Why net neutrality regulation is not necessary

There is a tremendous amount of misunderstanding and, frankly, propaganda floating around regarding the issue of net neutrality. The FCC is expected to vote on a plan Tuesday (Dec. 21) to impose net neutrality rules. You can read about some of the common concerns here.

On one side of this debate, you hear from people concerned that big providers like Comcast will dominate the internet and prioritize and/or suppress certain traffic. On the other, you hear from people who point out, quite accurately in my opinion, who say that net neutrality simply involves government intervention where it is not necessary.

My argument is simple: the internet will change in the coming years, but because of all of the new technology that is coming out right now, the changes will make any additional regulation unnecessary.

If government regulation is necessary in a public utility, it should be in a utility where there is very little or no competition. For example, you can understand why the government regulated the telephone business prior to 1984, because there was only one telephone company, AT&T, which owned all the lines and even most of the phones in your home. Without regulation, AT&T could have charged anything it wanted.

But the telephone business became deregulated in 1984, and now there are literally hundreds of ways to make phone calls and hundreds of different companies offering service.

So, which is the internet, a controlled near-monopolistic service or one with robust competition?

I argue the latter. The traditional argument that you will hear to counter this is that many people live in areas where they only have one or maybe two ways of accessing the internet, via a cable modem or DSL. So, people are concerned about Comcast, for example, prioritizing traffic that favors its business model and suppressing traffic that helps its business.

But, here’s the rub: Comcast’s control of internet access is decreasing every day without regulation.

Don’t believe me? Go to this link:

Put in your zip code. I would guess that wherever you live there are several internet providers out there besides cable and the phone company.

I live in rural Colorado. I do not have cable access to my house. I have at least nine viable broadband providers. Yes, you read that right: nine. I can get 4G-like service from Verizon, Sprint, AT&T or T-Mobile. I can get Wimax from a company called Open Range. I have microwave access from a company called Skybeam. I can get DSL from Qwest. And I can get satellite from either Dish or DirectTV.

You may say: none of these options are as fast as a cable modem. And in some cases, you are correct. Certainly, the “4G options” some companies offer are very slow. But my microwave internet is 10 megs for download. I watch Netflix on it today and make phone calls from my IP phone. It is faster than DSL and cable in many markets.

So, let’s say you’re concerned about Comcast competing unfairly by restricting Netflix access at your house. What do you do? Well, you call Comcast and tell them that they change their rules or you’re dropping them and using DISH or 4G or wimax as your internet provider. Comcast will either change its rules or lose a lot of customers.

The 4G world is about to revolutionize internet access at home. You simply will not have any more reasons to be held captive by your DSL or cable provider. You can read more about it here. Bottom line: a Computerworld tester is getting download speeds of 4 megs consistently on Sprint’s 4G service. In the next year or so, 4G will be available in every major market from one company or another.

Yes, ladies and gentleman, that’s called competition, and it’s a wonderful thing.

Well, what’s to prevent your cell phone provider from tacking on extra fees for accessing youtube or Facebook of some other site? Folks, again, it’s competition. There are at least four major cell phone providers in every major market. Not all of them will charge the extra fees, and if they do, another company will come along offering a flat-rate plan without the extra fees.

I have yet to hear of a reason for the government to regulate anything related to the internet. I hear a lot about potential problems, but they are just that — potential. All of the potential problems will be resolved through competition.

Lay off regulating the internet — it simply isn’t necessary.

This entry was posted in General by Geoff B.. Bookmark the permalink.

About Geoff B.

Geoff B has had three main careers. Some of them have overlapped. After attending Stanford University (class of 1985), he worked in journalism for several years until about 1992, when he took up his second career in telecommunications sales. In 1995, he took up his favorite and third career as father. Soon thereafter, Heavenly Father hit him over the head with a two-by-four (wielded by the Holy Ghost) and he woke up from a long sleep. Since then, he's been learning a lot about the Gospel. He still has a lot to learn. Geoff's held several Church callings: young men's president, high priest group leader, member of the bishopric, stake director of public affairs, media specialist for church public affairs, high councilman. He tries his best in his callings but usually falls short. Geoff has five children and lives in Colorado.

