Net Neutrality and the Oil War

These aren't analogous at all. The situation that Net Neutrality is about preventing involves four parties: a website, a comsumer, the website's ISP or datacenter, and the consumer's ISP. Call these W (website), C (consumer), D (the website's ISP), and I (the consumer's ISP). There are network connections between these parties, and the graph of who has a network connection to who looks like this:

    W---D---I---C

The website and the consumer each pay their respective ISPs for connectivity. Those two ISPs typically have a connection between them, in an arrangement called "peering". If they don't, then instead they will both pay a third ISP (a backbone provider, B) to bridge the gap. So the graph of who pays who for network connectivity looks like one of these two arrangements:

    W-->D   I<--C
    W-->D-->B<--I<--C

If the connection between W and D is too slow, then W pays for an upgrade. If the connection between C and I is too slow, then C pays for an upgrade. If the connection between D and I is too slow, then D and I haggle over who pays, under threat of losing business from W and C.

Now suppose a I, a consumer ISP, decides to block or slow down traffic coming from W. The key fact of this situation is that in the original state of affairs, there is no business relationship between W and I. The website only has business relationships with C and D. Basically, I is threatening to sabotage W's relationship with C, by degrading C's service, unless W pays up.

Mike Masnick had an interesting article about the solution being competition, too:

http://www.techdirt.com/articles/20140115/15035825890/losing...

I think there's a good argument for making the Internet be an utility like electricity is, but I think that also means there won't be anymore competition effectively (at least in terms of deployment), and they will upgrade their networks much more slowly. So the money for upgrades might have to come from the government (which actually did happen already, but with few results:

http://www.pbs.org/cringely/pulpit/2007/pulpit_20070810_0026...

That being said, we also can't just say "let the free market deal with it", because right now there's no free market in the broadband space. ISP's have managed to basically outlaw competition from their areas, so before we even begin to accept the idea of "competition is the solution, not regulation", then we need to actually make that true, and make sure all such restrictions against new entrants are lifted, and generally make it much easier for new competition to appear and exist.

If it becomes super easy to move from one ISP to another the moment one of them pisses you off, and there are at least several good choices, then this could work.

It would be nice to put together a spectrum of possible outcomes if net neutrality regulations were completely repealed. Here's what I think.

Peer-to-peer file sharing is gone or throttled way back. ISPs have no reason to support it since it takes up so much bandwidth and there are no stakeholders with enough money/clout to fight back.

Microsoft starts paying carriers for QoS for Xbox to use it as a differentiator against Sony. Maybe they try a similar tactic with Skype but maybe the carriers don't want to go along with that since they have their own voice offerings.

I don't think streaming music services are affected at all. The bandwidth is so low and it's relatively insensitive to latency. It seems like it would be excessively cruel for ISPs to seek out and block arbitrary streaming services.

Maybe video is different? Perhaps they could charge video services (Youtube, Amazon Prime, Netflix) slightly more for high def streaming to subscribers.

Sports. ESPN already has a sort of self-imposed reverse net neutrality thing with ESPN3. Hard to see much changing there. I don't think there really any VC backed upstarts here to speak of either.

> Suppose you want to compete with Amazon, and you want Amazon to pay the same UPS rates you pay. It may make sense for Amazon to acquire UPS, or build a competitor to achieve rates that are more natural at their scale. [...] Vertical integration like this isn’t necessarily anticompetitive. Amazon, for example, runs AWS, but doesn’t appear to have engaged in anticompetitive practices with prospective competitors who run on AWS. Nevertheless, the scenarios above could be more undesirable for competition than the initial unregulated scenarios.

The article resume is "don't be pro regulation, because X company might acquire W company and create a vertical company?", because that is really not smart.

If it makes sense for Amazon to acquire UPS or run it's own courier, since it's not illegal to do so, be sure that it will. The Net Neutrality has nothing to do with this. Corporations don't do any favors, last time I checked.

According to the author's reasoning we should let any bill pass by, because hey if we push hard on the other direction, only God knows what other solution might find corp-X to make money, better the devil you see and we could go on like this for ever.

Hence:

* We should leave the NSA do it's job, because repercussions of our action - of protesting - might be grave!

* We should have accepted the DRM on mp3s, because Sony might buy an ISP.

* etc, etc, etc...

> Sure enough, Microsoft arguably did become complacent, and that resulted in the well-documented shift in power from Microsoft to Apple and Google. Anyone seen an antitrust discussion centered on Microsoft recently?

Microsoft was under DOJ scrutiny[1] up until 2007, and that's the timeframe when their competitors grew surprisingly strong. Coincidence?

[1] http://www.justice.gov/atr/cases/f201200/201205a.htm

If you're running the pipes:

1) Charging more/less by VOLUME? = OK.

2) Charging more/less by CONTENT? = NOT OK.

The article misses that critical point.

And, yes, an even better solution is competition in ISP space.

But, we need to get money out of politics for that to happen, so we can't hold our breath!

(For example, big ISP's have bought senators to block cities from running their own free wifi networks, passing state laws prohibiting municipal ISP's!)

Interesting article, although right when I thought we were going to get to some interesting suggestions, the article ends.

So let me finish it for him, what we need is more dynamic and realistic competition in the last-mile ISP business. I believe point to point high-frequency bandwidth can help solve this problem. Metropolitan fiber with sub-leasing capacity to ISPs that carry the traffic is also an option. But the natural monopoly position of last-mile wiring has always been a major issue. Hence regulation of phone companies.

In dense cities with irregular geography, the wireless line of sight can work. Eg: Webpass, monkeybrains in San Francisco. In flatter cities, this may not work as well. In less dense areas, the installation cost usually means a natural monopoly, but towers, line of sight wireless may help there.

The problem is all the LOS wireless stuff has been more of a bespoke solution rather than a scalable one. Tech has helped reduce the hardware cost, but tuning and aiming antennas - does this work for a city like, say, St Lewis?

Net neutrality basically says, these are the legally acceptable network protocols and architectures. It inevitably requires a specific technical definition of acceptable traffic patterns and network uses, either by Congress or by case law.

So much of what we think about neutrality is based on a hand-wavy assumption of natural monopolies, that our current lack of last-mile competition is inevitable. At different times, we thought the same of package delivery, voice calling, sending messages. The things that obviated them were not obvious, a la “faster horses”.

Thought about this way, neutrality legislation actually locks in the incumbents’ current arrangements instead of opening them to (so far unimagined) asymmetric competition.