8 ms·

Net Neutrality Is Just a Symptom

139 points by NelsonMinar 12y ago

wmf 12y ago
So wire neutrality instead of net neutrality.
- jaunkst 12y ago
  Yes, that's the game. They own wires. The service sucks. Build better lines, sell access to providers for highest bid.
rayiner 12y ago
I agree with the premise that the lack of competition is at issue, but the reasoning of this article is at odds with itself. > they include net neutrality, the price of Internet access in America, performance, rural availability and privacy. In a free-market, rural availability won't improve. Someone posted this the other day: http://www.louisvilleco.gov/SERVICES/CityManagersOffice/FranchiseAgreements/CableFranchiseInformation/2013ComcastCableFranchiseRenewal/tabid/766/Default.aspx#faq http://www.louisvilleco.gov/SERVICES/CityManagersOffice/Fran.... That page describes the cable franchise negotiations for Louisville, CO, population 4,500. The page notes: "Should another cable provider want to offer cable service in Louisville the City would offer that company the same franchise opportunity that Comcast now has. To date, no other service providers have asked for a franshise." The only reason phone infrastructure got built in rural America at all is that the Telecom Act's Universal Service Fund diverted billions of dollars a year from long-distance customers to paying to subsidize service for rural customers. What will the free market do when you take that away? > But in 2004, the FCC took steps to limit competition, turning away from key provisions of the 1996 Telecom Act. They set aside unbundling requirements which serve as a key bridge for competitive carriers. By circumventing Congress this way, the Bush-appointed Chairman of the FCC was able to turn back a competitive tide, creating an intentional duopoly on Internet access in the US. The "competitive tide" under unbundling is a fiction. In the early 1990's, you could order DSL from a large number of ISP's . . . all of which used the same copper wire the AT&T monopoly had put in the ground decades before. It was not accompanied by increased investment into the actual wires that ran into peoples' homes. Indeed, it eliminated any incentive to invest in those wires--why pour billions of dollars into infrastructure you'll have to lease out at cost to your competitors? People mention the "unbundling" requirement as if its a panacea, comparing it to what has been done in Europe, but ignore what makes that policy work in places like the U.K.--the company that owns the wires is a sanctioned monopoly, protected from competition, that is guaranteed return on investment through statutory means. It's illustrative to look at places in the U.S. where the market for telecom is working pretty well. In Chicago, there is cable via Comcast, and both AT&T and RCN building FTTP networks. In a place like Baltimore, RCN wouldn't be allowed to build its network, because they only serve the wealthier neighborhoods from the Loop northward. When local governments intervene in the market and make such deployments impossible, rational market participants do not respond by building a bunch of unprofitable infrastructure. They do it by not building infrastructure at all.
- deleted 12y ago
  [deleted]
- Zigurd 12y ago
  > People mention the "unbundling" requirement as if its a panacea, comparing it to what has been done in Europe, but ignore what makes that policy work in places like the U.K.--the company that owns the wires is a sanctioned monopoly, protected from competition, that is guaranteed return on investment through statutory means. That's called a utility. Why not do it that way? Then you have a market among retailers. Then you don't need regulation because the one's that dick around with your streams can be selected out of the market.
  - icebraining 12y ago
    What's the incentive for the utility to keep upgrading the wires?
    - wmf 12y ago
      Maybe that's an argument for fiber. Gigabit that never gets upgraded is still gigabit.
    - rayiner 12y ago
      The way it usually works is that the monopoly petitions the regulatory authority to build infrastructure, and then gets some guaranteed rate of return on the money they spend. There's lots of ways to do it.
      - sp_nster 12y ago
        Domestically, this is called a tariff. The local carriers file them with the local public utility commissions. They are all posted publicly and outline the service, capability, features and customer costs. Someone here probably knows, but I am sure any service provider (LEC, CLEC, Municipality) has to file tariffs in order to get approval to deliver service.
- 12y ago
dbroockman 12y ago
The question is whether the lack of competition reflects a natural monopoly (i.e., something inherent to this market given spread out suburban geography), like for electricity service, or other forces. It's probably some of both. At the very least, increasing competition won't be easy in the medium term. So, I disagree with the notion that net neutrality is a trivial issue ("just a symptom").
