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Study Suggests That Keeping The Net Neutral Results In Increased Infrastructure Investment

from the well,-duh dept

As we’ve discussed a few times, we’re wary of putting network neutrality legislation in place, because the unintended consequences of having a bunch of lobbyists and Congresscritters define technology regulations are likely to result in some dangerous outcomes. However, the actual concept of having an open network tends to be a good thing — and, we believe, in the best interest of keeping the internet thriving by keeping an ecosystem that has lower barriers for innovation. The real issue, as always, has to do with competition in the broadband space. In areas where governments recognized that a broadband network is a natural monopoly and then encouraged competition within the network, broadband has thrived. Customers get faster speeds at cheaper prices. Despite this evidence that more competition (and no breakage of network neutrality) helps expand broadband capacity, the telcos (and their lobbyists) insist that without double charging, they’ll have no incentives to increase capacity and the internet will collapse. Of course, there’s plenty of evidence that investment in capacity continues to grow, even without anyone being able to break network neutrality rules.

Now, to add some fuel to the fire, some professors are releasing a paper that suggests that the “won’t invest in capacity” claim is completely bogus — and that when network neutrality is kept in place telcos are more likely to increase bandwidth. It’s not that surprising when you think it through. Without network neutrality, the telcos actually have incentives to keep the “free” layer of the internet slow and painful, because that puts more incentive on various companies to pay that second payment to get into the fast lane. Because, if the telcos just invested in basic bandwidth and everything works fine, there’s no incentive to pay the extra tolls. While the end result may seem good for the telcos, because they get to charge more, it’s actually worse for everyone. It’s worse for consumers who will have a slower internet and in the long run it’s worse for the telcos. Charging that second toll slows down the growth of innovative new services — and it’s those services that provide the demand for the internet in the first place.

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Comments on “Study Suggests That Keeping The Net Neutral Results In Increased Infrastructure Investment”

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Tim Karr (profile) says:

Again Mike. What's Your Solution?

Hi Mike. Posting this challenge to you once more in hope that you will respond.

Again, we at the SavetheInternet.com Coalition are grateful that you are covering this issue. What gets me, though, is your reluctance to commit to a viable solution to safeguard Net Neutrality.

I agree that a broadband marketplace where users have a choice of 8-10 providers would be ideal. But we are far, far from that ideal (more than 98 percent of the market is controlled by phone and cable providers, most all of whom have lobbied against Net Neutrality).

Until we can reach that ideal of diversity of broadband choice, how do we stop this duopoly from going forward with their stated plans to discriminate?

The market failure that we see today is the result of active telco lobbying in Washington – to the tune of hundreds of millions of dollars to craft laws that hand control of the Internet over to the likes of AT&T, Verizon and Comcast. These powerful corporations have created regulations that allow them to horde the market for broadband while cutting out local competitors. Why can’t the public then have simple regulations to protect Net Neutrality against these predatory plans to take over Internet content as well?

You need to elevate your argument beyond these broad swipes at government regulation and take a look at what’s really going on.

Casper says:

Re: Again Mike. What's Your Solution?

I’m rather curious, what constitutes a viable solution? There really isn’t one at this point in time, in my opinion, but there are a lot of things we really don’t want to happen. The two major ideas I hear from people are either the government should take over how the infrastructure is handled, or that each company should have supreme control over their own lines. Quite frankly, neither of those are very appealing. On one hand, anything the government touches becomes willfully inefficient, and we would see the current rate of development cease. On the other hand, if companies have a say in who uses their lines, we end up with issues we have currently, where an entire town has a single option of service because a company moved in and secure the area with their lines. The only way for another company to move into the area is to lease the lines of install a second set of the same structure to support their customers.

In the end there really isn’t a viable option, there are just politics flying around. While it would be great that anyone with a broad band connection could use it with any provider in their area, the plan just won’t work. Who would handle repairs of the lines? Are you going to have 7-10 companies tripping over each other to repair lines for customers? What happens when one company wants to bump up the switch capacity and another can’t match it? What incentive would there be for a company to install more architecture if they know the customers they attract may not use their service? I think this is a very serious problem that needs to have light shed on it and be considered, but I’m not sure that anyone has a truly viable solution at this time.

Sanguine Dream says:

Re: Again Mike. What's Your Solution?

On an almost daily basis we see people on both sides of the net neutrality issue who have resorted to exaggeration, lying, and ignoring evidence that contradicts their own opinion.

It would seem that there is a place for Mike and others like him that don’t try to push a solution into people’s faces but instead simply try to tell the story.

