Forget Net Neutrality: Just Take The Networks Away From The Telcos

from the root-for-no-one dept

Slowly, but surely, people are starting to figure out what's really going on with the network neutrality debate. While some of us have been trying to point out that the network neutrality debate is only clouding the real issue concerning competition in the broadband space, too many people have been focused on which side of the ridiculous debate you're on. However, both the telcos and the internet companies have been feeding the public exaggerated propaganda that continues to obscure the real issue. Hopefully the tide is turning. Last week, Tom Evslin wrote up a great summary of the situation, pointing out why both sides were lying and how competition was the issue. Now, Andy Kessler has matched him with a fun opinion piece for the Weekly Standard explaining why you should root for no one in the net neutrality debates. He points out that the telcos have to push against net neutrality, because otherwise their business model collapses -- an argument he made a few years ago when it came to line sharing (the lack of which has obliterated what little competition there was in the broadband space). Kessler goes on to knock down the telco supporters' favorite argument about how they'll never invest in new fiber without a guarantee of a profitable business model:
"Forget the argument that telcos need to be guaranteed a return on investment or they won't upgrade our bandwidth. No one guarantees Intel a return before they spend billions in R&D on their next Pentium chip to beat their competitors at AMD. No one guarantees Cisco a return on their investment before they deploy their next router to beat Juniper. In real, competitive markets, the market provides access to capital.
So, what's the solution? Kessler comes up with a modest proposal of sorts, that is amusing to read, but which will never play in Silicon Valley with its libertarian focus on "property rights." He suggests yanking language out of the Supreme Court Kelo "eminent domain" case -- and using that to argue for taking over broadband networks from the telcos (a situation for which there is some evidence that better broadband can be delivered). His point, satirically enough, is that if the threats are made loudly enough, it could freak out the telcos just enough to generate some real competition in new networks. Instead, though, we're left with arguing about silly side arguments backed up by musicians who have no clue what they're talking about. Suddenly, arguing for eminent domain over telco networks doesn't seem quite so silly...
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  1. identicon
    Scott, 19 Jun 2006 @ 5:51am

    Re: That's plain stupidity

    "Doesn't Netflix have a competitive advantage by locating DC's near a post office and (I believe) paying some sort of fee to get priority services in return for only using the USPS? Why is this any differernt than soemone paying for prime delivery over a broadband pipe?"

    You're central argument is flawed. The post office is one giant "network". There are not 100 post officess to pay to get your mail from point A to point B.

    Let's say Google uses Verizon, they would have to pay Verizon for priority there, and TWC for priority there. They would have to pay Comcast, Covad, AT&T, DirectWay, Cox, Adelphia and the list goes on for access to each of their networks. This would fragment the net horribly, end up compacting the already miserable number of players, and make the net useless.

    Now if there were 10 smaller ISP for every major metropolitan area, this may not happen. But the Telco's will just rewrite the DSL contracts with all the small players that they have to accept their prioritization and there is no competition again.

    The NN debate would slow down what I already have access to. I 'PAY' for 5Mb service to my house, therefore if I am not going to be able to access content I want at that full speed(where it is available), then I should pay less. Google pays for a connection that theoretically can handle that 5Mb connection, TWC should not be able to limit me to 1Mb because Google could only afford to pay Verizon and AT&T.

    The USPO does not charge a company more per piece when a company starts to overload them, they charge more for the bulk postage. So the carriers need to charge more to the "bulk" data houses.

    Lastly when the USPO gets bulk mailings they charge bulk rates, so they actually ship more physically, the company pays less per piece. But with data, you ship more, you pay more?

    The point is the telco's have oversold their capacity so vastly they can not do business anymore and want us to bail them out. I say they need to increase capacity so they can provide what they offer and charge for.

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