danielnaab 12y ago
I agree, we need service providers to unbundle. It's an abuse of network ownership to extend that control into monopolies/duopolies on network services, be it internet service, phone, or television. But it seems apparent to me that what we really need is more publicly owned networks, at the very least on the local level. Let ISPs and other service providers (phone, television, etc) compete for the consumer over open fiber networks in the same way cab companies compete over publicly owned roads. Fund the networks with taxes on network service providers, and provide federal subsidies for rural networks.
jaunkst 12y ago
Virtualize the bandwith. Remove the provider. Broker the line providers as what they are and create compition for higher speed lines for profit.
- al_bundling 12y ago
  This is called bitstream access. It's not a very good idea if it's the only option. Bitstream access is susceptible to the lowest common denominator of access technology and is at the mercy of the infrastructure owners upgrade cycle or lack of it. As an option to unbundling it is fine.
  - jaunkst 12y ago
    Can you explain more about the lowest common denominater? Does this mean sower technologies are more dominate in a bitstream access scenario?
lorddoig 12y ago
In the UK, unbundling has had a very limited effect on pricing when compared to straight-up nationalisation. Excluding Virgin's cable service, the last-mile infrastructure is wholly owned by BT Wholesale which, despite the name, is "independent" of BT Retail. It's operations are heavily bounded by legislation and politics - it is, in effect, a public corporation. So tied down are they, in fact, that they have a flat price list for almost all customers. Pricing innovation is precisely nil. I've have a copy from two years ago, but I'm under NDA wrt specifics. (Note that none of the above is a criticism, the idea of letting them free to do what they want is horrifying.) The result of this is strange to observe from an economists vantage point. On the one hand you can catch a glimpse of what perfect competition might look like in the consumer market as a thousand companies vie to maximise market share with an almost perfectly commoditised good, which in reality means packaging (with TV, phone, mobile, insurance, pretty much anything.) Aaand on the other hand most of the country is paying £30/month ($50) for 6Mbps down/0.2Mbps up at 50:1 contention and a fair usage policy to boot. Of course this is much better than straight up nationalisation as the private companies will at least innovate on peripheral services like billing and support, and will use a stronger punch when it comes to motivating BT Wholesale to stay on their toes. Is this better than the US situation? Most probably. Is this the ideal solution? Most probably not. I have a 152Mbps connection from Virgin which is around the same price, and am now in a super-exclusive club of Brits who get to moan about not being able so saturate a servers pipe (I want my downloads to read 18MBps every time, dammit!)
- radiowave 12y ago
  Excellent summary of the UK situation, although I'd say most people are paying quite a bit less than £30/m for their broadband service (or are you including line-rental in that?) The other part of the regulatory environment here that's worth mentioning is the "MAC-code" system which makes it relatively straightforward to switch ISPs. The ease with which customers can vote with their feet is a major part of what keeps (most) retail ISPs competitive.
- al_bundling 12y ago
  > In the UK, unbundling has had a very limited effect on pricing when compared to straight-up nationalisation. This may well be, but unbundling itself has had a very large impact on competition and prices. Currently the cheapest broadband plan including line rent is about £10 from plus.net. Not many countries can compete with that and no country without unbundling comes even close.
mp99e99 12y ago
This article is largely correct. Although we do cloud now, my company started as a access provider that was pushed out of the industry once Michael Powell changed the rules eliminating competition. If people knew what Internet access costs to deliver (small fractions of what you are paying) they would be shocked. Sadly, in the long-run it leaves the USA behind the rest of the world.
EGreg 12y ago