21 thoughts on “Why net neutrality regulation is not necessary

  1. Pingback: Tweets that mention » Why net neutrality regulation is not necessary The Millennial Star -- Topsy.com

  2. Geoff B, It should be mentioned that many of the providers that will show up on any query on that web site are only there because phone companies were previously required to allow customers to buy unbundled DSL service to connect directly to third party ISPs, per the Telecommunications Act of 1996.

    These days that ability is typically only available at low bandwidths. Xmission, the best ISP in Utah, is shedding customers left and right, because no one can get good quality DSL connections to them anymore. In fact Qwest is purposely degrading the service of those customers (even though they take in ~$30 a month from each), to force them to switch to an all Qwest service.

    Mobile Internet service is a viable option if you either don’t use the Internet very much or don’t mind paying ten to a hundred times more per GB than someone with landline / fixed wireless access.

    Fixed wireless service isn’t completely hopeless, if it is the only thing you can get. No one who had a comparable bandwidth alternative would choose it over a landline service though, because the latency is horrible. Satellite is much worse.

    Cable Internet service isn’t bad, although you probably won’t be able to get a static IP address unless you pay $50 a month extra for it. Back in the days when there was actual competition between landline ISPs that wasn’t a problem. The FCC put most of those ISPs out of business by misclassifying “DSL Internet service” as a pure “information service” (instead of a telecommunication service) a few years ago. One of the most blatant, opportunistic misreadings of the law I have ever seen.

    And now, the FCC’s stupid decision to classify facility based Internet access under Title I has come back to bite them, because the courts have (rightly) said that FCC doesn’t have any Title I authority whatsoever. So we have the FCC returning to Title II authority, except not remedying the mistakes that put all those smaller ISPs out of business in the first place.

    That is why the FCCs proposed regulations are ridiculously mild compared to what prevailed as recently as five years ago. One of the reasons why we need a modicum of “net neutrality” regulation is that the FCC helped put most of the competition of of business.

  3. Mark D and John C, yes, DSL is a monopoly service. For most users, however, the wireless options out there are more than sufficient.

    Most users want simply to access the internet and do e-mail. They want to watch a Youtube without having to wait. 4 megs for download (what you get with Sprint’s 4G) is more than enough for this.

    I have wimax and microwave at my home. I have no need for DSL or cable modems.

    I think we can all agree that if you are running some kind of internet-based server farm business — or if you want HD movies to stream to your home all day long — you need something better than that. Verizon’s FIOS network gets you 150 megs for $150/month. But coverage is limited, so if you have huge bandwidth demands you need to get an expensive dedicated DS3 or perhaps even bigger.

    When it comes to bandwidth to the home, we are way behind Japan and Korea and even some European countries. But the reality is that we live in a large country where it is not economical to provide fiber to ever home. I will probably never have fiber at my home in the countryside.

    This is why wimax is so exciting. If you are not familiar with it, you can read more here:

    http://en.wikipedia.org/wiki/WiMAX

    Wimax has the potential to provide up to 1 gig of connection, making fiber to the home unnecessary.

    The point is that technology is overtaking the regulation.

  4. So, what exactly is the harm of government regulation that maintains the status quo? The argument that it is not needed is losing credibility every day, since the biggest opponents of net neutrality are those with a financial stake in throttling.
    The idea that someday down the road, 4g technology, which barely exists now, is a protection against near monopolies is awfully optimistic. Trust the phone companies to compete against Internet companies? Is that like the Italian mafia battling against the yakuza?

  5. Hundreds and hundreds of telecommunications options exist in the sense that if we don’t like the two or three functional alternatives and couple of substandard ones available where we are, then we can move to another town that has a half dozen other choices. This post did lead me to look at the one wireless DSL service in my area though. From the company’s FAQ:

    Q: Should I wait to order wireless service, in case there are bugs that still need to be worked out?

    A: No. Waiting to order could result in losing the opportunity to receive wireless service this year. Available frequency space is limited and orders are coming in fast! Secure your opporunity NOW!

    A bit of marketing hype, but based on the reality of employing a couple megahertz of radio spectrum on a new tower to replace an unshieled twisted pair of copper wires in a trench. Sending a large fraction of DSL subscribers their data by radio is a task on a par with having 20% of commuters leave their cars home next month and hop on the bus; both are unsustainable fantasies.

