Monday, June 19, 2006

Net Neutrality: A Pox On Both Their Houses

Imagine being able to sit down and watch any TV program pretty much whenever you want to watch it, taking breaks any time you wish. (Sure you can do that with TiVO today, but how about scrapping the device and the monthly service fee?) Imagine not being beholden to current TV programming models. How about full-screen Internet video with DVD-like resolution and transmission smoothness? Maybe you’d like real time music or audio streaming without the hiccups. Or maybe you’d like a baby or pet monitor you could watch over your cell phone. Perhaps you’d settle for reasonably priced long distance phone calls. How about scrapping phone numbers altogether in favor of a service that simply finds you by name wherever you happen to be?

Some of you may be thinking, sure, that would be wonderful. Maybe someday we’ll have the technology to do those kinds of things. Wrong-o Mary Lou. We have the technology today. We just don’t have it in place. In fact, a number of countries already have the technology in place. It all comes down to bandwidth, and many parts of Europe and the Pacific Rim now far outstrip the US in bandwidth capability.

So why is the US so slow on the uptake? Aren’t people willing to pay for more bandwidth? As it turns out, we are paying more for it. At least, we are paying far more for our megabandwidth than consumers in other countries are paying for their gigabandwidth.

Part of the problem is our aging telecommunications infrastructure. The US built out its telecom infrastructure far earlier than did other countries. That means that we have a lot of infrastructure that is a lot older than that of other countries. And why is it a lot older? Could it be that our telecom companies—the ones accorded special government waivers and leeways as the protectors of an important national asset—have been loathe to spend cash on maintenance and upgrades?

These lethargic telecos control the pipes over which the vast majority of electronic media coming into our homes and businesses travel. As the electronic media market has changed, especially with the advent of the Internet, some content providers feel that the monopolistic telecos have them over a barrel. They argue that all content flowing over the telecom lines should be treated neutrally. They have coined the term Net Neutrality as the moniker for their cause. Of course, the telecos argue that they have a right, like any business, to appropriately price usage of their assets.

Andy Kessler describes the two sides of this issue in this article.
“On one side are the hip, cool, billionaire web service companies like Google, eBay, Yahoo, and even Microsoft. Net neutrality is their rallying cry. Despite the fact that they are basically schlocky ad salesmen on a grand scale, they're pushing this quaint, self-serving '60s notion that the Internet is a town square--all for one and one for them, or something like that. Everyone should be allowed to hang out in the town square and use it as they please, one low price, eat all you want at the buffet.

“On the other side are the monopolist plumbers like Verizon and AT&T and Comcast. These are the folks who laid the pipe that delivers the Internet--the blogs and pirated movies and photos of Shiloh Brangelina--to your house or office. They think the Internet is more like a giant shopping mall, and they're the mall owners. You the customer can walk around as if you were in the town square, but the tenants (see billionaire web service companies above) are going to have to pay for the upkeep of the premises. If they're one of the anchor stores, they might pay a lot.”
Kessler says that the current debate does not serve US consumers or citizens well because “this is one of those bizarre issues where both sides are off their rocker.” The Net Neutralists want legislation and regulations to force the issue their way. But Kessler says that “regulations beget more lobbyists.” Kessler argues that anything government can do to help pales in comparison to what the free market can do.

Kessler contends that both sides of this debate are playing a game that maintains the prehistoric Flintstone business and technology model. He thinks the market should be used to break this apart. Indeed, he seems to think that the market will eventually achieve enough critical mass to cause this to happen. But he also thinks it can be helped to happen sooner and cheaper by threatening to use eminent domain to forcibly take private telecom lines from their arguably less than responsible owners.

Yikes! If Net Neutrality legislation looks like a big ugly club, government takeover of telecom lines looks like a nuclear bomb. If the market will eventually force change anyway, would it really be worth going nuclear to make it happen sooner?

It’s good that we’re debating this issue, but Kessler does have a point. If we blather on too long about it, eventually the market will find a way around the immovable obstacles and render them moot. Kessler seems to be arguing for partial salvage of our current infrastructure so as to make transition quicker and less painful. I too would like gigabandwidth sooner. But I’m not sure that going nuclear is the answer.


That One Guy said...

You know, given the prevailing atmosphere when the telco's were DE-regulated (that of "phone-only and these are OUR phone lines), it makes me wonder how successful a bid to take that asset back would really be... they own everything except for what they call "the last mile" which basically means "from the street to your telephone", and I think that the big companies like Verizon, Qwest, the other "baby bells", etc, would have a lot to say about this, and a lot of money to spend at the lobby level. It would certainly make in interesting debate.

Certainly single- or double-twisted-pair is antiquated at best, obsolete at worst, and the required infusion that would be required for update would be massive. They will argue that they are moving as fast as possible to update to things like fiber, etc, given financial constraints, and will state that a combination of public funding and raised rates would be required for faster motion to that end.

The other direction is bandwidth not requiring "wire in the ground", such as satellite, and there may be traction in that direction if a coalition of interests were to get together on that in a bigger way. Certainly Verizon is in that landscape, and I would think companies like comcast, tivo, sat radio, Cingular, directv, dishnet, HDnet, and many others, would take a look at something like that.

An interesting thought, indeed.

That One Guy said...

Interestingly, as we contemplate this question, Nokia and Siemans have announced a merger...

Reach Upward said...

Hmmm ...

Bradley said...

Pete Ashdown has pointed out that we never really had net neutrality in the first place. Any network provider has to buy a link into a peering point to connect up with the rest of the internet. Some peering points are better than others and if you want to get into the fast ones you have to have a lot of money.

Furthermore, network providers are already actively trying to limit the speed the different types of traffic coming through their networks. This is necessary to prevent one rude service from overwhelming other, more polite serivces. "Traffic shaping" as they call it, is a big part of the infrastructure everywhere on the net.

Maintaining the "neutrality" of the net is a fantasy already and government legislation on this subject will only muddy the waters.