I'm a minarchist. I think the government should ensure people's minimum expectations are met (safe potable water, low violence, 20MBPS internet, etc.) but that's it. So I am not against "internet fast lanes" beyond the basics where both sides have to pay for them. That said, I think it's just good policy to have the same for startups. A minimum level of protection (bankruptcy protection, as well as a level playing field) for new entrants. I think that on the level of Netflix, they should indeed pay for special agreements. After all -- come on -- Netflix does special peering agreements with Tier 1 ISPs and their traffic accounts for 34% of all traffic to consumers. So basically, I think the general principle is: REDISTRIBUTE THE ECONOMICS TO ENSURE THE MINIMUM LEVEL THAT MAINTAINS INNOVATION, FREEDOM, BASIC EXPECTATIONS, BUT BEYOND THAT, LET THE MARKET BE FREE (BARRING REGULATIONS TO MINIMIZE AGAINST NEGATIVE EXTERNALITIES). PS: If you downvote, I'd love for you to actually reply with a reasoned comment.
- logn 12y ago
  There is no market. Two sellers and millions of buyers is not a functional market. You can't set a monopoly free and hope it becomes a thriving ecosystem of buyers and sellers. The free market libertarian ideology has been brilliantly pushed by crony capitalists and most people can't discern the difference. Given the current situation, the simple solution for peering is to force providers to connect at cost (which is thousands of dollars... not millions like what netflix paid).
  - EGreg 12y ago
    True, monopoly players distort markets as much as governments (which are in fact also monopolies in a certain real sense). I think that, in general, having the government guarantee something and then regulate it should be done only for the "minimum layer", it should have a limit. Above that, there should be a free market where only negative externalities are regulated.
- jessaustin 12y ago
  This seems to stretch the definition of "minarchist".
- 12y ago
driverdan 12y ago
Dane nailed it. This is a problem the free market would resolve if allowed to. Yes, there are issues that others have raised like rural access but competition would make net neutrality a much smaller issue.
- lern_too_spel 12y ago
  How libertarians interpret government-mandated unbundling with guaranteed fixed profits as "free market" is something I may never understand.
  - wmf 12y ago
    Yeah, in this debate "net neutrality" means regulation and "competition" usually also means regulation.
magice 12y ago
The root cause of all this is the fantasy of a certain group of people. Those believe, against the evidence and the suffering of their fellow citizens (let alone their fellow human beings), that enthroning money (aka capital, corporation, and all that) will boost the economy. The result? Money now owns the US, and drags all down into hell hole. One moment of sadness passes. Let's go and make some money. Gotta pay the bills.
- nickik 12y ago
  Oh comon. Stop with your philosophic anti captialist meta ravings. Either make real arguments or g stop posting.
nextw33k 12y ago
I've been making comments to that effect for years. The FCC shouldn't be looking at this, the FTC should: "The Federal Trade Commission's Bureau of Competition enforces the nation's antitrust laws, which form the foundation of our free market economy. The antitrust laws promote the interests of consumers; they support unfettered markets and result in lower prices and more choices." Unfettered markets being the operative words.
- nickik 12y ago
  This is funny. You have one part of the government activly promoting monopoly and things like that while you have another part of government that is claming to prefent the same thing. The reality is that antitrust law has been used more often to destroy competition that underpriced you rather than taking out evil monopolys. Many free market economist are against antitrust regulation.
al_bundling 12y ago
Net neutrality issues are a symptom of the lack of competition in the US, but it's not all roses and sunshine in countries with robust broadband competition either. Since network netrality violations are frowned upon, eyeball ISPs have resorted to playing favorites and extracting payments from over the top / web service providers. The battlefields are in carrier interconnect points and Internet exchanges, where ISP, transit providers and service providers meet to exchange bits coming and going to broadband users. The weapons of choice are denial of peering connections and congestion of existing connections. The shakedown is as simple as it is effective. Want your bits to go through? Pay up. Some of these peering wars have made it to the press, but most don't being shrouded in NDAs and trade secrets. Here are some examples of the public ones: - Free in France vs. Youtube - Orange vs. Megaupload - Orange in Africa vs. Google - Netflix vs. US ISPs Public or not, one thing is for sure these peering wars are only about to get worse. What is needed to avoid these and other potential problems are just basic consumer protection rules: - Truth in advertizing - Minimum performance guarantees - Independent third party verification The funny part is that we don't need new laws or regulations. We just need to actually enforce the laws we have. And sufficiently penalize infractions to make it economically unfeasible not to comply.