You ask why can’t the public have simple regulation to prevent predatory practices by the telcos. Two possible answers are:
(1.) You yourself pointed out that the telcos lobby to the tunes of hundreds of millions. It’s safe to assume that they will lobby heavily to stop any regulation that would end their predatory actions.
(2.) Simple? Yeah right. Even if the telcos don’t lobby against the regulation the government would add so many back doors a work arounds to any such regulations that they would become sub articles of the Patriot Act. If the government comes to regulate Net Neutrality it’s safe to assume they would try to regulate the internet itself for the sake of “protecting the children” or whatever the popular issue is at the time.

Before a viable solution can be though of the situation should be looked at from several angles. Rushing to a definite yes or no on government mandated net neutrality regulations will lead to unforseen problems down the road. It’s easy to offer a shortsighted solution but it’s quite another to stop, think, and then come up with a solution.

Scott Cleland (profile) says:

Re: Again Mike. What's Your Solution?

Mr. Karr,
I respectfully suggest that you follow your own advice and “elevate your argument beyond these broad swipes” at broadband companies.

You are still using an aging and old 98% number, if you would only read the last FCC broadband report you would note from Table 1 that competitive alternatives to DSL and cable have 20% of the high speed market. This is a dynamic market where in the first half of 2006, 58% of new broadband additions were wireless broadband and not DSL or cable.

You derisively spit out the word “duopoly” thinking that because it has an “opoly” in it — it is bad. You never share the fair perspective that dial up was a monopoly but that cable challenged and beat DSL in market share and that the US has more wireless broadband investment and competition than any other country — and somehow this obvious trend of increasing competition is either not happening or not a good thing.

Moreover, you are moving the goalposts and saying that you have to have 8-10 competitors for their to be competition. Well the facts are that we are getting there… there are that many in the bigger markets and more players entering. I won’t be surprised when you feel the need to move the goalposts again and say we need 14-15 competitors before you admit competition may work.

The “solution” you are proposing is that Government is superior to markets and consumers in sorting out technologies, products and services. Net neutrality is just a smokescreen for abandoning competition and consumer choice for the infinite wisdom of bureaucrats.

Scott Cleland

oh21 says:

Clueless SOS

Inbreeding of corporatist and politicians make for a functional self-serving marketeer government, which is very good for some. Remember gold pays, good will cost nothing, self-serving benefits me/I, why should someone like B.G./G.B./D.C./… suffer when many can be serviced for the betterment of televangelist, politicians, and corporatist.

Net-nepotism has already been purchased for US, EU … others … the politicians will formalize/legalize this Privateer and/or Buckaneer venture just like the past many many other high-treason/thieving ventures. Remember always for the betterment of US, EU … is never we, you …, by law it is always them (post financial transactions).

!HAVEFUN! give-up-don’t-worry

“Reality is self induced hallucination.”

Tim Karr (profile) says:

Again Mike. What's Your Solution?

Mike isn’t “simply trying to tell the story.” He’s not a straight news reporter he’s an editorialist.

He’s offering intelligence and insight to the issue and criticizing approaches to a solution. I respect his views but think he needs to get beyond the simplistic idea that all government regulation is bad.

The Internet (and all of our media) is the byproduct of regulations. Without public involvement policymaking, we’re subject to the bad regulations that are dictated to Congress by the phone and cable companies.

WITH public involvement in the process we’re can craft regulations that foster a better, more open and innovative Internet for everyone. Don’t believe me? Look at what we’ve accomplished thus far.

The phone companies are actively engaged (spending hundreds of millions of dolars) to craft bad regulations and lobby aggressively for their passage. That’s what they do in Washington.

Companies like AT&T, Verizon and Comcast aren’t champions of the free market. They are champions of regulations that protect their monopoly control of markets, eliminate competition, and maximize their profit margins.

Who gets screwed by their regulations? That’s right, you and me.

We at SavetheInternet.com are simply lobbying for regulations that are good — that protect free speech, economic innovation and REAL competition on the Internet.

Those of you who buy into the telcos anti-regulatory screed are simply being fooled into thinking that they aren’t the heaviest — and most damaging — players in strong arming through regulations that hurt us all.

The sooner people wake up to this reality and take action to defend a free and open Internet, the better.

Mike could help lead the way.

No exaggeration. No Lie. No distortion.

Casper says:

Re: Again Mike. What's Your Solution?

Wait a minute Tim, everything you said was great, but it wasn’t really a viable solution. You just presented a concept of a proposal. The real questions are still up in the air. If the government forced all companies to share their lines with each other tomorrow, what do you think would happen? Do you think suddenly everyone would be happy?

