Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
The Knave Detector
I recently read a comment that Marx is useful to us because his philosophy allows us to easily identify fools and knaves. I’ve personally observed that the net neutrality debate is useful for much the same reason.
The FCC is currently considering a proposal that has many up in arms. Consider this, from the activist group SumOfUs:
Comcast, AT&T, and Verizon want to control what we can and cannot do online — and they’re about to get their wish.
Their lobbyists and lawyers have taken over the FCC — the agency meant to keep them in check. Now, the former lobbyist running the FCC is about to announce new rules that will kill Net Neutrality — the rule that stops Comcast, AT&T, or Verizon from deciding which sites you’re allowed to visit.
Does Guinness track the maximum number of errors that have ever appeared in writing for certain word counts? If so, the above statements are clearly in the running for the 75 word or less category. Rather than list them out in a fact-checking exercise, I’d like to ask some questions of those passing this drivel around on social media.
Why would Comcast, AT&T, and Verizon want to control what you can and cannot do online? Are all of these companies run by fascists who wish to force a specific world view on us? Are they run by puritans who are going to do away with porn? What could the aim of these for-profit companies possibly be?
What if — and I’m just spitballing here — their motivation was simply profit? What if they don’t care at all what you do online as long as they can make money providing you with internet access? What if they are having trouble adding bandwidth fast enough to keep up with demand, and are desperately looking for solutions aside from doubling the rates they charge their customers?
As you can see, internet usage is doubling approximately every two years, driven largely by an ever-increasing amount of streaming video. What the chart doesn’t show you is that the amount of bandwidth available is not doubling every two years.
Internet providers face a dilemma: how do they acquire the funds to do the R&D and infrastructure improvements required to keep up with our insatiable demand for bandwidth? One solution is for them to dramatically increase rates on all of their customers; an idea that will lead to a revolt among average Americans who just want to stream their favorite show at the end of a hard day and care little about the future calamity of a bottlenecked information superhighway. They face a similar backlash if they throttle back the bandwidth of all of their customers equally. Instead they have settled on a third option where they will charge websites extra for faster service.
The practical effect is that those sites that use the majority of the bandwidth will have to shell out the money required to add more. Naturally, Netflix, Google, and others are none too pleased with this outcome.
According to recent news reports, the Commission intends to propose rules that would enable phone and cable Internet service providers to discriminate both technically and financially against Internet companies and to impose new tolls on them. If these reports are correct, this represents a grave threat to the Internet.
This is creative usage of the word ‘discrimination’. In much the same way, car companies apparently discriminate against customers when they charge them more for a car with greater horsepower. I wonder if this represents a grave threat to travel?
The problem for the internet providers is the simplicity of the narrative. Most of us have had bad encounters with these companies and hold them in low regard. Meanwhile, we tend to see only the upside of YouTube and Google, as it’s natural to be less critical of services we seemingly get for free.
One of the more amusing aspects of this entire story is seeing mega corporations such as Google and Facebook described as “technology innovators” to avoid framing this as a dispute between massive companies about who should pay for what.
Instead of permitting individualized bargaining and discrimination, the Commission’s rules should protect users and Internet companies on both fixed and mobile platforms against blocking, discrimination, and paid prioritization, and should make the market for Internet services more transparent. The rules should provide certainty to all market participants and keep the costs of regulation low.
God forbid these businesses engage in “individualized bargaining”. Surely Google doesn’t offer superior services for an extra cost. And of course Netflix would never introduce any type of tiered pricing system that includes extra benefits to those who would pay more.
These companies would prefer the FCC pass new net neutrality rules that would prevent them from having to pay more in order to receive excellent bandwidth. I would prefer Google provide me with an unlimited amount of file and e-mail storage at no extra cost, yet somehow I suspect they would balk at the idea of users lobbying to have a regulation passed to avoid having to pay them extra for these services.
The spectacle of Google using the government to avoid having to pay more in a market arrangement while accusing the internet providers of doing the same would be funny if it weren’t so effective. One is forced to wonder what it would take for those who fear corporations above all else to realize that when they empower government to insert itself in these matters, they have really only empowered those corporations to engage in regulatory capture.
I suppose they’d have to first know what regulatory capture is. Hardly time to bother with that when they could be streaming Breaking Bad on Netflix.
Published in General
So long as business leaders are more concerned with playing the regulatory game than breaking the game, regulations will only get stronger and more preferential.
No doubt, it just amazes me that we now get “good” companies and “bad” companies in these debates.
So what is to stop the same IP from throttling back my access to those websites that are not paying up, eventually charging websites to be ‘available’ to their customers? Soon it will be like cable TV, you have to buy a package that includes Ricochet or you just won’t see it…
FCC regulations.
Thanks for this, Frank.
When people yammer on about net neutrality, I usually have no idea what they’re really talking about – or even what they think they’re talking about. They describe the virtues of net neutrality as if they were dragons: no one has ever seen one in person, and everyone has a different idea of what they look like.
I hope this post gets promoted.
FCC regulations.
Aren’t those the same regulations they propose changing? (I’m not challenging you, I don’t know)
The internet providers are asking for deregulation, where as the wesites are looking for even more regulation that protects them.
