“Net neutrality” certainly sounds appealing, doesn’t it? Who could possibly be against “neutrality” given its ability to evoke an emotional tie to equality, fairness, impartiality and egalitarianism? Only someone who is sufficiently ethically consistent that they will aver the use of aggression in all situations, rather than merely when popular opinion provides a safe harbor for that stance. Neutrality is not neutral when imposed at the barrel of a gun. Proponents of net neutrality seek not neutrality, but rather protectionism. For example, applying the principle of net neutrality one could legitimately argue that the state should restrict the ability of some companies to spend more money on marketing or R&D than their competitors. If they were allowed the freedom to spend as desired this might promote a competitive disadvantage leading to a market no longer consisting of “neutral” players. Competition bad, neutrality good.
Net neutrality has been in the news this past week due to a not-so-secret-secret vote by the FCC concerning some proposed Internet traffic rules. Proponents of net neutrality want the FCC to reclassify the Internet as a Title II medium (telecommunication service) from its current Title I designation (information service). This would transform the Internet (in the US) for all practical purposes into a public utility. Now consider the reputation that public utilities have for innovation, choice, and service and the whole notion of net neutrality should make you shudder. Free or low cost phone service over the Internet? Well you can say goodbye to that if the FCC is ever allowed to micromanage the net. Be grateful Congress did not allow the FCC to regulate cable; had they done so we’d still be stuck with three channels and rabbit ears.
Net neutrality, like all appeals for regulation, is about fear i.e. fear of hypotheticals. It is a solution in search of a problem. Indeed anti-trust legislation is based upon a similar principal. It seeks to destroy that which has never existed (a market monopoly) before it can do that which it has never done (raise prices). If one proposes dragon slaying as a solution, chances are they will be motivated to uncover dragons where none exist. Net neutrality is likewise the latest in a long line of state sponsored dragon quests. Net neutrality proponents have an irrational fear that dragons (big companies) will take over the forest (dominate the Internet) and thereby incinerate the little guy. The problem with this of course is that these dragons don’t exist. The Internet has been very much non-neutral since day one and none of their fears have come to pass. Under this benign regulatory neglect we have witnessed not oligopolization but rather innovation, growth, competition and more, not less, access for the “little guy” (Twitter, YouTube, Facebook, etc). Their fears of the Internet turning into a virtual walled garden are not supported by 20 years of unregulated growth.
Companies like Netflix, Hulu or Apple pay big money to ensure the pipes carrying their content remain full. Why? Because we, the paying customers, demand it (anything to avoid the dreaded “buffering, buffering” message)! The network providers in turn use those big bucks to build out infrastructure to ensure content delivery occurs as promised. But if net neutrality proponents have their way, such premium payments would be disallowed, because everyone’s content must be treated “equally”. How again exactly does that help us, the customer?
If the public demands faster internet and prioritized content then the only means to achieve this is through the same process that has brought the internet to the state it is in today: an unregulated free market where individuals, not internet czars at the FCC, choose what services they want by voting with their dollars.
“Companies like Netflix, Hulu or Apple pay big money to ensure the pipes carrying their content remain full. Why? Because we, the paying customers, demand it (anything to avoid the dreaded “buffering, buffering” message)! The network providers in turn use those big bucks to build out infrastructure to ensure content delivery occurs as promised.”
So what exactly am I, the customer, paying my internet provider for? If this is the case, then my internet connection should be free right? Netflix has already paid to deliver the content to me, so I should not have to pay to have the same content delivered to me.
But that is not exactly how it is. I pay my internet provider, something I have very little choice in. I do not get much choice in who provides my internet service, the cable companies and local municipalities have ensured this monopoly status for these ISP’s.
When I purchase internet service, I am purchasing service to the entire internet, not just the parts my ISP wants me to access. Also, netflix is not sending data into the ISP’s infrastructure that was not requested. It is the ISP who is asking netflix to send data down this channel. I am going to netflix and asking for a movie stream, on a line that I have paid for access to the internet on. Now the ISP wants to charge netflix for the same thing it is already charging me for? That makes no sense.
I think an ISP should actually be able to charge extra. Conversely, I should have the choice to find an ISP that does not have these policies. But there is the rub, I do not have that choice. Where I live (and in large parts of the country) there is not much choice in ISP availability. I can choose AT&T, Comcast or DigitalPath (a local wireless provider), and that is two more choices that most people have. I am fine with them allowing comcast to do what they want, but if they do this, I need the choice to tell comcast where to go stick it, a choice I currently do not have. So as long as these ISP’s are going to enjoy the monopoly status, then they need to deal with the regulations that make this status fair. Otherwise comcast can allow competing ISP’s to operate in their government granted territories.
“So what exactly am I, the customer, paying my internet provider for? ”
You are paying for both your “last mile” connection to the network as well as the ISP’s connection to the network backbone (if a smaller ISP). In other words you’re paying for your driveway and local streets, the big boys are paying for the interstate highway.
The large companies are paying for “large pipe” high speed connections to the network so that when say a million customers all ask to stream a movie they can respond to all of them instantly. But many of them are still competing for use of this same large pipe so some of them would like priority access above competitors to this pipe – so their ISP’s would then charge them more for this access. But, everyone can’t have “priority” access, but the ISP’s would love to charge for priority access, so they use the money paid by the ones paying for priority now to build out more lanes so they can have more customers buying the “priority” product. Same as any other business, reinvest your profits into inventory so you have more to sell.
The concern that net neutrality proponents have, that I did not touch on in my article, is that the reverse could happen, i.e. artificially slowing some down. So a good example is with the recent announcement of AT&T buying up Direct TV. We could well imagine that Direct TV content, if streamed over the web might be given preferential treatment over an AT&T backbone over say Netflix content. But AT&T is in the business of making money, if Netflix is willing to pay something extra to regain parity or exceed it, then AT&T will take their money. If AT&T charges too much for too long for this privilege then eventually someone is going to come in and take that business away and gain Netflix as a customer (new backbone providers, or new wireless providers, or some future invention we can yet envision) – again assuming of course the government stays out of it and allows such competition and doesn’t create barrier to entry so high that it keeps others from competing with AT&T.
From our side of the equation, as end users, we obviously don’t want our ISP purposefully slowing down certain sites or blocking them – and that would quickly translate into lost business as users move to ISP’s that don’t do that. But as you say that process is currently somewhat hampered given the local municipalities creating artificial barriers to entry or outright monopolies by only allowing one provider in a given area. I agree, that must end as well in order for market forces to correct for those actions not desired by users.