Comment by rayiner | Hacker News Reader

Comment by rayiner | Hacker News Reader

I like the idea of net neutrality conceptually, but the ulterior motives of its proponents bugs me. It strikes me as just a way for the Youtubes and Netflixes of the world to get a bigger piece of the pie for themselves.

Consider the basic streaming transaction: consumer tunes in to watch an episode of their favorite show on some streaming service. Several companies are involved in the transaction: the streaming service, the broadband provider, and the content company that made the show. But the consumer doesn't really care about any of that, he's willing to pay $X for the experience of watching that episode.

How that $X is split up amongst the companies in play is the subject of a lot of legal wrangling. Each party has an incentive to try and turn the contributions of the other parties into a commodity. The streaming service and the broadband provider have an interest in weaker copyright protections, so the content company has less leverage. The streaming service and the content company have an interest in net neutrality, because that prevents broadband companies from differentiating their services from each other, and forces them to compete only as "dumb pipes."

It's not clear what the "proper" division of that $X should be. Arguably the content creation is the least fungible from the consumer's point of view. If they want to watch "House" that's what they want, not some substitute. The broadband provision is arguably the most technically complicated and the one that involves the greatest capital expenditure. Distribution is, in my opinion, relatively simple. Computing power and commercial bandwidth are commodities thanks to AWS and the like. So all that differentiates Netflix from Hulu from Youtube is the software. The software isn't easy per se, but it's easier than making a blockbuster movie or building a fiber network. That's why streaming sites are a dime a dozen but it takes the likes of Amazon or Netflix to even attempt to compete with NBC, etc, in developing AAA content.

That's almost certainly why Netflix is getting into the content business, and why Youtube has always been in the content business (through user generated content). That's what's hardest to turn into a commodity.

I like the idea of net neutrality conceptually, but the ulterior motives of its proponents bugs me.

The ulterior motives of the opponents of net neutrality bother me much more. I can't help but imagine a world where companies like Comcast have complete control over the internet. They pick the winners, whether it's the next Google, Facebook, or Netflix. With, of course, Comcast receiving a hefty percentage for allowing said winner to succeed if they don't have complete control over the winners outright.

Companies like Comcast are the internet. Without their massive capital investment in building networks, there is nothing but a bunch of software running on computers that can't talk to each other. Why shouldn't they get to control it however they want?

If the Googles and Facebooks of the world don't want to abide by the terms set by the Comcasts of the world, they should build their own networks. If there are regulatory barriers to doing that, those should be the target of regulatory reform.

If this is how things go, we'll end up with no Internet at all. The Internet exists because of government investment. The Comcasts of the world did everything they could to prevent it from becoming accessible to the typical user. If you value the Internet at all, strong net neutrality is essential.

"The Comcasts of the world did everything they could to prevent it from becoming accessible to the typical user."

How so? Buying a big ISP and expanding it seems like an odd way to do so.

The ARPANET project was great, but expanding it to homes was never in the plans.

Lets do it the other way. Consumers let Comcast use their land, so Comcast can serve them with internet and earn profit. If Comcast doesn't want to give consumers full and neutral internet, Comcast shall not profit from the land.

> Companies like Comcast are the internet. Without their massive capital investment in building networks, there is nothing but a bunch of software running on computers that can't talk to each other. Why shouldn't they get to control it however they want?

Because its not a freely competitive market. They didn't acquire the infrastructure and access -- particularly the last mile access -- by freely negotiating with property owners, nor, even if they had, is there unlimited capacity for new competitors to do so. Incumbent major broadband providers all got the basic access essential to provide infrastructure as CATV and telephone providers, as locally or regionally regulated monopolies, and there is pretty much no way for direct competition with fixed broadband providers on equal footing.

Fixed broadband providers aren't an ideal market for the same reason "road providers" or "sewer service providers" aren't.

> If the Googles and Facebooks of the world don't want to abide by the terms set by the Comcasts of the world, they should build their own networks.

Google's been working very hard on that for many years, because they knew that their preferred regulatory framework wasn't something that they could count on.

OTOH, I don't see why the Comcasts and AT&Ts of the world now ought to be free to capture all the profit from business done over the internet any more than the AT&Ts of the telephone age were allowed to do so for all business done over the telephone.

Clearly that's part of the answer, but I don't think that's the whole answer. While the existing broadband providers certainly did benefit from growing out of locally or regionally regulated monopolies, they haven't been that for quite some time, and much of their capital investment in infrastructure has happened after deregulation. Indeed, I wouldn't hesitate to say that the vast majority of investment in telecoms networks has happened since deregulation of the industry in 1996. Is a blanket neutrality order legitimate for companies whose networks are say 15% regulated monopoly and 85% private?

