Net Neutrality

Off Topic Politics & World Issues
41

[quote]nephorm wrote:
At any rate, we are not talking about the market for high-speed internet backbones, because such a market does not exist to any appreciable degree. It does not exist because it is too cost prohibitive to create new backbones.
[/quote]

If anything, we’ve been suffering from an excess backbone capacity brought on by a proliferation of cheap capital and the prospect of such a huge market (the so-called “TMT Bubble,” which the market has been trying absorb for a number of years now).

While it’s true that building and maintaining communications networks is hugely capital intensive and requires significant scale to be profitable, that’s a different thing entirely from saying there’s “no market.” There has been and will be a huge market for backbone capacity.

I agree with the first part. But everything after the “but” is, in my opinion, problematic.

Methinks it is politics at it’s very best. The forces at work to increase regulation are legion. The “countervailing forces” at work are precious few.

Remember, regulation is like a ratchet device - it generally only goes in one direction. So I think it’s wise always to question any “additional regulation.”

Especially to ask 1. who is actually going to benefit from it? Regulations - even those that are ostensibly there to protect the consumer - are usually “captured” by the regulated.

And, 2. are we able to predict what other sorts of unintended consequences this new regulation might cause?

Answer: no, generally not, which is why there’s a perennial hue and cry for “additional regulation.”

On that narrow issue, there are no regulations preventing companies from laying fiber - which is why so many companies sprung up during the TMT bubble (360 communications, XO, Level Three, Qwest, MFS…there were so many that I can’t remember them all…) Anyway, they built so much capacity that pricing fell to incremental variable cost (i.e. zero) and, of course, no company can exist at that pricing level.

42

[quote]beebuddy wrote:
orion wrote:

What is a fact that you and Zap started to speculate that the internet would not exist without the government and that is not a fact.

It takes much less speculation on my part that a technology that was in the air at that time would have been used sooner or later.

You are the one making speculations, obviously. What Zap stated was a fact, plain and simple. All things being equal, there would be no internet without the US Gov. It is speculation to say otherwise. [/quote]

Jesus…

Would you be so kind as to think about that again?

43

[quote]nephorm wrote:
katzenjammer wrote:
Any given market emerges precisely because there exists a (relative) scarcity of resources.

I probably should have written “a monopoly on resources,” but that is not accurate, either. At any rate, we are not talking about the market for high-speed internet backbones, because such a market does not exist to any appreciable degree. It does not exist because it is too cost prohibitive to create new backbones. Markets can only function when the resources are scarce enough to be valuable, but entry costs are low enough that a plurality of sellers can exist.
[/quote]

That is simply not true.

The sheer possibility that someone could enter the market keeps the monopoly prices relatively low.

There does not need to be a plurality of sellers, the possibility of competition is enough.

44

[quote]beebuddy wrote:
katzenjammer wrote:

It’s a fact that the Internet was developed by the US Military/DARPA. It is not a fact that the Internet would never have otherwise come into existence. That is just pure speculation. Orion is correct.

Orion is the one making that speculation.

Zap wrote… “With no government action the internet would not exist.”

For this statement to be false there has to be disagreement about the definition of “Internet.” That would be a silly thing to disagree about.[/quote]

For this statement to be true he would have to possess knowledge of every possible alternate course of history.

That is a pretty bold claim.

It would mean that there is no imaginable course of events that would have created the Internet without the government.

45

[quote]katzenjammer wrote:
Methinks it is politics at it’s very best. The forces at work to increase regulation are legion. The “countervailing forces” at work are precious few.
[/quote]

When people suffer because the regulation is not put into place, I do not think they will blame the original regulators. They will blame those who blocked the new regulation.

46

[quote]nephorm wrote:
When people suffer because the regulation is not put into place, I do not think they will blame the original regulators. They will blame those who blocked the new regulation.[/quote]

Which is quite the philosophical problem, don’t you think…?

47

[quote]nephorm wrote:
katzenjammer wrote:
Methinks it is politics at it’s very best. The forces at work to increase regulation are legion. The “countervailing forces” at work are precious few.