139 points by NelsonMinar 12y ago

wmf 12y ago

So wire neutrality instead of net neutrality.

jaunkst 12y ago
Yes, that's the game. They own wires. The service sucks. Build better lines, sell access to providers for highest bid.

rayiner 12y ago

I agree with the premise that the lack of competition is at issue, but the reasoning of this article is at odds with itself. > they include net neutrality, the price of Internet access in America, performance, rural availability and privacy. In a free-market, rural availability won't improve. Someone posted this the other day: http://www.louisvilleco.gov/SERVICES/CityManagersOffice/FranchiseAgreements/CableFranchiseInformation/2013ComcastCableFranchiseRenewal/tabid/766/Default.aspx#faq http://www.louisvilleco.gov/SERVICES/CityManagersOffice/Fran.... That page describes the cable franchise negotiations for Louisville, CO, population 4,500. The page notes: "Should another cable provider want to offer cable service in Louisville the City would offer that company the same franchise opportunity that Comcast now has. To date, no other service providers have asked for a franshise." The only reason phone infrastructure got built in rural America at all is that the Telecom Act's Universal Service Fund diverted billions of dollars a year from long-distance customers to paying to subsidize service for rural customers. What will the free market do when you take that away? > But in 2004, the FCC took steps to limit competition, turning away from key provisions of the 1996 Telecom Act. They set aside unbundling requirements which serve as a key bridge for competitive carriers. By circumventing Congress this way, the Bush-appointed Chairman of the FCC was able to turn back a competitive tide, creating an intentional duopoly on Internet access in the US. The "competitive tide" under unbundling is a fiction. In the early 1990's, you could order DSL from a large number of ISP's . . . all of which used the same copper wire the AT&T monopoly had put in the ground decades before. It was not accompanied by increased investment into the actual wires that ran into peoples' homes. Indeed, it eliminated any incentive to invest in those wires--why pour billions of dollars into infrastructure you'll have to lease out at cost to your competitors? People mention the "unbundling" requirement as if its a panacea, comparing it to what has been done in Europe, but ignore what makes that policy work in places like the U.K.--the company that owns the wires is a sanctioned monopoly, protected from competition, that is guaranteed return on investment through statutory means. It's illustrative to look at places in the U.S. where the market for telecom is working pretty well. In Chicago, there is cable via Comcast, and both AT&T and RCN building FTTP networks. In a place like Baltimore, RCN wouldn't be allowed to build its network, because they only serve the wealthier neighborhoods from the Loop northward. When local governments intervene in the market and make such deployments impossible, rational market participants do not respond by building a bunch of unprofitable infrastructure. They do it by not building infrastructure at all.

deleted 12y ago
[deleted]
Zigurd 12y ago
> People mention the "unbundling" requirement as if its a panacea, comparing it to what has been done in Europe, but ignore what makes that policy work in places like the U.K.--the company that owns the wires is a sanctioned monopoly, protected from competition, that is guaranteed return on investment through statutory means. That's called a utility. Why not do it that way? Then you have a market among retailers. Then you don't need regulation because the one's that dick around with your streams can be selected out of the market.
- icebraining 12y ago
  What's the incentive for the utility to keep upgrading the wires?
  - wmf 12y ago
    Maybe that's an argument for fiber. Gigabit that never gets upgraded is still gigabit.
  - rayiner 12y ago
    The way it usually works is that the monopoly petitions the regulatory authority to build infrastructure, and then gets some guaranteed rate of return on the money they spend. There's lots of ways to do it.
    - sp_nster 12y ago
      Domestically, this is called a tariff. The local carriers file them with the local public utility commissions. They are all posted publicly and outline the service, capability, features and customer costs. Someone here probably knows, but I am sure any service provider (LEC, CLEC, Municipality) has to file tariffs in order to get approval to deliver service.
12y ago

dbroockman 12y ago

The question is whether the lack of competition reflects a natural monopoly (i.e., something inherent to this market given spread out suburban geography), like for electricity service, or other forces. It's probably some of both. At the very least, increasing competition won't be easy in the medium term. So, I disagree with the notion that net neutrality is a trivial issue ("just a symptom").