> Clearly that's part of the answer, but I don't think that's the whole answer. While the existing broadband providers certainly did benefit from growing out of locally or regionally regulated monopolies, they haven't been that for quite some time, and much of their capital investment in infrastructure has happened after deregulation.

The monopoly condition and the public position they had with it is how they acquired a lot of the permanent property rights (easements, etc.) necessary for the infrastructure. That advantage doesn't ever go away, even if the regulated monopoly status does.

And it doesn't change the fact that wireline broadband, because of the physical access requirements, is inherently not a kind of service for which a real competitive free market is possible, for the same reason that it isn't with road networks or sewer systems or electric power delivery.

Sure the advantage of those property rights doesn't go away, but what's the value of that advantage as a proportion of the total private investment into these networks?

> Sure the advantage of those property rights doesn't go away, but what's the value of that advantage as a proportion of the total private investment into these networks?

The value is a substantial barrier to entry to competition -- why even Google Fiber, backed by the vast stockpiles of cash at Google, is often seen as a risky proposition against the entrenched providers and why you see very few providers of actual connections (as opposed to resellers) to those who have access developed as CATV or telephone monopolies.

Because its not a freely competitive market. They didn't acquire the infrastructure and access -- particularly the last mile access -- by freely negotiating with property owners, nor, even if they had, is there unlimited capacity for new competitors to do so. Incumbent major broadband providers all got the basic access essential to provide infrastructure as CATV and telephone providers, as locally or regionally regulated monopolies, and there is pretty much no way for direct competition with fixed broadband providers on equal footing.

Exactly this. To me, it ceases being a property rights issue when the rights given to the carriers were not granted under market conditions to begin with.

Does that give the government the ability to impose on the carriers whatever it wants in an arbitrary fashion? No. But it does mean that there should be some elasticity in terms of regulatory structure.

Seems poor practice to attack the symptom instead of the problem, though.

They shouldn't get to control it however they want because it's not in the best interests of the commonwealth.

Never really thought of that.. this could get Google Fiber to more cities in a smaller time frame.

I think the bigger issue is really increasing competition in markets where cable companies have monopolies. The only way to limit the control of the internet is make sure more companies have a chance to compete.

This should in theory, drive down prices and increase the quality of the product offered to customers.

Your summary of the incentives is not wrong, but I fail to see how it argues against net neutrality. The dumb pipes are basically that. If providing a commodity service, even with local monopoly power, is not sufficiently lucrative to meet the needs of the greater economy, then perhaps we should admit that broadband is, like roads, water pipes, and power lines, a common good that a free market will fail to provide and which therefore needs to either be owned by governmental entities or heavily regulated and subsidized by them.

Doesn't the same logic say it should be ok for a postal carrier to charge more for more valuable items, or for a water company to charge more to luxury houses, or the like? My view is that the broadband companies are natural monopolies, and thus should be required to carry all content equally; there's meaningful competition between Netflix/Hulu/Youtube because customers have a choice, but for many people there's no meaningful competition between broadband providers.

And sure, everyone has an agenda, the companies arguing for net neutrality aren't doing so out of the goodness of their hearts. That doesn't make them wrong.

You're complicating the issue:

1) I pay for the dumb pipe to give me all the internet fluid I care to pay for, regardless of its makeup.

2) I pay either one of or both of the content provider and service for the content.

All of these pieces have to work together. The internet is nothing without content, and the content is ungettable without the internet. A Mutually-assured destruction relationship between these three elements should be quite sufficient.

> I pay for the dumb pipe to give me all the internet fluid I care to pay for, regardless of its makeup.

You're assuming that broadband networks should be a dumb pipe to begin with. Why can't Verizon just decide to get out of the "dumb pipe" business, and say that they won't sell you a dumb pipe, but a pipe with whatever restrictions they want to impose?

> You're assuming that broadband networks should be a dumb pipe to begin with. Why can't Verizon just decide to get out of the "dumb pipe" business, and say that they won't sell you a dumb pipe, but a pipe with whatever restrictions they want to impose?

Why couldn't AT&T do that when they provided pre-internet landline telephone service?

Because AT&T was a regulated monopoly, with all of the benefits that come from being a regulated monopoly (guaranteed rates of return, etc). The net neutrality proposals today amount to imposing obligations on carriers as if they are a regulated monopoly without giving them all the benefits of being a regulated monopoly.

> It's not clear what the "proper" division of that $X should be

Your hidden assumption that X is constant is what clouds the picture. It's easy to see that maximizing competition at every stage is in the consumer interest.

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