Akamai was arguably paying Comcast for carrying their transit traffic. But they never should have been paying for traffic with a final destination in Comcast's

Akamai was arguably paying Comcast for carrying their transit traffic. But they never should have been paying for traffic with a final destination in Comcast's network (peering traffic). As a Tier 1 ISP, Level3 does not require Comcast to carry any transit traffic for it. If Level3 has to pay to deliver traffic that Comcast's customers themselves have requested, Comcast is clearly charging Level3 (and by extension, Netflix) for access to the customers on their network. If Comcast broke off its peering agreement with Level3, all that traffic would instead be going through a different transit provider. Comcast would then likely have to pay to receive that traffic. Comcast is in a position to charge for access to their customers because they have a monopoly on access to those customers. Those customers may not even have other choices for broadband internet access, because infrastructure has such high barriers to entry. Because the consumer broadband market has high barriers to entry,[1] there is little competition.[2] That lack of competition in infrastructure is now distorting the market for internet applications, possibly the closest thing to perfectly competitive market that has ever existed,[3] by raising both the barrier to entry and transaction costs. Yes, regulation would distort the market. In a market that is tending towards monopoly or oligopoly, this is a good thing. Net neutrality is an ill-defined idea, but I think we can agree that we want the market for internet applications to remain as free of a market as possible. [1] This is not the case under regulatory regimes that require line-sharing, where the consumer broadband market is decoupled from the infrastructure market. Line sharing is not required in the US. [2] Infrastructure markets are natural monopolies <http://www.linfo.org/natural_monopoly.html&#62 http://www.linfo.org/natural_monopoly.html> due to economies of scale. [3] A definition of perfect competition: http://en.wikipedia.org/wiki/Perfect_competition http://en.wikipedia.org/wiki/Perfect_competition