Net neutrality and politics

Zoe Lofgren, representative of the 16th district of California (the region that contains Silicon Valley), recently wrote an article for ZDNet where she defended net neutrality rules as a means of preventing broadband companies from acting as gatekeepers to the Internet. From the article:

Instead of continuing our freedom to use those connections with whatever content, devices and services we want, some corporations want to control what we access over the Internet. This would include giving better connections to their favored content and charging money for that privilege.
What would the world look like if the Internet had been controlled in this way a few years ago? Imagine if the students who created Google or Yahoo had been charged a fee by a phone company for the privilege of letting their potential users have fast access. These small projects would not have turned into big ideas that revolutionized the World Wide Web.

That's a bit of an exaggeration. Broadband providers, most notably AT&T, aren't suggesting that they will "control what we access over the Internet." Rather, they are saying that some content may be given "fast track" access into the home, access to which is contingent on a fee paid either by the provider of content or the consumer.

To consider why this might be useful, imagine 5-10 years down the road when the average size of the datapipe into the home is in the 25-50 megabit range (placing us still behind the South Koreans, but oh well). VoIP service might start to get enhanced by video that is not just the simple 320 by 240 image we are used to in the IM world, but in the Standard Definition, or even the High Definition range.

Given the time criticality of such data, not to mention the fact that such usage will vastly outweigh, from a network load standpoint, the simple text and image traffic that constitutes a large percentage of the current Internet, a fast track might not be just useful, but fair to boot. We charge ten ton trucks more for access to a toll road than standard-sized automobiles because of the extra wear and tear they cause on these roads. Why shouldn't we make "bandwidth hogs" pay more?

That's why the Google example is ill-considered. Even under a regime wherein standard tier access was at lower speeds than video or time-critical tiers, nobody would notice, and Google would still have grown to become the search juggernaut it is today. Most processing for Google's search page happens at the server level, and search results are hardly a bandwidth hog. Providing faster access wouldn't alter the usability of Google search one jot.

Where faster tiered access might affect things, however, is in Google's new video service, the revenue for which will mostly be paid by ads. If broadband providers are allowed to tier access, companies such as Google might have to pay a bit of that money to broadband providers to get themselves onto a faster tier...unless they want end users to pay for the privilege.

That, to my mind, is the crux of the issue. Google and companies that support net neutrality rules (a group that may even include Microsoft, but I am John Carroll, not Microsoft, in case anybody was wondering) want to be able to continue as 18 wheelers who pay the same fees (if any) as standard automobiles, even though their traffic is responsible for most damage to the road. That's one model, and is largely the way things work now, but that doesn't mean it is a fair model.

Fairness aside, the current Internet works for the most part according to de facto net neutrality rules. Why change things? Well, I've already suggested some pragmatic reasons to have different tiers. Video streaming will take up a lot more bandwidth than standard text and image transfer.

The best reason, however, lies in fixing America's lag with respect to the popularity of and bandwidth available to broadband service.

America is different, to be sure. South Korea, the current broadband global leader, is a much smaller and denser country (though has similar levels of urbanization). That doesn't explain, however, why Canada is ahead of us in the provision of broadband. But, maybe Canada has some state-sponsored thingamajig that helped to spur broadband adoption.

Hey, state sponsored thingamajigs CAN do good things. However, it's also a fact that America's telecom industry has been strangled with regulations ever since America dismantled AT&T back in the early 80s. We've made progress since then, though often in baby steps with enough caveats to drive a gasoline truck through.

Even so, we are now at a point where we must prove whether we really believe the market can create the competition its supposed to create. I think it can, and here's why.

If there's one certainty in free market systems (with "free" being the critical adjective), it is that profits attract competition. Create profit opportunities, and competitors offering alternatives will arise. I STILL think that satellite, powerline and mobile networks can be third, fourth and fifth broadband options...assuming goverment doesn't continue to try to find ways to drain profit potential from the provision of broadband (and they stop blocking mergers, as occurred with DirectTV and EchoStar).

Telcos and cable companies (the two primary sources of broadband cited by Rep. Lofgren) are spending billions in preparation for a battle royale between competing providers of broadband internet services. They are spending even more billions to consolidate their technologies to flow through those Internet data pipes (IPTV is one example). To justify those billions, they are seeking ways to monetize that investment.

If they do monetize that investment, then they can generate profits. And if they generate profits, then those other three potential sources of competition start to invest their own billions in order to steal some of those profits away.

That is how market systems work. And that is why it's a good idea to let the cable companies and telcos figure out new revenue-generation schemes by which to profit from the billions they are sinking into the ground.  After spending decades burrowing out from the regulatory pile, creating a new layer just as competition is starting to heat up makes little sense.

The Internet is not threatened by access tiers. In fact, it can be enhanced by making new bandwidth-heavy services more economical and reliable in ways that would be impossible given a naive enforcement of "net neutrality" rules.