Feeling a little dumb (nothing new) on the Net Neutrality thing. Are the Net Neutralists demanding that everyone have equal access to Cadillacs, but that “Whoa, man, nobody should have to pay more than for a Yugo…”?
Like.
They have been told that internet providers can control the content you have access to if these rules aren’t established. And they can, in the same sense that Ford can control which models of their cars get which features at what prices.
“The internet should be free” chants should demand that the government stay the hell out of it. instead, they mean “get the government in here so that Comcast can’t charge Netflix more for bandwidth, or throttle back their available bandwidth since they consume such an absurd percentage of it.”
Netflix and Youtube combined to equal about half of all activity on the internet. This dispute should be settled in negotiations between these companies and the internet providers, not by the FCC.
To elaborate on this, imagine if Honda offered blue tooth as standard on all of it’s new cars for years, and suddenly decided it was going to make it optional and charge extra for it.
Now imagine a government agency saying “no that’s unfair, you can’t create two versions of the car, with the better one costing more.”
The idea that Google is being portrayed as the “David” in this fable is ludicrous.
Google isn’t simply a “website”. It’s a massive computer company with a heck of a lot of actual, physical, infrastructure.
Google has the resources to compete with cable and telecom companies in the business of providing internet connectivity to end users.
Google has been building its own private networking infrastructure for many years now.
According to ZDNet way back in 2010, if Google’s private network was considered an “ISP”, it would be the fastest-growing and third-largest global carrier. The difference between Google’s backbone and the Internet is that Google’s network only carries Google’s traffic.
http://www.zdnet.com/blog/foremski/google-is-building-a-private-internet-thats-far-better-and-greener-than-the-internet/1266
One doesn’t have to imagine it. This scenario already exists when it comes to in-car cigarette lighters.
All of this is true -and the particular example is overwrought.
However, while this might be a slugfest between giant companies, this does not mean the tech companies don’t have a point. I warned some friends on Facebook earlier today that it is foolish to think only ISPs have lobbyists. However, it is equally foolish to think that only tech companies have an interest in how the network forms. Netflix has a legitimate gripe that they are being penalized for their size. ISPs charge Netflix more because Netflix can pay more. Same with Google and other companies.
The ISPs also have a point -Netflix is asking to be given, in effect, a wide open and unrestrained track to run their trains on. To provide that, ISPs will have to idle a bunch of other traffic every time Netflix wants to stream something. Yet Netflix doesn’t want to pay extra for the inconvenience they cause everyone else.
Common Carrier laws do address this problem, though I am reluctant to have the FEC make this decision.
Interstate Commerce is Congress’s problem. Chop Chop, boys. Do some IP reform while you’re at it.
Can’t agree. Someone is going to have to pay for more infrastructure. Better to have the market decide who then get a top down solution from congress.
Since Netflix and Google are using so much of the bandwidth, they should be the ones paying for it, and naturally this cost will end up passed onto their users. This is better then uniformly passing the costs on to everyone, including those who don’t use these services.
I have a friend who is generally independent/ libertarian in his views, but for some odd reason he’s a net neut fan. Ironically, he’s never happy with any actual government regulations that appear on the horizon. He says, “well, if they’d do it the way they should, then it would work.”
Of course, the apologists for Communism say the same thing…
Or maybe the problem is that internet companies offer unlimited bandwidth, and they now don’t like the consequences of a market place that allows a consumer to have “unlimited” of something that cost more the more a consumer well consumes.
Sorry, no-one is innocence in this battle. The fact is ISP providers want to go after individual corporations because it is easier and consumers will balk if we actually having to start paying rates retaliated to the bandwidth we actually use and peak-time rates.
Sorry Frank you are delusional if you think large corperations only care about making money. That statement assumes the Executives are always rational, have no agency problems, and don’t let their religion and politics (but I repeat myself) strongly influence business decisions especially the ethical ones. None of these statements are true. Profitable companies are the worse because executive can use their power to prompt their own personal agenda because they are already making more money than average.
Since corporations are run by people, and all decisions are made by people. To claim a corporation only care about making money is saying human beings only care about making money, which is false.
This is a common mistake I wish people would recognize. We are not the ISPs consumers anymore than we are the Newspaper’s consumers or the TV’s consumers. We’re the product. Netflix is Comcast’s customer. Comcast is selling Netflix access to us. What they charge us is the discounted cost of connecting the cables from the main trunk to our door. In major cities that cost is basically trivial (in rural areas, though, that price can be obscene). The horribly massively expensive part is the main trunkline. Netflix pays for that, but it’s only valuable to them if there are spurs off the main line to our computers.
As a result, we pay only a fraction of the costs. The post office works the same way. So do long distance telephone companies.
Cellphones and Wireless might change this, though.
And this dispute over prices is better settled by government intervention, as opposed to allowing the market place to work?
Human beings who have organized themselves to make money (aka, a corporation), aren’t primarily concerned with money making while working for that organization? Want to take another crack at this point before I pounce?
“Why would Comcast, AT&T, and Verizon want to control what you can and cannot do online?”
