Network Neutrality And Natural Monopolies

from the follow-along-now dept

In the last few months, the telcos have become especially bold in asserting their rights to do away with network neutrality, and create special tiers of service, where providers have to pay them to reach internet users. It’s no surprise that they want to do this, even if it is clearly double charging and decreases the value of their network. It’s the telco mentality, and the only reason they’re able to do it is because the FCC has more or less done away with any attempt at building real competition. Broadband Reports points to a post by Larry Lessig about the importance of real competition and network neutrality in our networks — a point echoed in a New York Times article as well. As Lessig points out, “Broadband is infrastructure — like highways, if not railroads. If you rely upon “markets” alone to provide infrastructure, you’ll get less of it, and at a higher price.” That’s rather simplified, but is mostly right. The issue isn’t that it’s infrastructure — but that the infrastructure is a natural monopoly, where the effort to build more than one of the same style of infrastructure does more harm than good, and the value is only in having the same infrastructure reach far and wide (network effects).

For example, look at the highway system. It makes little sense for private entities to compete to build multiple highway systems to “let the market decide.” There may be some cases (private toll roads) where you can add to the natural monopoly, but the core needs to be built only once and then open to all. The same argument can be made for broadband. Have one full fiber system built (not the limited stuff the telcos are working on now) and let private companies compete using that network. If companies want to opt-out and offer a different kind of broadband (say, wireless) then that’s their decision too. But, without that real competition we get the messy process of the telcos building a limited network, at high prices, where they attempt to control every bit of it and charge extra for it. In other words, more expense and less infrastructure. The NY Times piece linked above points out what we’ve said in the past, that this attempt to charge extra for what the broadband providers promised us (unlimited broadband) simply shows that they’ve been unable to deliver on their own promises — something that broadband providers in other countries have been able to deliver on. Lessig points out that bandwidth for dollar we get in the US is well below other countries that have open networks, but it’s even worse than he states. He uses the $15/month DSL number, which AT&T is suddenly promoting again after dropping it late last year. However, as a customer of their DSL (I’d go elsewhere if I could, but I can’t because… yup, there’s no competition at my home, right in the middle of Silicon Valley), I can say for certain that after the promotional rate runs out, they jack up the prices to ridiculous levels (in my case, it was $60/month including all the various fees). Add to that the $15 for a bundled phone line I don’t want, don’t use and can’t unbundle, and suddenly I’m paying $75/month for slow broadband from a company that wants even more money if I want to use VoIP or a search engine.

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Network Neutrality And Natural Monopolies”

Subscribe: RSS Leave a comment
Anonymous Coward says:

Encouraging Competition in a Monopoly.

Perhaps the solution might be to have different
suppliers to provide the service in different areas.
But, to allow competition – allow the customers at
the boundraries to switch supplier say once a year.
So if A us much better value than B then B customers will switch to A, glowing A market and increasing A profit? (Perhaps even have B required to hand over control of hardware to A.

I have some problems with this suggestion – I am looking for a better way to have competition without duplicating the networks. )

The other problem is to ensure that the suppliers do not price fix. Comments welcomed.

Paul M says:

double charging

the fact that this is not making major waves in the USA amongst consumers shows that many people do not understand the internet.

to bend an analogy, it would be like the Post Office charging a rich corporation for receiving your letters when it wouldn’t charge the small company or residence next door; or a toll road which charged Ikea for vehicles travelling to or from them even when the road didn’t actually take you there.

so, if the DSL provider subsidised their services by getting a cut of google’s revenue and thereby passed it on to you, the customer, would you be so unhappy?

how about more intrusive activity? What would you do about this:
if your ISP started inserting their own banner adverts into web pages you downloaded?
if your ISP added watermarks/advertising over images downloaded or uploaded, or even an advertising audio stream?

it’s the long and slippery slope, don’t let them even get started!

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...