danielnaab 12y ago

I agree, we need service providers to unbundle. It's an abuse of network ownership to extend that control into monopolies/duopolies on network services, be it internet service, phone, or television. But it seems apparent to me that what we really need is more publicly owned networks, at the very least on the local level. Let ISPs and other service providers (phone, television, etc) compete for the consumer over open fiber networks in the same way cab companies compete over publicly owned roads. Fund the networks with taxes on network service providers, and provide federal subsidies for rural networks.

jaunkst 12y ago

Virtualize the bandwith. Remove the provider. Broker the line providers as what they are and create compition for higher speed lines for profit.

al_bundling 12y ago
This is called bitstream access. It's not a very good idea if it's the only option. Bitstream access is susceptible to the lowest common denominator of access technology and is at the mercy of the infrastructure owners upgrade cycle or lack of it. As an option to unbundling it is fine.
- jaunkst 12y ago
  Can you explain more about the lowest common denominater? Does this mean sower technologies are more dominate in a bitstream access scenario?

lorddoig 12y ago

In the UK, unbundling has had a very limited effect on pricing when compared to straight-up nationalisation. Excluding Virgin's cable service, the last-mile infrastructure is wholly owned by BT Wholesale which, despite the name, is "independent" of BT Retail. It's operations are heavily bounded by legislation and politics - it is, in effect, a public corporation. So tied down are they, in fact, that they have a flat price list for almost all customers. Pricing innovation is precisely nil. I've have a copy from two years ago, but I'm under NDA wrt specifics. (Note that none of the above is a criticism, the idea of letting them free to do what they want is horrifying.) The result of this is strange to observe from an economists vantage point. On the one hand you can catch a glimpse of what perfect competition might look like in the consumer market as a thousand companies vie to maximise market share with an almost perfectly commoditised good, which in reality means packaging (with TV, phone, mobile, insurance, pretty much anything.) Aaand on the other hand most of the country is paying £30/month ($50) for 6Mbps down/0.2Mbps up at 50:1 contention and a fair usage policy to boot. Of course this is much better than straight up nationalisation as the private companies will at least innovate on peripheral services like billing and support, and will use a stronger punch when it comes to motivating BT Wholesale to stay on their toes. Is this better than the US situation? Most probably. Is this the ideal solution? Most probably not. I have a 152Mbps connection from Virgin which is around the same price, and am now in a super-exclusive club of Brits who get to moan about not being able so saturate a servers pipe (I want my downloads to read 18MBps every time, dammit!)

radiowave 12y ago
Excellent summary of the UK situation, although I'd say most people are paying quite a bit less than £30/m for their broadband service (or are you including line-rental in that?) The other part of the regulatory environment here that's worth mentioning is the "MAC-code" system which makes it relatively straightforward to switch ISPs. The ease with which customers can vote with their feet is a major part of what keeps (most) retail ISPs competitive.
al_bundling 12y ago
> In the UK, unbundling has had a very limited effect on pricing when compared to straight-up nationalisation. This may well be, but unbundling itself has had a very large impact on competition and prices. Currently the cheapest broadband plan including line rent is about £10 from plus.net. Not many countries can compete with that and no country without unbundling comes even close.

mp99e99 12y ago

This article is largely correct. Although we do cloud now, my company started as a access provider that was pushed out of the industry once Michael Powell changed the rules eliminating competition. If people knew what Internet access costs to deliver (small fractions of what you are paying) they would be shocked. Sadly, in the long-run it leaves the USA behind the rest of the world.

