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Tuesday, May 09, 2006


Net neutrality

I have to open this post with a disclaimer: I'm immediately suspicious of anything supports. is one member of an admittedly odd coalition of advocates of what is known as "Net Neutrality" legislation. In a nutshell,they don't want ISPs to charge certain customers more because they use more bandwith. Neutrality proponents have mangled this into the accusation that service providers such as Verizon and/or Comcast will charge certain content providers a higher rate to ensure their data goes through faster, and degrade the service of competitors who don't pony up.

So for instance, they say that Verizon might enter a deal with to direct users to the Amazon website while simultaneously making certain rival Barnes & Noble doesn't load as fast, or may not load properly.

This is a business model already in place on the internet with no ill effects. On eBay, you can purchase various "upgrades" to your listing to make it look better and hopefully attract more customers. Most search engines have "sponsored links" which always appear at the top of the search page because the owner of that link paid for the service. Under "Net Neutrality" rules, such arrangements could be eliminated, thus denying the service providers a source of revenue. The providers would have to charge EVERYONE more for their services or simply not provide the service at all, nor would they have as much revenue to spend on developing new services.

To claim that ISPs will try and restrict content from competitors as a business model is absurd. It opens the door for acompetitor to advertise UNRESTRICTED access as a feature of their service, giving them a competitive advantage. So, if Verizon starts limiting content from competitors, then were I a service provider, I would offer unrestricted access for a similar price in order to lure users away. Verizon would be stupid to continue to limit content as a result. Thus, claims that service providers would block or limit competitors' content are unfounded.

Such a scenario already played itself out in the early days of the Web. On-line access and content was gained through companies such as Compuserve, Genie, Prodigy and others. In many cases, consumers paid per-minute for access and were restricted to the content provided by that carrier. Internet access was often an additional surcharge. Then providers started offering flat-rate,unlimited Internet and access and consumers flocked to it in droves, giving us the business model in place today without a single bit of government intervention.

There are also some beneficial effects of non-neutrality. Suppose someone wants to create a family- or kid-friendly ISP with access to certain things restricted? Parents might enjoy such a service as a way to let their kids surf the Web without having to constantly watch over their shoulders. Impossible under "net neutral" standards. Maybe an ISP could create a high-speed,entertainment-only ISP which only allows access to games and music for a reduced rate from full-access Internet?

In fact, netizens seem to have no problem with paying more for better, higher-quality data connections - something which Net Neutrality propponents say is a Bad Thing. You pay more for DSL or Cable internet access than dial-up, don't you? Why? Because it's better and faster. Net neutrality could eliminate this with the net effect of raising everyone's prices. If an ISP can't charge more money for a service requiring more bandwidth (which is exactly whatthe business opponents of Neutrality are saying they need to do), then they have to recoup the cost somehow by charging everybody the same rate fo rthe same service whether you need it or not. You will no longer be able to buy a lower-cost service with lower bandwidth and lower quality because that's all you need. You'll be forced into the high-cost, one-size-fits-all, "net neutral" service that subsidizes high-bandwidth users at your expense. This illustrates the difference between service and content.

In fact, during the late 90s, telefcoms were forced to open their networks to competitors' services at regulated prices. The idea was that the competing services, known as CLECs, would eventually build their own physical networks and become true competitors to the existing providers, called ILECs. This was called the "stepping stone theory."It was supposed to lead to increased competition and lower prices. Quite the opposite happened. Competition stalled and investment in telecomm companies faltered.

Then in 2003, telcos were finally released from the requirement to share their lines with competitors at regulated prices. Dire predictions of monopolies, less choice, limited content and higher prices for high-speed internet access abounded(sound familiar?). At the time, the mean price of DSL was over forty dollars a month, actually higher than faster cable internet access.

It is a matter of history that prices for DSL have dropped dramatically. It is possible to get DSL for under twenty dollars per month these days. Permitting telcos to charge competitors for use of their lines is no barrier to competition.

Proponents of "net neutrality" have engaged in little more than scare tactics and misrepresentation to advance their agenda, oddly one of attempting deregulation by regulation. The government needs to leave the internet alone.If people want to "save the internet," they should quit writing congressmen or signing internet petitions and start talking to their ISPs about what kind of services they will and won't pay for.

"Today's report confirms that, despite White House scare tactics, Social Security remains sound for decades to come.."

-? Senate Democratic Leader Harry Reid (NV) upon hearing reports that the Social Security and Medicare Trust Funds will go bankrupt even earlier than predicted.

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