Observations of an Internet Middleman (Level3) (was: RIP Network Neutrality

Sat May 10 22:31:43 UTC 2014

++1

Andrew Fried
andrew.fried at gmail.com

On 5/10/14, 2:42 PM, Patrick W. Gilmore wrote:
> Nice discussion about history & motivations. Not completely correct, but it's always fun to argue over history, and over motivations, since both are open to intepretation.
> 
> Personally, I am interested in the future, and specifically in market-driven solutions to our problems. Call me a capitalist if you like, but I believe in a functioning market, we can get a very good approximation of "fair".
> 
> If Company A and Company B have a mutual customer, and that customer needs both companies to perform a task, the market will find a way to make those two companies work together. Either that, or the customer will replace A or B, whichever the customer feels is underperforming, with Company C.
> 
> We have that situation today. Streaming Company wants to send End User of Broadband Company some content. If Streaming Company sucks - not enough titles, lousy customer service, high price, poor performance, etc., etc. - End User is free to select Streaming Company 2. And contrary to popular belief, there are plenty of "Streaming Company 2s" available. Besides NF, there is Hulu, Amazon, iTunes, iPlayer, etc. They might have different models, but they all allow you to access streaming content, so choice is available.
> 
> And here is where we get into the problem. Should End User believe Broadband Company sucks, they frequently cannot choose Broadband Company 2. I know I cannot, my choices are Comcast @ 100 Mbps or Verizon at 1.1 (yes, one-point-one) Mbps. So when Streaming Company sucks, but they suck because Broadband company is doing something I do not like, I cannot "vote with my wallet" and pick Broadband Company 2. I have no choice but to pick Streaming Company 2, even if I think the problem is Broadband Company's fault. (To be clear, I am not a NF subscriber - any more - and so this is not a NF/CC thing, I'm just talking generalities.)
> 
> Put more succinctly, there is no functioning market. therefore there cannot be a market-based solution.
> 
> Personally, I view that as about the most Un-American, Un-Capitalistic thing there is.
> 
> Lots of people have suggested a simple, if very difficult, fix to this problem. Make the underlying physical infrastructure a regulated monopoly, i.e. a Utility. Then allow anyone to run services over that physical infrastructure.
> 
> This is not  pipe dream. The UK does it today. People there pick ISPs based on service, price, features, etc., not on "who paid off my local PUC".
> 
> And before anyone brings up the whole "the UK is more dense than the US", I preemptively call BS. There is more choice, faster speeds, and lower prices in the middle of no-where UK than downtown manhattan. Please just leave that argument where it belongs, in the dung heap.
> 
> Why can we not do something similar in the US? because the companies who own the lines have enough money to pay enough lobbyists to avoid even the promises they do make. (If anyone on this list is un-aware of things like the telcos promising ubiquitous high-speed BB years ago and never delivering, but never giving back their tax breaks or monopoly positions, you should be ashamed of yourselves.)
> 
> But hey, a guy can dream, right?
> 
> In the mean time, let's stop pretending that 'oh, L3 paid CC so they must be best friends'. L3 paid because They Had No Choice, and maybe because they see some long-term strategic benefit (e.g. they can charge others more later).
> 
> This is not a functioning market. This is a few players with Market Power charging Rents, which any first year econ major will explain is a _very_very_very_ bad place for the market to be.
>