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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

by 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?
    - jbooth 13y ago
      So, if which ISP I happen to be a customer of completely dictates which streaming service I wind up using, then the actual merits of the product have become divorced from which product I buy. That's textbook market failure, right? Dollars aren't flowing to the best product or the cheapest, they're flowing to the product approved by someone in a completely different industry. The invisible hand isn't doing shit for me in that scenario. Is the next phase of this discussion "the free market will create incentives to start new telephony companies that don't throttle your favorite website"? For an analogy, should the electric company have a say in which brand CPU I use? Or should they just sell me watt/hours?

by jbooth 13y ago

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?
  - jbooth 13y ago
    So, if which ISP I happen to be a customer of completely dictates which streaming service I wind up using, then the actual merits of the product have become divorced from which product I buy. That's textbook market failure, right? Dollars aren't flowing to the best product or the cheapest, they're flowing to the product approved by someone in a completely different industry. The invisible hand isn't doing shit for me in that scenario. Is the next phase of this discussion "the free market will create incentives to start new telephony companies that don't throttle your favorite website"? For an analogy, should the electric company have a say in which brand CPU I use? Or should they just sell me watt/hours?