Because they can extract monopoly rents if they do.
By the way, net neutrality is this simple: internet routers are programmed to process data packets in the order in which they arrive, known as First Come, First Serve.
“Why would Comcast, AT&T, and Verizon want to control what you can and cannot do online? Are all of these companies run by fascists who wish to force a specific world view on us? Are they run by puritans who are going to do away with porn? What could the aim of these for-profit companies possibly be?”
Comcast owns NBC, which among other things operates MSNBC. Are you real, real sure that they’re not interested in propagating a specific worldview?
The New York Times is also theoretically a for-profit corporation.
Notice that comcast owns NBC, not the other way around. You don’t want the government injecting itself into these situations. If comcast refuses to cater to a group of Americans, another company can enter the market place and clean up. If the government gets involved, you’ll never get them out.
As for theoretically for profit newspapers, we know they aren’t really for profit, because they haven’t earned any in a decade. They could mimic the wall street journal who has had a slight uptick in readership while the newspaper business in general crashes around them. Notice how the market solves the problem of corporations who stop acting like corporations. They slowly go out of business.
Similarly, Comcast will wither and die if they block access to sites. The market solves these problems. don’t look to government.
This statement makes zero sense.
And yet, none of the proposed net neutrality regulations have been remotely that simple.
ISPs raising prices to prevent bandwidth traffic jams is a perfectly rational behavior in a market place. That they would target first the largest consumers of bandwidth is also rational. FCC interference in market negotiations will bring nothing positive.
“As for theoretically for profit newspapers, we know they aren’t really for profit, because they haven’t earned any in a decade.” If the web did not exist as an alternative source for news & information, the incumbent newspapers would be in a far stronger position than they are now. And the entry barriers for creating a website or a blog have been quite low.
The entry barriers for creating a carrier-level service competing with Comcast or Verizon are very high. You are talking about extensive and expensive physical infrastructure, consisting of fiber buried in the ground or tacked to poles (with all the local regulatory approvals involved in that process), and/or building out large numbers of cellular towers, again requiring extensive property acquisition or leasing and acquiring ownership of spectrum.
The tangle of regulations here is worse than indicated. For instance, phone companies would like to compete on DSL, but it is difficult to improve, much less charge for better bandwidth, because existing copper wire phone regulations.
Cable companies have been granted local monopolies such that in my own area, for instance, there is only Time Warner – they are protected from anyone else laying cable here.
It’s always the case of following the money. The content providers don’t want to pay, the ISPs don’t want to pay, the consumers don’t want to pay. Everyone wants protecting from everyone else, making the issue far far worse, stalling development. Stupidty reigns here everywhere.
Frank,
I was wondering how your arguments for league parity in the NFL line up with your arguments against net neutrality. As I understand it giving everyone equal access to infrastructure, though some use it more than others, is precisely the same type of leveling as the NFL salary cap and revenue sharing. You seem to place a greater value on competitive parity in a spectator sport as opposed to competitive parity for websites which are gifted equal access to internet speed.
It is important to remember what people want here:
The FCC wants POWER, and doesn’t ultimately care how they get it. Right now they have practically none when it comes to the internet. They want a lever, ANY lever, to regulate content, speech, speeds, access, maybe even the color of the LEDs on your modem. Right now they’ve got bupkis, and that makes them feel useless.
Consumers want all the bandwidth they can consume, and they want it as a god-given-fundamental-right. They’re fine with paying for Netflix, but not for internet access to get Netflix.
ISPs want to sell internet access, which conflicts with the demands of #2. They also want to sell their own content, and yes, they do want to control what you view insofar as it will make them money. Want to bit-torrent movies? They want you to pay for it. Want Netflix to run smoothly? Make Netflix pay for all the data they send (knowing that Netflix will pass along the costs to consumers, who will respond by watching a bit less). (cont.)
Content providers want to sell directly to the consumer without paying for delivery. It’s like Amazon demanding that Fedex give them free carriage. Content providers do not want to pay for Quality of Service (QOS), nor get in a bidding war with other providers. Amazon does not want to have to out-pay Netflix to get smoother streaming in Philly, then do the same in Cleveland with a different ISP. This would reduce their profits and make them raise prices. This would also put them in competition with certain ISPs (Comcast, Time Warner) who own vast stocks of original content, whose delivery would doubtless receive priority delivery.
Thing is, somebody has to pay eventually, so somebody will pay. If the FCC gets involved, we’ll all pay, and the price will be government regulations, leading to regulatory capture, leading to corruption, stifled growth, and FCC chairmen calling for new “fairness doctrines”. We do NOT want that kind of power given to anyone in Washington, regardless of power.
As I explained in that post, the NFL is not 32 separate companies, but better understood as 1 company with 32 branches in different cities.
UPS doesn’t let smaller branches in less profitable cities go under, because there is valuing in maintaining them as people who use the profitable branches want to ship things all over the country.
Similarly, the NFL needs the Cowboys, Steelers and Giants ect. to have teams to compete against athletically.
Which is again, the entire product of a sports league: athletic competition. Comparing this type of competition to the resource distribution of an economic market is somewhat silly.