problem. Of course, established companies (semi-local monopolies) have political power. The push should be rather toward breaking this political power. Over the long term, even without Net Neutrality, having a fast growing infrastructure will prevent the sort of abuse customers are currently being threatened with. With Net Neutrality, but still with a quasi-monopoly, I don't think people would necessarily get a better service.

berntb 16y ago

I'm coming in so late, that few will see this. Which is good for an irrelevant question, I guess. I wonder a bit about Cato Institute. As people have noted, this 2004 report is too old to build an opinion from. The arguments were less sophisticated then. It is hard to have an opinion. From the Wikipedia page, Cato is one of the more influential think tanks in the US. The US political life is a strange animal to me, so some basic information would be nice re Cato? (-: Mainly since I was flamed and called troll by a couple of left wingers for referencing a Cato report :-). So... How much "work for hire" does Cato do? Or the average US think tank? Can you trust anything from a US think tank? Appendix: The report I was flamed for: http://www.cato.org/pub_display.php?pub_id=9626 http://www.cato.org/pub_display.php?pub_id=9626 (Afaik there are not even attempts to answer this slaughter of 'The Shock Doctrine", which seemed to be why the "arguments" got personal. But, certainly, credible references as to why you can ignore arguments form top think tanks would be interesting?)

anamax 16y ago
> How much "work for hire" does Cato do? Or the average US think tank? Can you trust anything from a US think tank? What makes you think that think tanks are different in this respect? Heck - what makes you think that think tanks are only on one side of this issue? > But, certainly, credible references as to why you can ignore arguments form top think tanks would be interesting? Yes, if you've got any. Hint - "they got paid" isn't one. Very few people work for free, and their record is pretty bad. A "think tank" is just one mechanism for funding folks making arguments. There are many others.
- berntb 16y ago
  I'm not arguing a point, I'm just checking if some idealists might have been correct in disqualifying an argument, just because it came from someone affiliated with Cato. From the lack of good answers, I infer they just couldn't answer the argument -- and lacked the integrity to admit that. Not exactly surprising, for people with fixed political world views. (Being called "troll" by a favorite author hurt. :-)