The debate over Net Neutrality reminds me of the time 20 years back when voice-over-IP (VoIP) was just becoming A New Thing. What I remember most is the Pie-in-the-Sky attitude that many folks had about VoIP. It opened up a lot of alternatives for carrying voice calls and there was this attitude of "We’re free of the Phone Company now!"
But we weren’t free of reality. Somebody still had to finance the infrastructure no matter whether you were switching circuits on a T1 line or you were routing packets over a TCP/IP connection. Somebody had to pay for the copper, or for the fiber, or for the radio towers. The Follow-The-Money rule still applied.
I think something very similar is happening today in the debate over Net Neutrality. Subscribers want unlimited access to whatever source they choose for a flat fee. They’re thinking, "We’re free of the Phone company/Cable company now!" Meanwhile, ISPs want to be paid based on the traffic they have to carry since the Internet is no more an unlimited resource for video than it was for voice calls. Somebody still has to pay for the copper… etc.
Netflix and (Google’s) YouTube accounted for half of peak-time traffic at the end of last year. As of last May, Netflix accounted for over 1/3 of downstream bandwidth by itself. Maybe you’ve said good-bye to your cable company, but you’ll never say good-bye to the need to finance the infrastructure.
9 questions about network neutrality you were too embarrassed to ask.
So I liked Coyote’s post this week looking at the bottom line for Net Neutrality. If you’re interested in the topic, read the whole thing.
Net Neutrality is Not Neutrality, It is Actually the Opposite. It’s Corporate Welfare for Netflix and Google
November 12, 2014, 12:24 pm
Net Neutrality is one of those Orwellian words that mean exactly the opposite of what they sound like. There is a battle that goes on in the marketplace in virtually every communication medium between content creators and content deliverers. We can certainly see this in cable TV, as media companies and the cable companies that deliver their product occasionally have battles that break out in public. But one could argue similar things go on even in, say, shipping, where magazine publishers push for special postal rates and Amazon negotiates special bulk UPS rates. [...]
What “net neutrality” actually means is that certain people, including apparently the President, want to tip the balance in this negotiation towards the content creators (no surprise given Hollywood’s support for Democrats). Netflix, for example, takes a huge amount of bandwidth that costs ISP’s a lot of money to provide. But Netflix doesn’t want the ISP’s to be be able to charge for this extra bandwidth Netflix uses – Netflix wants to get all the benefit of taking up the lion’s share of ISP bandwidth investments without having to pay for it. Net Neutrality is corporate welfare for content creators. [...]
Don’t believe me? Well, AT&T and Verizon have halted their fiber rollout. Google has not, but Google is really increasingly on the content creation side. And that is one strategy for dealing with this problem of the government tilting the power balance in a vertical supply chain: vertical integration.
Postscript: There are folks out there who always feel better as a consumer if their services are heavily regulated by the Government. Well, the Internet is currently largely unregulated, but the cable TV industry is heavily regulated. Which one are you more satisfied with?
And I also ran across an interview with Mark Cuban this week. He had similar thoughts. (My emphasis below.)
Mark Cuban is not a fan of President Obama’s plan for the internet.
He’s been bashing plans to regulate the internet, and questioning other people who support it.
Over email we asked him about the potential for small companies to be stifled by internet providers.
His reponse: “I’m more concerned the government will f— it up.”
Obama thinks the internet should be reclassified to be considered a utility like telephone lines. This would allow it be regulated, and protect consumers and companies that rely on the internet. [...]
The fear is that internet providers like Comcast are going to prioritize the traffic of certain companies over the traffic of other companies. In this scenario, it’s harder for a young company to take on older, more monied companies.
Cuban thinks this is an idiotic concern. We asked him if he was worried that internet providers would hurt startups.
“Hell no,” he said. “Since when have incumbent companies been the mainstays for multiple generations?”
He believes that startups blow up older companies despite an unregulated internet that allows internet providers to prioritize certain traffic streams.
Overall, he thinks the current debate is too narrow and short sighted.
“There will be so much competition from all the enhancements to wireless that incumbent ISPs will have to spent their time fighting cord cutting,” he said. [...]
As Coyote and Cuban point out, what it comes down to is how this industry grows and who should be trusted to regulate it.
It’s an easy call in my opinion. No matter how limited my choices for ISPs, I can find a better ISP easier than I can find a better FCC. I remember the days before telephone deregulation.