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Hang on a second, in what way is "last-mile connectivity providers cannot selectively extort content providers based on business considerations" NOT identifying

by jbooth 13y ago

Hang on a second, in what way is "last-mile connectivity providers cannot selectively extort content providers based on business considerations" NOT identifying and addressing a market failure? I pay for the pipes on my end, I want the same data-rate regardless of whether the data originally came from a netflix server or a NBC-affiliated company's server. If netflix needs to beef up their peering arrangements in order to get the data to comcast's network, that's one thing, but they absolutely should not have to pay an additional fee to comcast to protect themselves from being penalized.

rayiner 13y ago
That's not a market failure, but that's rather using a market failure as a hook impose a particular ideology about what the internet should look like. Hypothetical: say there was no last mile monopoly. The coax into your house was owned by the municipality, which allowed competing providers to plug in and provide the rest of the network. Would that eliminate the need for net neutrality regulation? No: companies could still pay ISP's to prioritize their packets all the way up to the municipally-owned coax into the customer's house. In other words, the regulation has nothing to do with the market failure ostensibly justifying it. Being able to pay other companies to give you better service is an intrinsic advantage to being big, and is not the product of a market failure. For example, Amazon works out a special deal with the USPS for Sunday deliveries. That still gives a huge benefit to Amazon versus smaller competitors who can't afford to pay up. Being small comes with penalties, and the FCC shouldn't impose an ideological view of the internet that artificially removes these disadvantages.
- jbooth 13y ago
  I don't understand this argument at all. You're conceding that last-mile extortion is a market failure, then turning around and saying legislating against that last-mile extortion is "imposing ideology" rather than just addressing the market failure? When I purchase internet connectivity, I want internet connectivity. I don't want varying grades of speed depending on who I'm talking to, I just want a dumb pipe. That's what I'm paying for. How is legislating the dumbness of the pipe 'imposing ideology'? The market is allegedly $/gb/mo, let providers compete on service, price and speed. If they can't deliver those GBs for those $s, they're free to charge more to consumers. The only ideology there is capitalism. What am I missing? Note that I said in my original post, if Netflix doesn't have good enough peering arrangements on their end, then that's their problem and nobody thinks there should be legislation guaranteeing them cheap bandwidth. But most of us think they should be able to buy bandwidth to the consumer networks, via peering, at the market rates that everyone else pays, maybe with discounts for volume.
  - rayiner 13y ago
    The last mile monopoly is the market failure, saying that internet connectivity should be just a "dumb pipe" is the ideology. Legislating wireline providers into being "dumb pipes" doesn't do anything to directly address the last mile issue, but instead uses the last mile issue as a hook for imposing an idealistic vision of what internet services should look like. There's no nexus between QoS or prioritization or the other sorts of things an ISP might want to do and the last mile monopoly. A better legislative approach would be something like having municipal utilities own the last mile coax, and allowing different ISPs to plug into it. That would eliminate the market failure directly, and allow the industry to evolve into whatever structure makes sense. I think you wouldn't see them end up as dumb pipes in a competitive market. Some ISP would come along and make a deal with the NFL to have high quality streaming only on their network, etc. Just like how there's no monopoly in shipping but Amazon still has an advantage by being able to cut special deals.
    - jbooth 13y ago
      Ok, that's our disagreement then. When I buy internet service, I and 99.999% of customers are trying to buy a dumb pipe. That's what it's marketed as, that's what the provider tells us we're buying. I'd consider a patchwork of different providers with the same problem ("well, sprint has fast netflix but comcast has fast amazon") to be just as much of a market failure. That's bringing huge distortions to internet business, whether or not there's a monopoly on the last mile. How about if we split it like so? * Content-neutral QoS and prioritization isn't a market failure. * Throttling netflix because they strategically threaten NBC (owned by comcast) is a market failure. Would you agree with that sort of categorization? How about the following? * Throttling whichever service your customers are using the most so that you don't have to provide the bandwidth you sold to them under a contract, also a market failure.
      - rayiner 13y ago
        Being out of compliance with what you think the internet should look like does not make for a "market failure." There has to be some sort of economic explanation: the existence of a negative externality, free-riding, etc. Even in competitive markets, companies still get together and cut deals and customers face choices like "Sprint with fast Netflix" versus "Comcast with fast Amazon." The mobile OS world is quite competitive, yet I still face choices like "Windows Phone with Office" versus "Android with Youtube." The restaurant industry is highly competitive, yet most places serve Coke or Pepsi but not both. If you eliminated the last mile monopoly, which is an economically valid reason to regulate, with a targeted regulation, I still think you'd see a lot of the sort of activities that HN-ers dislike. There would still be a huge incentive for ISPs to vertically integrate and buy up content companies and cut special deals. What does Comcast care if they don't own the actual coax into my house, just everything leading up to it? Who can compete with them when they have a "killer app" like Hulu and their competitors don't?
- rhizome 13y ago
  That's not a market failure, but that's rather using a market failure as a hook impose a particular ideology about what the internet should look like. The ideology is what you think is the result of the market failure, whether it's being used as a "hook," or something else. Heck, whether it can even be defined as a market failure can been argued to be a value judgement these days.