All that would happen is companies would pass service requests back and fourth because there would be no clear idea of who should fix what problems. What happens when I line goes down? Who fixes it? If Verizon needs to upgrade a system and it knocks Comcast customers offline, who’s fault is it? If Comcast customers are eating all the bandwidth, do Verizon customers just have to live with a slower connection? Who controls the MAC lists on the routers? Do the companies have to just pass a sheet of names around so they know who’s customers are on what and connecting through what lines? Are the lines shared, but the routers independent?

It’s great to want to work toward a better future, but at some point you really do have to step back and take a realistic look at the problem. This is not just a matter of telling companies to play nice, it’s integrating completely different entities. The amount of money that you are talking in a retrofit for a single state is astronomical, and guess who pays for it? Yeah, you and me. I would love to see this happen, but there needs to be A LOT more thought about how it would really work rather then just activism against the current system.

a says:

Save the internet? Thats pretty funny.

The issue is one of lack of providers in the bandwidth space. My solution is for all the people who want to save the internet is to band together and become a pipe owner. You are free to enter into the market, so put your money where your mouth is. Invest 23 billion dollars in laying fiber and you can ensure that consumers are protected. Buy up some spectrum and profide WiMax.

Instead, you ask someone else to pay 23 billion dollars for that same network, but want to tell them what to do with it. OK, lets get the government to do it and provide it to all, that sounds good right? Lets get the taxpayers to pay for it (cause Muni-Wifi is going so well, right?)

Tell me “save the internet” just what is wrong with the internet to date? What indications are there that the internet needs to be saved?

Charish says:

Solutions? Don't buy them.

Tim, it’s an admirable effort of what your organization’s trying to do. However, a “viable solution” isn’t something you can ask for from someone who is just telling facts. In case you haven’t noticed, in today’s society there is no way to get a solution in an argument without everyone shaking their rattles and whining and calling for Mommy Sammy (a.k.a., the government). Hell, even the politicians are talking gibberish to each other in Congress and all those nice federal departments.

What gets me, however, is your method of fighting against the telcos in this matter… lobbying. Now, I don’t know about the other people in this thread, but I absolutely loathe the idea of lobbying. No, not loathe — abhor it. I know it’s a hard thing, but instead of letting money talk, maybe get the rallying outcries of the people on your side somehow (I’m no expert at that sort of thing, so please don’t ask me for a solution) and bring them to Washington. I’m quite sure that the politicians can’t exactly fend off a good chunk of a 240 million person population with rolls of Benjamins in there hands.

Good day.

Casper says:

Re: Read This

If everyone shared systems, do you think it would be faster? I’m just trying to gauge your background in information technology… a lot of what your saying sounds nice, from a political perspective, and like hell from a IT perspective. I for one do not want more people using less infrastructure. Even if Verizons lines are slower then Comcasts, Comcasts sure as hell won’t be faster with a greater amount of traffic. So once they are free to pick and choose, do you think they will ever install more lines to speed things up? If every company is equal in performance, do you think that they will look forward to spending millions of dollars to improve architecture that helps their competitors as well?

I understand your very broad message, but all the gray area in the middle is what worries me.

a says:

I agree, competition is the problem. There are not enough companies willing to build out a network to provide competition.

Wonder why that is? Do you think that limiting the pipe owner in their attempt to monitize their investment would encourage others to try? Really? Do you think technology advances won’t make it a moot point anyway, considering the future of BPL, wireless, etc? Couldn’t regulation actually limit future innovation?

Tim Karr (profile) says:

Blind Eyes and Bank Accounts


Seeing as how you work for broadband companies (pity you forgot to mention that once again), it’s little surprise to see you rushing to their defense.

They ARE disserving of scrutiny and scorn, but I wouldn’t expect a paid apologist like you to adopt any other tone but praise. Don’t take it from me, read Cory Doctorow’s take on the damaging influence companies like AT&T, Verizon and Comcast have had on the U.S. broadband market.

Then go to Richard Hoffman’s report over at InformationWeek, which decisively skewers a lot of the industry spin that you hold so dear.

I’m sure you have read these but, again, I don’t expect you to admit that the marketplace failures they report on have resulted from a regulatory climate controlled by phone and cable lobbyists — you know, those same companies that pay your bills.

Again, it’s easier for you to turn a blind eye and regurgitate FCC data that has been widely disparaged by almost every independent technology analyst in the business – including Mike here at Techdirt.

Good work Scott. Stick to the party line. The check’s in the mail.

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