When people suffer because the regulation is not put into place, I do not think they will blame the original regulators. They will blame those who blocked the new regulation.[/quote]

Yes, it’s too bad so many people are grossly misinformed :slight_smile:

48

[quote]nephorm wrote:
LIFTICVSMAXIMVS wrote:
The internet is made up of many, many small content providers using an infrastructure that is owned by very few companies; how does more regulation that favors these companies help the internet customer any? I would like one example in “net neutrality” legislation that actually helps the customer in the long run.

How does net neutrality legislation favor those owning companies? It restricts them from targeting competitors or popular sites and extorting additional payment. As you put it, small content providers and ISPs use an infrastructure that is provided by large corporations, some of which have a large interest forcing content providers like Google to pay an additional fee if they want users to be able to access that content. The “free market” does not work because there is a scarcity of resources, and only a few large players own the lion’s share of high-bandwidth infrastructure. Until that changes, it might be nice to protect consumers from the mafia-esque tactics of the large providers.[/quote]

My take on the issue.

First, obviously someone has to invest massive amounts of capital both to maintain & to improve networks. And just like any business, it’s the prospect of profits that provides incentives for companies (telephone, cable and satellite companies) to invest billions of dollars to do so. And, of course, they charge subscription fees to recoup their large upfront investments.

Now, today everyone gets “best efforts” internet service subject to congestion/traffic constraints.

What the telcos want (i.e. those opposed to “net neutrality”) is the ability to charge for premium service (subject to service level agreements).

If Google wants to ensure a better experience for its customers, they are free to pay, say, AT&T extra fees to ensure dedicated bandwidth for customers accessing their site.

But, you see, Google doesn’t want to pay extra for this.

Therefore, Google and their lobbyists created the meme: “net neutrality”

49

[quote]katzenjammer wrote:
Yes, it’s too bad so many people are grossly misinformed :)[/quote]

Which is why I said it is bad politics. Practical considerations are key for doing politics well.

50

[quote]katzenjammer wrote:
What the telcos want (i.e. those opposed to “net neutrality”) is the ability to charge for premium service (subject to service level agreements).

If Google wants to ensure a better experience for its customers, they are free to pay, say, AT&T extra fees to ensure dedicated bandwidth for customers accessing their site.

But, you see, Google doesn’t want to pay extra for this.

Therefore, Google and their lobbyists created the meme: “net neutrality”
[/quote]

What the telcos want is to be able to identify companies with successful internet presence, and then throttle traffic to those specific sites. Google would not be paying to ensure a “better” experience, they would be paying to ensure the same experience for customers. What the telcos - or at least Verizon - want to do is exploit their positions as gatekeepers to extort money from the other direction. They are essentially playing mafia.

51

[quote]nephorm wrote:
katzenjammer wrote:
What the telcos want (i.e. those opposed to “net neutrality”) is the ability to charge for premium service (subject to service level agreements).

If Google wants to ensure a better experience for its customers, they are free to pay, say, AT&T extra fees to ensure dedicated bandwidth for customers accessing their site.

But, you see, Google doesn’t want to pay extra for this.

Therefore, Google and their lobbyists created the meme: “net neutrality”

What the telcos want is to be able to identify companies with successful internet presence, and then throttle traffic to those specific sites. Google would not be paying to ensure a “better” experience, they would be paying to ensure the same experience for customers. What the telcos - or at least Verizon - want to do is exploit their positions as gatekeepers to extort money from the other direction. They are essentially playing mafia. [/quote]

Exactly.

52

[quote]nephorm wrote:
What the telcos - or at least Verizon - want to do is exploit their positions as gatekeepers to extort money from the other direction. They are essentially playing mafia.
[/quote]
The Telcos could always just refuse to keep up their maintenance and not allow anyone service. That would solve everything.

Google, et al, does not have any rights to the infrastructure that was bought and paid for by the Telcos. PERDIOD.

That is not extortion. That is called a legal profit model. It is up to the market to figure out ways around the Telco’s position – in order to do this we require deregulation.

53

[quote]LIFTICVSMAXIMVS wrote:
It is up to the market to figure out ways around the Telco’s position – in order to do this we require deregulation.[/quote]

Or we could consider the Internet a natural monopoly and regulate it as such. Did you know that the airline industry was more profitable BEFORE deregulation?