by jbooth 13y ago

rayiner 13y ago

That's not a market failure, but that's rather using a market failure as a hook impose a particular ideology about what the internet should look like. Hypothetical: say there was no last mile monopoly. The coax into your house was owned by the municipality, which allowed competing providers to plug in and provide the rest of the network. Would that eliminate the need for net neutrality regulation? No: companies could still pay ISP's to prioritize their packets all the way up to the municipally-owned coax into the customer's house. In other words, the regulation has nothing to do with the market failure ostensibly justifying it. Being able to pay other companies to give you better service is an intrinsic advantage to being big, and is not the product of a market failure. For example, Amazon works out a special deal with the USPS for Sunday deliveries. That still gives a huge benefit to Amazon versus smaller competitors who can't afford to pay up. Being small comes with penalties, and the FCC shouldn't impose an ideological view of the internet that artificially removes these disadvantages.

jbooth 13y ago
I don't understand this argument at all. You're conceding that last-mile extortion is a market failure, then turning around and saying legislating against that last-mile extortion is "imposing ideology" rather than just addressing the market failure? When I purchase internet connectivity, I want internet connectivity. I don't want varying grades of speed depending on who I'm talking to, I just want a dumb pipe. That's what I'm paying for. How is legislating the dumbness of the pipe 'imposing ideology'? The market is allegedly $/gb/mo, let providers compete on service, price and speed. If they can't deliver those GBs for those $s, they're free to charge more to consumers. The only ideology there is capitalism. What am I missing? Note that I said in my original post, if Netflix doesn't have good enough peering arrangements on their end, then that's their problem and nobody thinks there should be legislation guaranteeing them cheap bandwidth. But most of us think they should be able to buy bandwidth to the consumer networks, via peering, at the market rates that everyone else pays, maybe with discounts for volume.
- rayiner 13y ago
  The last mile monopoly is the market failure, saying that internet connectivity should be just a "dumb pipe" is the ideology. Legislating wireline providers into being "dumb pipes" doesn't do anything to directly address the last mile issue, but instead uses the last mile issue as a hook for imposing an idealistic vision of what internet services should look like. There's no nexus between QoS or prioritization or the other sorts of things an ISP might want to do and the last mile monopoly. A better legislative approach would be something like having municipal utilities own the last mile coax, and allowing different ISPs to plug into it. That would eliminate the market failure directly, and allow the industry to evolve into whatever structure makes sense. I think you wouldn't see them end up as dumb pipes in a competitive market. Some ISP would come along and make a deal with the NFL to have high quality streaming only on their network, etc. Just like how there's no monopoly in shipping but Amazon still has an advantage by being able to cut special deals.
  - jbooth 13y ago
    Ok, that's our disagreement then. When I buy internet service, I and 99.999% of customers are trying to buy a dumb pipe. That's what it's marketed as, that's what the provider tells us we're buying. I'd consider a patchwork of different providers with the same problem ("well, sprint has fast netflix but comcast has fast amazon") to be just as much of a market failure. That's bringing huge distortions to internet business, whether or not there's a monopoly on the last mile. How about if we split it like so? * Content-neutral QoS and prioritization isn't a market failure. * Throttling netflix because they strategically threaten NBC (owned by comcast) is a market failure. Would you agree with that sort of categorization? How about the following? * Throttling whichever service your customers are using the most so that you don't have to provide the bandwidth you sold to them under a contract, also a market failure.
    - rayiner 13y ago
      Being out of compliance with what you think the internet should look like does not make for a "market failure." There has to be some sort of economic explanation: the existence of a negative externality, free-riding, etc. Even in competitive markets, companies still get together and cut deals and customers face choices like "Sprint with fast Netflix" versus "Comcast with fast Amazon." The mobile OS world is quite competitive, yet I still face choices like "Windows Phone with Office" versus "Android with Youtube." The restaurant industry is highly competitive, yet most places serve Coke or Pepsi but not both. If you eliminated the last mile monopoly, which is an economically valid reason to regulate, with a targeted regulation, I still think you'd see a lot of the sort of activities that HN-ers dislike. There would still be a huge incentive for ISPs to vertically integrate and buy up content companies and cut special deals. What does Comcast care if they don't own the actual coax into my house, just everything leading up to it? Who can compete with them when they have a "killer app" like Hulu and their competitors don't?
rhizome 13y ago
That's not a market failure, but that's rather using a market failure as a hook impose a particular ideology about what the internet should look like. The ideology is what you think is the result of the market failure, whether it's being used as a "hook," or something else. Heck, whether it can even be defined as a market failure can been argued to be a value judgement these days.