Cogfactory

Proponents of Net Neutrality tend to fail to grasp simple economics as evidenced by this post over at InfoWorld.

Dear Paul,

Thank you for your recent letter to Sen. Hutchinson of Texas. Your letter exposes many of the fundamental problems with comprehending the scope and breadth of Net Neutrality and presents a simple failure to understand the nature of ownership, property, and property rights.

But let’s step back and analyze your own letter to Sen. Hutchinson.

If the big ISPs are allowed to play free and easy with packets traversing their networks, innovation will plummet. Only those companies that can afford to tithe the big ISPs will get to play in the “publicly accessible” Internet, and those that can’t afford to do so will simply cease to exist as an entity on the network — traffic to their sites can and will simply be throttled to ridiculous levels or tossed entirely.

There is no reasonable or rational basis for such an assumption. This is simply based on conjecture. What ISPs have proposed is to use excess bandwidth to serve popular endpoints on various networks on the Internet. There is no master plan to bend everyone over to give them the screw. And why would they? The basic, flawed, logic used by Net Neutrality proponents is that these large ISPs would invariably leverage bandwidth in their own favor at the expense of others. However wealthy and powerful these companies are belies the simple fact that they have their own customers to appease. Adverse actions by these companies affect the ability for these organizations to profit. While they might try such tactics, the logical outcome is that they are restricted. In order to adequately provide an level of service for their end users, they need to ensure the data pipe is sufficiently large to provide for the data coming through their network for non-tiered traffic.

It would be highly counterintuitive for an organization to throttle and reduce services to both the web site and the end user. If users flock away, it reduces the bargaining position the ISPs have with potential website clients. I’ll come back to your conclusion that innovation will decline if ISPs essentially “win”.

Please understand that the Internet is not and never will be a parallel for any other communications medium. It is not analogous to cable TV, it is not analogous to the PSTN, it is a completely separate and unique entity that has nearly single-handedly revolutionized the world socially, financially, and politically. The linchpin of this success is the free and unfettered delivery of data from one point to another. By allowing quasi-monopolies to control whether or not that data is delivered is a most horrible idea.

Unfortunately your logic fails again. There is no such thing as a “quasi-monopoly” – that is unless you are talking about large values of ‘1′. I do agree with you that the Internet is a unique communications medium. But I disagree with your assumption that it is not analogous to CATV or PSTN. The fundamental underpinnings are the same – they are essentially networks for conveying information. PSTN was one step along the path and revolutionized both industry and individual lives along with CATV which helped speed information along through news, programming, etc.

The problem is that you appear to suffer from a lack of understanding the value of each step in the process of increasing the speed of communication. Each of these systems were rolled out and often highly subsidized at one time or another. But because you fail to recognize the value CATV and PSTN provided when they launched, your argument fails to offer any value. You have a historical bias. Next time you get the chance, sit down with an old timer and ask them about the many innovations that were earth shattering or changed their own lives significantly going back as far as they can remember. You might just learn something.

Please note that I am not talking about bandwidth caps or levels of service; I am talking about the fact that you wish to sanctify the actions of large corporations to deny their customers the right to request information from a third party at a whim, to essentially make large swaths of the Internet inaccessible unless both their customer and the third-party site pay a fee for that information.

The problem with this is you are assuming the end result before it is known. ISPs already have this power. You don’t pay your bill and you will find out how quickly they will terminate your access to “large swaths” of the Internet. In fact, anyone who has any invested interest in providing Internet service will provide it to you at a cost. You take the primary point of Net Neutrality and attempt to make it what it is not.

So come back from the land of mythical unicorns and elevator death metal. Even access at the public library has a cost involved whether directly or indirectly. You just continue on with the assumption that there is such a thing as a “free lunch.”

Further, large ISPs have a habit of increasing rates for those who order a la carte services, such as Internet without phone and Internet without TV. They can and will develop pricing plans that make it difficult for dissatisfied customers to use another Internet provider (assuming there is one) without breaking the budget or losing TV service.

Most ISPs provide their service and discount it when bundled with other services. The unbundled price is the unbundled price. I’d love to see this argument stand up with someone at McDonalds. ‘No, goddammit! I want the Big Mac at the bundled price of the Big Mac, not the unbundled price of the Big Mac.” Make sense? Do I need to illustrate how asinine your type of argument is?

Now. The last half of this quote is priceless. A lot of people bitch about a lack of competition. To use your own logic against you – what happens when you get a bunch of disaffected people together pining for something they want? When it reaches a point of profitability and the profit outweighs the cost of doing so – what do you think happens? Competition arises! Not only do most people in the United States have access to broadband Internet, they have more options available to them as well. Wanna wager on it? Two-way satellite, one-way satellite, cable, DSL, cellular – need I continue on? Lack of competition or lack of your ability to see what is plainly evident?

I saved the tie-up for last:

High-speed data equipment and infrastructure are faster and cheaper than at any other time in history. This is the time that we should be working to provide the benefits of high-speed Internet access to those places in this country that are still without it, not trying to impose arbitrary and costly limits on those lucky enough to already have it.

You are absolutely right. So right in fact that if you don’t heed your own observation, you’ll probably die a poor columnist. If technology has made such leaps in terms of speed and financial cost, there is nothing stopping you from going out, gathering venture capital and starting your own ISP where you can enforce your own vision of your piece of the Internet.

Now what the hell does all this have to do with property, ownership and property rights? If you haven’t taken a look at a nice map of the Internet, I’ll tell you: the Internet is nothing but a collections of networks both public (not really public in the sense of “free”) and private.  ISPs tend to often be of the ‘private’ variety which implies that they own their network and provide their network as a service to subscribers… subscribers who choose to enter into a service contract.

Welcome to America – the land of opportunity!