Net Neutrality, Politics and My Checkbook
November 12th, 2006By Doug Miller, Director-Channel Management
Just when you thought it was over, here come the politicians again trying to revive Net Neutrality legislation. Political pressures have forced the issue to become a potential roadblock to the AT&T–Bell South merger. Without it, pundits say that the FCC may block the merger. It’s definitely something to watch for in this post-election environment.
While there are very real and valid arguments both for and against this type of open structure, for me it should come down to a free market. The Internet should be no different than the rest of our society in that consumers get to choose with their purchasing decisions. With carriers, service providers and content owners openly competing for purchasing dollars, it would seem that they will make the best choices for the consumers and ultimately for themselves. Competition, reinforced by anti-trust laws, is thus a far better protector of the interest of consumers, carriers and content providers than government ownership or regulation.
Let’s take an example of an environment without Net Neutrality regulation (today’s status quo). Say that DSL Provider A decides to charge content providers to ride its network. Google and Yahoo! pay the fee, but Ebay and Amazon do not. In this case, it stands to reason that many consumers would rather go to Cable Operator X for their service where they have equal access to everything (a conscious choice made by Operator X). Provider A then changes its structure to keep up with the dreaded churn and innovates to launch new services that will bring customers back. Operator X sees this and launches its own new services like managed VoIP or P2P services, and sets QoS higher for those services to ensure that customers get the best possible experience. There’s competition, new services are conceived and launched, billing plans are changed. Everybody, including the consumer, wins.
Now, let’s take a similar example with Net Neutrality regulation. All of a sudden, Provider A and Operator X are relegated to nothing more than bit pipes that can only compete on aggregate speed and price. Sounds a lot like a commodity, right? Sure, they can bundle data services with home phone service and maybe TV, but they have lost any incentive to launch new branded services since they really can’t legally guarantee QoS or QoE. In essence, Net Neutrality, with all of the good intentions that go along with it, would have effectively stifled new service delivery, innovation, desire for growth, etc. Why would carriers continue to pour literally billions of dollars into their networks if their only payback is to sell bits? Sure, it would be a big win for content providers, but that’s not going to get carriers to increase the network performance and security to the point that the services would be valuable and worth paying for.
The “access?” honeymoon is over. The market is demanding more than just fast service to check e-mail, stock quotes and weather reports. Where will the money be made? If it’s not going to be made by the carriers, why will they continue to spend the money so that content providers can reap the rewards? Basic economics says that just won’t happen. It’s time for carriers to get broadband in every home and to give them free reign to manage their networks based on consumer demand. And let’s all get real here. Will any carrier in their right mind block or otherwise limit access to Google, Yahoo!, Ebay, Amazon, etc.?
So, do we let the politicians decide for us? Do they have the networking knowledge and insight to make these decisions? Or, do we let carriers and service providers with advanced DPI tools, monitoring systems, security solutions, and other key network management applications and skills go head-to-head with each other and let them fight for our monthly Internet budget? I, for one, am up for a good fight and one that is conducted not in the courtroom or on Capitol Hill, but on my computer and in my monthly bill.
November 12th, 2006 at 6:05 am
FREE MARKET vs. FREE SOCIETY? I think the answer is clear. Our impassioned drive for a free market creates sweatshops and deposes thrid world governments so our corporations (e.g. Bechtel) can take control of a South American city’s water supply and charge the inhabitants 50% of their income just for water. If the big business are given the freedom to choose how to charge their internet clients, they will have the freedom to decide what information we as consumers receive on the internet. Also, and very important, these companies, given the power to charge different amounts to different individuals, will have the power to squelch someone’s expression via the internet. The internet has become the public forum for the world, bringing together the people, the great equaliser between the rich and the poor, allowing everyone to have a voice. If Net Neutrality is not upheld, the internet will become just like the radio and television, a place where only the rich and poweful are given the freedom to express themselves. It may be possible to complicate this argument by getting into the details, but it is also possible to simplify this argument by balancing FREE MARKET vs. FREE SOCIETY (freedom of information, freedom of expression)
November 14th, 2006 at 4:40 pm
While this blog is not necessarily the place to debate the macro issues associated with a free market in terms of third world politics, I will give you my thoughts about Net Neutrality legislation on a more micro level. In my opinion, the concept of a free market actually gives consumers the power to choose what they want and don’t want. By imposing legislation that forces the carriers’ hand in what they can and (equally as important) cannot do, I believe we are effectively taking away the consumer’s right to choose.
