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
    Jeff, 19 Jun 2006 @ 6:08am

    Re: That's plain stupidity

    I have brought this up before but have yet to see any response, Net Neutrality in the current form being debated would eliminate a service providers ability to enter into an SLA which could l have a great impact on the business economy. For example, when a service provider signs up a 10 facility auto dealership they sign an SLA ensuring a certian quality and uptime between the delaerships. To do this the service provider must provide priorization for certain data on the network.

    SLAs are crap. The individual consumer who signs up for a TCP/IP pipe into her home should expect the same level of service as a big corporation. The fact that big corporations pay for SLAs says more about the implied shaft given to individual consumers. If the networks were more bulletproof, big corporations would not need the protection of a SLA and the individual consumers would be getting superior service. One supposed benefit of network neutrality is that competition between service providers could lead to just such a more bulletproof network as competitors strive to create better and better networks.

    VOIP is another example of prioritzation of packets. How many consumers are willing to give up quality voice service so that 5 year olds across america can play on with quality bandwidth? Nothing of course against 5 year olds or Nick Jr.

    Again you miss the point. You're looking at it in terms of scarcity of resources. Much like the argument that the well-off people are taking an unfair piece of some static "pie" and that the poor folks are getting much less. Another assumption of network neutrality is that as the network improves, the pie gets bigger. Meaning we're not talking about scarcity of resources, we're talking about improving the resource. Look at it this way. The best network is one that is robust enough to support lagless VOIP --AND-- kids on Nick Jr. or whatever. (And yes, for the seriously technically inclined, I am purposely avoiding the argument here that Nick Jr. web pages require vastly less bandwidth than your average VOIP phone call.)

    And finally why should the internet be any different than anything else in America? Do all comapnies get the front cover advertising page? 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?

    Ummm... Sure the Internet started as a US military project. But it's a little bigger than that now. There's some very valid arguments against the issues you state, but your examples are so US-centric I'd like you to restate your question a bit in terms of " the world" vs. " America" (by which your examples seem to imply the US, forgetting about the rest of the Americas that comprise the Western hemisphere). Try to find some global examples of what you mean. As you struggle, realize that is part of the point. The Internet is bigger than any one country or its customs, culture or economy.

    I think the big issue that is totally missing from the debate is the fallicy that "everyone business can be equal on the web" which started in the 90's to get companies to open websites. I mean think about it, can a small bookstore really compare with Amazon? Of course not. Why? Well lots of reasons bur for one because Amazon can spend far more money (which means take far bigger risks) than others on advertising, search engine placement, etc.... What I cant understand is why premium placement of an ad is any different than premium delivery of a service?

    It's different because it's not a tangible good. Which doesn't mean it doesn't have tangible benefits. What does this mean in terms of business? The Internet itself is NOT an end product. It is merely a tool. This is not to say that tangible electronic-media end-products cannot be created that use the Internet. Just that the Internet itself is not the product. Go from there on your delivery analogy and it unravels further.

    And finally "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.

    True but in the examples given for the most part none of these companies need to worry about the gov't taking steps to completely turn their business models upside down. Can anyone imagine the outcry if Intel designed a chip that is so far beyond anything available today and than the gov't steps in and says "You cant only sell that in high end machines at 2k plus since that would mena the masses could not affort it. Instead you must sell it at a lower price." The entire investmetnt market would dry up in a hearbeat and the stock market would crash. How is the net neutrality debate which at its core is focussed on "best effort vs prioritized packets" any different?

    Again some would argue that this is exactly the type of situation network neutrality would fix. Your example uses the current-network situation where telcos can soak business customers for more money because they are using more bandwidth, because bandwidth is a scarce resource. If the network "pie" were big enough that bandwidth was not the scarce resource of the network, then companies would not need to pay premium charges for "high" bandwidth.

    Unrealistic, but let's dream a little. Consider what would happen if suddenly today we decided that all of the world's Internet traffic only took up of 50% of any telco's bandwidth even at peak times on the most congested segments of its network. Meaning, what if the network was so good that the telcos didn't have to worry about keeping "extra" bandwidth for network stability issues? Under the current setup, the telcos could still soak businesses for "high-bandwidth" connections or increased used of the network. In such a world, if network neutrality existed, businesses could just choose a service provider that charged them the same as any other individual network user. Arguments that businesses would be "hogging" bandwidth from consumers at the consumer rate would be null and void because bandwidth is no longer a scarce resource. Arguments that poor consumers need to have a subsidized resource are moot because network connectivity would be cheap enough that everyone could afford it. Perhaps this is a bit utopian, but I don't think we're too many years away from such a reality.

    Technology goes through waves where different parts of the system are more scarce or plentiful than others. Sometime network bandwidth will be a less scarce resource, and the scarce resources will be in terms of whether someone has a slower or faster computer connected to the network. Meaning, perhaps individual consumers will not be able to afford business supercomputers, but both business supercomputers and individual computers will be able to share the same network without any thought of crippling the network.

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