David Isenberg is worried that I’ve been turned by the telecom borg into a fan of telcothink. I can see why he’s concerned, but I’ll try to explain why I don’t think it’s a problem.
Network Neutrality entrenches the current status quo in the US. The conditions in the US are unique to that country; no other has a comparable market structure and regulatory environment.
Here in the UK I subscribe to Zen Internet. They block ports 135-139 on TCP and UDP to exclude Microsoft LAN file-sharing protocols from operating across the WAN.
And I don’t care.
Zen caters specifically to people like me who value a high-quality Internet connection and are willing to pay a small premium for unfettered access and quality customer service. If no ISP offers truly “unfiltered” neutral Internet connectivity in the UK, it’s because there’s no demand for it. Why campaign for something that the public by its actions has expressed no desire to have?
There are better remedies to failed telecom competition laws than Net Neutrality. The most obvious is to simply copy the rules from somewhere else that has cracked the problem. Plenty to choose from higher up the list! I suspect that this will be too hard a pill for my American friends to swallow, so they’ll just have to continue with their disease until he symptoms worsen and the bitter medicine tastes less foul.
Personally, I think it’s wonderful that SBC’s CEO falls asleep at night wondering how he can get Google to pay for his pipes. This is precisely the kind of creative business thinking we need! Yes, they are HIS PIPES — at least colloquially, as I’m sure the shareholders have an opinion on who actually owns the business. If he can find new ways of funding them, whoopee!
The problem is that he can possibly make such price increases stick because he’s established significant market power by ensuring the rules preclude real competition.
More radically, you could try to seed a new “open” Internet via a General Peering Agreement which, much like the GNU General Public License, would agglomerate an ever-bigger pool of openness. That said, it isn’t easy to see where you would start now to achieve this. It would have been a slam-dunk 15 years ago when most of the Net was the wiring between universities and a few early entrants like Sun Microsystems.
Another alternative would be a radical approach that would allow customers to “opt out” of Bell hegemony and reclaim ownership of their local loop at regulated rates. A more extreme form of unbundling — one which could even be done at the exchange level. Imagine receiving a ballot card which would allow all the users of an exchange to select one wholesale provider! Now that would generate some business on K Street.
Freer rules on unlicensed spectrum would help those who dream of a wireless mesh future bypassing access bottlenecks. And so on. In fact, pretty much anything apart from Network Neutrality, please!
Ultimately, if the customers really only wanted TV with a ‘buy’ button and that’s all the market was capable of delivering, then yes I’d be in favour. But as David notes, the “market” doesn’t really exist in the US. The problem is that blanket Net Neutrality rules will make things worse, not better. It’ll eliminate the bottom end of the ISP market by preventing price discrimination, and these people will be attracted to the more price-discrimination friendly IMS world. Not the outcome we desire.
Call me a Hayekian or Chicagoan, but I really believe that the price mechanism is important, and that it’s vital that monopoly rent price signals be allowed to be sent. How else do you ever expect to attract new capital to create competition?
The time to apply Network Neutrality rules is this: an incumbent with monopoly or duopoly power in the connectivity market also offers an application service like email, voice telephony or TV. Only then do you have cause to ensure that the application market remains open. (You’ll need some small print to deal with cases where it’s an affiliate who stands to gain and pass the money over through the back door; e.g. an SBC-Yahoo! deal which excluded rival portals.) All other forms of price discrimination are legit.
As mentioned before, there’s also the issue of truth in labelling when people buy “Internet access” or “broadband”. That needs to be dealth with separately too.
If you’ve got cancer, you’ve got to take the chemotherapy. The morphine is only there to relieve the pain, not to make you better. Sorry for the unpleasant diagnosis, but that’s the way it is.
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As a veteran on the losing side of the telecom wars and an unabashed fan of Austrian Economics (http://www.mises.org) I believe you are absolutely correct.
Posted by: at November 17, 2005 07:24 PMAs a veteran on the losing side of the telecom wars and an unabashed fan of Austrian Economics (http://www.mises.org) I believe you are absolutely correct.
Posted by: at November 17, 2005 07:25 PMYou've got a point, and it may be a good one.
I certainly would not want to see regulations that limit what a small competitive provider can do, so great care must be taken in mandating such things.
It's also certainly true that monopoly price-gouging has opened up market opportunities. But even without that, consider the boost that technology can give to those opportunities. That last-mile monopoly could be a lot more tenuous than most people think, considering that a WiFi access point costs U$50 or less, versus U$100K for a cell site. If you want to know where a General Peering Agreement could get a foothold, try the average Joe who would be glad to share his WAP in exchange for guaranteed reciprocal access. Relay points could easily bypass the landline monopoly to competitive access providers.
Posted by: at November 17, 2005 08:30 PM