Going back to my original example, Net Neutrality will actually limit the ability of the Internet to flourish as a public forum. Keep in mind that giving carriers the right to manage their networks as they see fit does not mean they will, all of a sudden, make “stupid� decisions. You say, “these companies, given the power to charge different amounts to different individuals, will have the power to squelch someone’s expression via the internet.� Aside from the fact that this goes beyond the Net Neutrality debate, why do you not have these same concerns in the telephone world? There are a variety of packages and pricing plans offered to different types of consumers. I don’t think anyone is complaining about the right of the telephone companies to charge different rates. I actually like to have that choice. One size definitely does not fit all.
Regardless of how the Net Neutrality debate finally ends up (should be interesting with the shift in power with the recent elections), the consumer’s rights are not an issue here. Individuals will always maintain the right to express themselves freely. I don’t think carriers are looking to abolish our rights as protected by the First Amendment of the Constitution.
As painful as it is to hear (or say?), our country was built on some fairly capitalist principles. I, for one, don’t have a problem with that. Capitalism brought us some great things in the last couple hundred years and continues to do so today. The Internet would not exist in any form today if it wasn’t for the very telecommunications carriers Net Neutrality proponents are looking to handcuff. These carriers must be given the opportunity to thrive and yes, dare I say, “profit� from their services. Without that carrot, development and the new medium to take the place of radio and TV (as you put it) simply cannot exist. Would you argue that the Internet of 10 years ago could support today’s demand? Do you think the Internet of today will support demand in 10 years? I believe the answer to both questions is “No�. Carriers must continue to grow and develop.
One last thought. Doesn’t freedom extend to the market as well as society? The people that manage these carriers are also the consumers of the services, just like you and me. Keep that in mind as you broaden this discussion to South American water supplies.
December 3rd, 2006 at 9:54 pm
While I absolutely agree that the carriers deserve to be compensated for investment in their networks, the carriers do not have anybody\’s interests in mind but their own. Lack of regulation will eventually lead to homogenization of the Internet (if we\’re still able to refer to it as such after at&t has trademarked it). Your argument above misses an important point. What happens when Provider A merges with Operator X? How does the consumer vote with his wallet in that situation? Move house?
December 11th, 2006 at 1:12 am
All fair and accurate comments about the carriers’ interests. As strange it may sound, that’s exactly why regulation is not necessary. The carriers need additional revenue to placate shareholders and that revenue can only come from customers. Even if they generate revenue from content providers, if they lose their customers, they lose all sources of potential revenue. Having them focus on the bottom line without intervention (as in Net Neutrality) forces them to innovate to stay ahead of the competition. The customer wins. They have to.
Homogenization, you ask? How can carriers compete if all they sell are commodities? The only way to grow that precious bottom line is to put out a better product at a lower cost. Only the carriers can do that. Government regulators simply don’t have the day-to-day knowledge of the competitive landscape and emerging technologies that the carriers themselves have.
With regard to mergers, your concern is that these mergers will lead to one monopolistic carrier leaving you a single choice for service. I believe that’s simply not possible. While large carriers have been merging, that’s a sign of efficiency, not a sign of the end to competition. Take judges such as Emmet Sullivan of the U.S. District Court for the District of Columbia who just last week refused to simply rubber stamp mergers just because the FCC already approved of them. Are you saying that not only should we distrust the carriers, but now we should distrust the legislators that we voted for to protect our rights? It looks like you have no faith in the consumer to make good purchasing decisions.
The fact is that broadband is a competitive marketplace. Even if there was only ONE cable broadband provider and ONE telco DSL provider (which will never happen), there would still be the satellite and dial-up service providers, of which there are many. That doesn’t even include new delivery technologies such as BPL, EVDO/UMTS, WiMax, and to a certain degree, the emergence of municipal and subscription-based WiFi services! Consumers have a choice and always will. The beauty of capitalism is that it self-corrects for inefficiencies. Bad carrier decisions lead to such inefficiencies that the market should be able to correct on its own.
So, carriers want your money. They want my money. They want everyone’s money. The only way they’ll get it is to offer a service that people both want to buy and can afford to buy. If they adversely impact pricing plans and quality of service arrangements not only with customers, but also with content providers like Google, Amazon, Ebay, etc., they will put themselves in a position to hurt their own bottom line. While you may not trust them to care about their customers (and I wouldn’t disagree to a great extent), trust them to look after their bottom line, and that can only be delivered by you and me.