54

[quote]beebuddy wrote:
LIFTICVSMAXIMVS wrote:
It is up to the market to figure out ways around the Telco’s position – in order to do this we require deregulation.

Or we could consider the Internet a natural monopoly and regulate it as such. Did you know that the airline industry was more profitable BEFORE deregulation? [/quote]

There is no such thing as a natural monopoly. Monopolies exist because entry into the market is barred by regulation. It is that plain and that simple.

Yes, I believe that Airlines made more money when they were regulated. The market opened up after deregulation thus making profits more available to other airlines. Airlines lost profits because they actually had to compete in a fair market – those that couldn’t compete lost. Another aspect to Airlines losing profits is all the new safety regulations – which isn’t deregulation at all.

55

[quote]LIFTICVSMAXIMVS wrote:

There is no such thing as a natural monopoly. Monopolies exist because entry into the market is barred by regulation. It is that plain and that simple.
[/quote]

Monopolies exist because a competitor can or should crowd out all other competitors for profit or efficiency’s sake. This may or may not involve regulation. Your theory makes no sense.

Anyway, it is in the interest of consumers for there to be one Internet. The less fragmented the better. As it stands every country seems to be setting up their own ‘intranet’ which sells short the potential of a world wide web. I think this trend should be avoided.

56

[quote]beebuddy wrote:
LIFTICVSMAXIMVS wrote:

There is no such thing as a natural monopoly. Monopolies exist because entry into the market is barred by regulation. It is that plain and that simple.

Monopolies exist because a competitor can or should crowd out all other competitors for profit or efficiency’s sake. This may or may not involve regulation. Your theory makes no sense.

[/quote]
How exactly does a company crowd competitors out of the market if there is no regulation? Violence or coercion is the only way which is already illegal.

If I have a better idea or way to bring some service to customers (internet service, fore example) than I am free to do so – barring any regulations prohibiting me. If I am stopped via coercion or violence then my rights are being violated. There is no other way to “crowd out” competition without regulation.

Even mafioso tactics do not end up in monopolies because there will always be some other stronger thug to try and take business away – which is why gang violence occurs. BTW, organized crime only exists because of the black market created by government regulation.

57

[quote]LIFTICVSMAXIMVS wrote:

How exactly does a company crowd competitors out of the market if there is no regulation? [/quote]

By utilizing economies of scale.

58

[quote]beebuddy wrote:
LIFTICVSMAXIMVS wrote:

How exactly does a company crowd competitors out of the market if there is no regulation?

By utilizing economies of scale. [/quote]

First of all, companies don’t “utilize economies of scale.” This is just an advantage that is enjoyed by being an established company verses some other entrepreneur who wishes to enter the market. Those who do successfully enter the market usually out-compete economies of scale because they have figured out how to better utilize and manage resources…or maybe they render their competitor’s resources obsolete.

For example, in the case of the telcos, if a competitor figures out how to make hard lines obsolete they will out-compete the telcos which is why we need deregulation of the EM spectrum.

There is no such thing as a natural monopoly because entry into the market has to be barred by regulation for it to occur.

59

[quote]LIFTICVSMAXIMVS wrote:
For example, in the case of the telcos, if a competitor figures out how to make hard lines obsolete they will out-compete the telcos which is why we need deregulation of the EM spectrum.
[/quote]

Beautiful… then no wireless devices will function, because everyone will try to use the same frequencies.

EDIT: And this is a situation in which regulation can help rather than hinder. You may argue that such a situation would force companies to create some sort of voluntary body that would internally regulate. Of course, the large numbers of smaller companies who do not choose to join, for whatever reason, could render their efforts moot. Or worse, a large player who decides it is not in the company’s advantage to play within the rules.

60

[quote]nephorm wrote:
Beautiful… then no wireless devices will function, because everyone will try to use the same frequencies.

[/quote]
So what!? Wi-Fi uses high frequency with a very short range…everyone on my block uses wi-fi with no ill effects. Thank you, SSID/WEP protocol.

In any case it is for those would be entrepreneurs to figure out. You cannot even begin to perceive the technologies that may come into existence when there exists a profit motive.