The FCC’s New Bandwidth Glutton Antidiscrimination (aka Net Neutrality) Policy
Let’s suppose you’re the mayor of a medieval village (read on—this really will go somewhere). The town commons is open for all to graze their sheep. One farmer has a sheep, fat as an elephant, with a particularly voracious appetite. She’s always getting in the way of the other sheep and leaves little for them to eat. If she keeps coming, in fact, the common will soon become a barren field of dirt. If you were a wise mayor, you would probably ban the fat gluttonous sheep from the commons—better to disadvantage this one farmer than to ruin the commons for all. In fact you aren’t really disadvantaging the owner of the fat sheep because in the end the common would be ruined for him too.
This is a variant of the well-known Tragedy of the Commons which is the cornerstone of modern environmental thinking not to mention much work in economics on the problem of externalities. The tragedy is that when people try to maximize their own well being they can actually make everyone—including themselves—worse off.
Now replace the commons with the Internet, and replace the fat gluttonous sheep with the people that consume massive amounts of bandwidths, and the farmer with the businesses that encourage those people to overgraze the Internet. Then you will have the debate over net neutrality. The ISPs want to be able to regulate—through prices or network policy—the piggish sheep. Like the farmer with the fat sheep, Web content providers such as Google don’t want ISPs like Comcast telling them what they or their users can do or be able to charge them differentially for it.
Unfortunately, the analogy ends with the FCC which—in a victory for bandwidth gluttons everywhere—is planning to slap Comcast for regulating the traffic coming from people who were consuming massive amounts of bandwidth for BitTorrent downloads. The FCC isn’t the wise mayor. Just like governments that have allowed the massive erosion of our common air, water and soil, the FCC is pushing a policy that in the end will make most Internet users worse off. Net neutrality leads to the tragedy of the commons.
If pushed to its logical limits it will make trolling around the Internet about as much fun as driving around midtown Manhattan.
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Cable, Regulation, consumers, Economics, Internet
This is a compelling article, however only one side of the story. When you realize that in most areas Comcast is a virtual monopoly you see that allowing them to limit certain types of traffic is similar to practice of the mob where they make businesses pay for protection. Please read my letter to US Senator Arlen Specter below:
August 2, 2008
Dear Mr. Specter,
After seeing the news article this morning “FCC rules Comcast violated Internet access policy” this morning I was reminded of the importance of “net neutrality”. I commend the FCC for taking a stand with Comcast. Comcast is a huge business that in most areas operates almost as a monopoly, yet they continue to cry that their infrastructure is being unfairly used. They claim that companies and people are getting a free ride on their pipeline. I always get a kick out of how they try to justify the policy of slowing down different types of traffic just because that type is popular. One example is Google. They talked about implementing a way to slow traffic to companies such as Google and then charging them a higher fee so that the traffic will run at normal speeds. That sounds like a form of racketeering, which is not unlike what the mob does when they force people to pay for protection. “Protection from what?”, you ask. In actuality the money being paid is to protect the victims from the mob itself.
The idea of slowing different types of traffic could also be equated to Microsoft saying you can install any program on a Windows computer, but you will have to pay MS more money so the software will run correctly.
Companies like Comcast feel that they can’t support their networks with the fees they are charging, but their fees continue to go up and they continue to see profits and growth. Comcast Reports First Quarter 2008 Results Furthermore do they really think that Google and friends are not paying for their connection the internet? I would be interested in seeing the numbers on how much they pay to keep all their data centers connected… It’s not like they are running a billion dollar business on a dial up connection that costs them only a few dollars a month. Plus, all those people using Google, are they not paying for their connection as well?
As a business owner myself I support finding creative ways for new revenue, but it has to be done in an ethical manner. If the telcos are allowed to decide at what speed traffic travels over their networks it will stifle the economy. There are number of reasons this is true. For instance, the US has become a service economy and many of those services are performed via the internet. Many companies live or die by their ability to reach customers online. There is also a big conflict of interest for the telcos/cable companies. For example a company such as the VOIP breakthrough Vonage could be squashed out of existence if Comcast decided they wanted to hinder Vonage’s VOIP traffic. Since Comcast also has a VOIP service this would give them an unfair advantage. Then where does it stop? The telcos could start picking off different markets by eliminating their competition in this manner.
Then fundamental idea of the internet is based on neutrality. This has created new economies, new markets and new jobs. Allowing the telcos/cable cos to hold companies and individuals hostage would be disservice to the country and its people.
Best regards,
Bryan Coe