Release 0.9: Net Neutrality (Yet Another Take)

There are real issues here, but legislation isn't gong to solve them. Antitrust enforcement is probably the best solution.
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[for tech nuts only]

I've been thinking a lot about net neutrality, including Dave Farber's wise comments in the other Post.

But I'm finding it difficult to follow the conversation, which is boring, confusing and filled with mis-targeted invective. It's complicated: There's no easy fix, legislative or otherwise. Any legislation may solve one problem - stopping a particular bad practice, for example - but it could also stop other good practices or stall competition in the development of new services.

The big fight is in essence two interest blocks arguing over who owns the consumer: Is it the big content-providers and carriers, who can make money by offering content in exchange for audience?... and, oh, to get those audiences, they'd like to get exclusive access, please. Their pitch to consumers is that without us, you'd have to pay more for your Net access.

Or is it the other side, the paternalists and free-loaders who want to keep the Net the way it (supposedly) always was, open and "free" (for themselves as well as for consumers)? They want to make it illegal for certain (big bad) companies to offer too much in the way of network-based enhancements and charge for them. They are generally suspicious of business and even of consumers making their own choices. It's unfair, they say, for a movie-streaming service to be able to pay more to offer faster access to consumers - whether they reap profits from ads or charge the consumers directly.

Perhaps the consumers should be able to decide for themselves, but amidst all the rhetoric they have a hard time figuring out what to ask for....

There are real issues here, but legislation isn't gong to solve them. Antitrust enforcement is probably the best solution.

Bandwidth is cheap and fungible...until the last mile

One issue is that there's a definite scarcity of local bandwidth: There are only a couple of service providers that go to any particular person's house, and you don't want AT&T saying "the only content you can have is content we offer [for which we are paid big bucks because it carries advertising]. We're such nice guys, we're giving it to you for free." That squeezes out other content providers, and is a bad thing. (And by the way, AT&T agreed to "net neutrality" provisions only for its basic service; it specifically excluded "internet TV" in the promises it made to the FCC.)

If the incumbent carriers really had their way, we'd have a situation like what we have on cell phones, where providers pay tribute to the carriers in order to appear on the main screen; if you're not there, it's almost impossible to find an audience, though as Internet access becomes better, things are changing. Gary Bolles describes how many start-ups are showing up with cool mobile apps that are both carrier- and device-independent. (Yeah, but how many of them will still be in business next year?)

Mirror mirror on the wall, who's best suited of them all?

On the other hand, there are a lot of things only the carriers can do effectively... or at least, they are well-positioned to do them effectively, and it would be painful having them limited to offering vanilla bandwidth at prescribed prices. That's pretty much what we did in another market when we set up ICANN, the domain-name policy agency (I was founding chairman): We defined precisely what constitutes domain name services, and thereby constrained creativity so that pretty much the only innovations in the field are sleazy marketing practices. You can't offer better security, better service (at a price) or restrict your reseller base in the domain-name business; all you can do is try to steal the other guys' customers, or hoard the best names for yourself and independent entities such as a domain-parking page owned by your brother-in-law.

What are some of those market innovations?

Potential net-centric offerings start with security and spam-filtering. Network operators are in a good position to detect the presence of mass-mailers, single-user machines suddenly spouting out volumes of viruses, odd traffic patterns of any kind. They can also load-balance effectively; if they know what's video and what's mail, they can (and already do) effectively manage capacity so your videos are smooth and your mail arrives with a second's delay. They could run ad networks, provide tech support (especially on communications issues), backup and hosting services and so forth. (And if they do all this, they should also be more accountable for their customers' behavior, which is a topic I'll address some other time.)

Of course, the challenge is that the incumbents are so well-positioned to offer such services that they can squeeze innovators out... Instead, they should be offering their metadata about usage to third parties (for a small fee), and let third parties innovate around the data. The carriers that do that are likely to offer the best services, but it may be hard for them emotionally to let go to that extent.

But an ICANN-like body that required the publication of certain kinds of data (of course, it would inevitably miss the most interesting bits) would be a cure worse than the disease. That's why vigorous antitrust - which can react to a changing market, however imperfectly - is better than obscure, ear-marked legislation that will already be outdated by the time it passes.

Now, how do we get vigorous antitrust?

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