by Mike Masnick

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.

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  • identicon
    Anonymous Coward, 16 Jan 2006 @ 12:32pm

    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.

    reply to this | link to this | view in chronology ]

  • identicon
    Paul M, 16 Jan 2006 @ 2:30pm

    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!

    reply to this | link to this | view in chronology ]

  • identicon
    Dusty, 16 Jan 2006 @ 9:13pm

    Easy solution

    Google can just blacklist SBC ip addresses.... no more searches for any of their customers...

    Or... Rather, Put up a page that says "We'd love to help you search, contact SBC here: xxx@sbc"... See how long it would be until SBC realizes that they still have to listen to the customers' best interests.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jan 2006 @ 5:58am

    No Subject Given

    Send a message to these telco's which have always acted on nothing but GREED. Drop their crappy DSL and upgrade to cable.

    reply to this | link to this | view in chronology ]

    • identicon
      david, 20 Jan 2006 @ 3:54pm

      Re: No Subject Given

      telcos still own the backbone, cable needs to connect to the telcos backbone to provide connections to the net

      reply to this | link to this | view in chronology ]

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