Jeff Pulver is frustrated at the apparent port blocking antics in his London hotel. He looks forward to a day when he can screen his accommodation search to those who subscribe to the four Net Freedoms. Namely:
From a UK residential perspective, the whole debate sometimes looks like a quaint parochial American thing. Isolation of the local loop bottleneck by the regulator has done wonders here. I have a choice of different access suppliers in my street, a choice of dozens of retail suppliers on BT’s wholesale DSL product, and a choice of several unbundled loop providers (with the number of choices increasing fast). Whilst the UK is not a connectivity nirvana, the only net freedom that counts is the last one — in making such complex choices.
For example, my ISP blocks ports 135-139. Do I care? Not at all. They’ve judged that the geek market they serve sees this as a security benefit, not an imposition. If I didn’t like it, I’d be off in a flash.
Anyone who thinks they can ravage the residential customer and get massive rents in the UK market by port blocking is just plain nuts. The answer to net freedom problems is, by default, competition. Indeed, in a competitive market, the first three “freedoms”, if externally imposed, are damaging. They prevent the healthy price discrimination that enables markets to extend downwards into sub-prime segments. Well-meaning regulation could esaily turn the Net into a middle-class ghetto. (Democratic needs for universal access to “speech” facilities are a different issue, and shouldn’t be bound up in this part of the debate over commercial terms.)
The above argument doesn’t necessarily apply to the market that Jeff is experiencing. Jeff wants a bed for the night, first and foremost. Connectivity is, even for the nerdiest of us, ancilliary (I hope). The problem is one of transaction costs and externalities. Why do we have consumer protection laws, for example? Why not just allow everyone to negotiate whatever terms they like?
There are search costs in finding a supplier of a hotel room or connectivity. In most markets the majority of suppliers offer basically similar commercial terms, even if the products and pricing vary enormously. Just look, for example, at the ease with which you can return unwanted goods to stores in the USA, even when no law mandates it.
Once you reach a certain supermajority offering the same terms, the minority then start to impose a search cost on the market. Do I need to check whether this contract stipulates that all legal proceedings must be initiated in Vanuatu on a Tuesday? We impose universal consumer rights to overcome co-ordination and search costs, particularly those where one party is imposing additional burdens on others.
In this case, the terms “broadband” and “Internet” for short-term access should be taken to imply the net freedoms. No exceptions or small print. You can’t disclaim the ability to sue for negligence in a contract. You can’t create your own definition of “Internet access”, in an Alice-in-Wonderland “it means whatever we choose”.
For peripatetic connectivity the search costs are particularly high. You need to physically travel about to experience the connectivity on offer. You move often. Therefore it is reasonable to apply ex ante regulation on this sub-market.
Net freedoms are just means to ends, not ends in themselves.
UPDATE: …and just on cue, here’s what you get when you have a competetive access market. Deep packet inspection? No problem, as long as it isn’t being forced on you or done without disclosure.
Posted by Martin Geddes at 05:06 PMTrackBack URL for this entry:
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Hey Martin, you mean "Jeff Pulver" not "Jell", right? :)
Posted by: at August 23, 2005 07:02 AMFixed!
Posted by: at August 23, 2005 09:02 AM