EGreg 12y ago

I'm a minarchist. I think the government should ensure people's minimum expectations are met (safe potable water, low violence, 20MBPS internet, etc.) but that's it. So I am not against "internet fast lanes" beyond the basics where both sides have to pay for them. That said, I think it's just good policy to have the same for startups. A minimum level of protection (bankruptcy protection, as well as a level playing field) for new entrants. I think that on the level of Netflix, they should indeed pay for special agreements. After all -- come on -- Netflix does special peering agreements with Tier 1 ISPs and their traffic accounts for 34% of all traffic to consumers. So basically, I think the general principle is: REDISTRIBUTE THE ECONOMICS TO ENSURE THE MINIMUM LEVEL THAT MAINTAINS INNOVATION, FREEDOM, BASIC EXPECTATIONS, BUT BEYOND THAT, LET THE MARKET BE FREE (BARRING REGULATIONS TO MINIMIZE AGAINST NEGATIVE EXTERNALITIES). PS: If you downvote, I'd love for you to actually reply with a reasoned comment.

logn 12y ago
There is no market. Two sellers and millions of buyers is not a functional market. You can't set a monopoly free and hope it becomes a thriving ecosystem of buyers and sellers. The free market libertarian ideology has been brilliantly pushed by crony capitalists and most people can't discern the difference. Given the current situation, the simple solution for peering is to force providers to connect at cost (which is thousands of dollars... not millions like what netflix paid).
- EGreg 12y ago
  True, monopoly players distort markets as much as governments (which are in fact also monopolies in a certain real sense). I think that, in general, having the government guarantee something and then regulate it should be done only for the "minimum layer", it should have a limit. Above that, there should be a free market where only negative externalities are regulated.
jessaustin 12y ago
This seems to stretch the definition of "minarchist".
12y ago

driverdan 12y ago

Dane nailed it. This is a problem the free market would resolve if allowed to. Yes, there are issues that others have raised like rural access but competition would make net neutrality a much smaller issue.

lern_too_spel 12y ago
How libertarians interpret government-mandated unbundling with guaranteed fixed profits as "free market" is something I may never understand.
- wmf 12y ago
  Yeah, in this debate "net neutrality" means regulation and "competition" usually also means regulation.

magice 12y ago

The root cause of all this is the fantasy of a certain group of people. Those believe, against the evidence and the suffering of their fellow citizens (let alone their fellow human beings), that enthroning money (aka capital, corporation, and all that) will boost the economy. The result? Money now owns the US, and drags all down into hell hole. One moment of sadness passes. Let's go and make some money. Gotta pay the bills.

nickik 12y ago
Oh comon. Stop with your philosophic anti captialist meta ravings. Either make real arguments or g stop posting.

nextw33k 12y ago

I've been making comments to that effect for years. The FCC shouldn't be looking at this, the FTC should: "The Federal Trade Commission's Bureau of Competition enforces the nation's antitrust laws, which form the foundation of our free market economy. The antitrust laws promote the interests of consumers; they support unfettered markets and result in lower prices and more choices." Unfettered markets being the operative words.

nickik 12y ago
This is funny. You have one part of the government activly promoting monopoly and things like that while you have another part of government that is claming to prefent the same thing. The reality is that antitrust law has been used more often to destroy competition that underpriced you rather than taking out evil monopolys. Many free market economist are against antitrust regulation.

al_bundling 12y ago

Net neutrality issues are a symptom of the lack of competition in the US, but it's not all roses and sunshine in countries with robust broadband competition either. Since network netrality violations are frowned upon, eyeball ISPs have resorted to playing favorites and extracting payments from over the top / web service providers. The battlefields are in carrier interconnect points and Internet exchanges, where ISP, transit providers and service providers meet to exchange bits coming and going to broadband users. The weapons of choice are denial of peering connections and congestion of existing connections. The shakedown is as simple as it is effective. Want your bits to go through? Pay up. Some of these peering wars have made it to the press, but most don't being shrouded in NDAs and trade secrets. Here are some examples of the public ones: - Free in France vs. Youtube - Orange vs. Megaupload - Orange in Africa vs. Google - Netflix vs. US ISPs Public or not, one thing is for sure these peering wars are only about to get worse. What is needed to avoid these and other potential problems are just basic consumer protection rules: - Truth in advertizing - Minimum performance guarantees - Independent third party verification The funny part is that we don't need new laws or regulations. We just need to actually enforce the laws we have. And sufficiently penalize infractions to make it economically unfeasible not to comply.