  6. “The idea that someday down the road, 4g technology, which barely exists now, is a protection against near monopolies is awfully optimistic.”

    You missed the point of my post. 4g technology is actually pretty widespread right now. I am using it at my home. All of the major carriers are in the process of offering it nationwide. Sprint’s has been tested at 4 megs for download speed and is available in most major markets today.

    In addition, today you can get satellite everywhere and microwave in many other locations. There is robust competition today.

    The regulation is aimed at an imaginary future problem. Let me ask you this: what exactly is happening today in the internet to cause any regulation? There are all kinds of potential concerns — Comcast restricting Netflix, etc, etc, — but none of these concerns has actually borne fruit. So, why regulate a problem that doesn’t exist yet, especially when increasing competition will make the regulation unnecessary?

  7. If I understand correctly, the issue that creates a need for net neutrality is not that one company will dominate the market but that, once you have chosen a company, that company will not treat all incoming information equally. For example, Comcast could cut a deal with one of Youtube’s competitors to favor the competitor’s site by blocking Youtube or by making its videos run very slowly. Companies might block peer-to-peer file sharing or create a tiered system of Internet access similar to what currently exists for cable channels. A company could do this to their subscribers whether there are many or few competitors in the market, because you have signed a contract with your provider. Competition could help if some companies offer net neutrality on their own and thus attract customers, forcing other companies to follow suit, but that doesn’t seem to have happened to the terrible service that wireless phone providers give, so I doubt it would be very effective for Internet providers either.
    That said, I’m skeptical that the FCC is competent enough to improve the situation through regulation. They seem to be stuck in the last century, so I’m inclined to think that it might be best to leave the situation alone for now. Especially if the bureaucracy is captured by the entities it is set up to regulate, which usually seems to happen.

  8. The main point here is that telecommunications services have been subject to varying degrees of federal regulation for more than a century now, and for very good reason. Congress did not pass the various statutes encompassing federal telecommunications law to solve a non-existent problem.

    DSL access until 2005 was governed as a telecommunications service under Title II of the 1934 Communications Act, as amended. That is why there were a large number of DSL ISPs. DSL access was basically a virtual circuit connecting you to your preferred ISP.

    However, due to a poorly thought out decision by the Supreme Court in the Brand X case, Cable internet access was ruled to be exempt from Title II regulation, at least under the FCC rules as implemented at the time. So the telecom providers started to complain about a level playing field, and the FCC, as a favor to the telecom providers, and in a perverse display of mental gymnastics, reclassified DSL access as an a pure “information service”, like a web site. A decision radically contrary to the tenor of more than a century of federal laws and regulation in telecommunications.

    That decision (which has effectively put most small ISPs out of business) turned out to be a strategic mistake for other reasons, because the FCC has little or no authority over “information services”. So the FCC is moving in the direction of classifying broadband access services as “telecommunications services” once again.

    The telecommunications companies are just whining to no end because they don’t want to be regulated like telecommunications companies (i.e. as common carriers) as the law provides. That is a legitimate point of view. But to get their way and turn their access networks into walled gardens of the sort wireless phone services have historically been, they need Congress to repeal Title II.

    Until then complaining about enormously restrained FCC action in this area is just a bunch of hot air. The FCC has an affirmative duty to enforce federal communications law, by regulation. If the communications providers don’t like the FCC having any authority over them whatsoever, they need to go to Congress to have them repeal it. Good luck with that.

  9. Maybe I haven’t found the right place yet Geoff, but all the 4G providers have a cap on bandwidth don’t they? So they start out more expensive than the DSL I get now, then make you pay more on top when you reach a limit that my DSL also doesn’t have. No big deal if you only read email, but there is a reason Netflix is succeeding when Blockbuster is failing. Anyone who streams movies or television through Netflix, Hulu, iTunes etc will hit that cap pretty quickly in any given month.

    If you’ve found one that doesn’t have caps I’d love to hear about it.

  10. Jjohnsen, most 4g providers are using wimax spectrum. I have a wimax box sitting in my office provided by Open Range. This particular company offers internet at about 3 megs for download plus phone service for $65/month for unlimited bandwidth.

    Put in your zip code in the link I provided up there to see if you can find a similar service in your area. If not wimax, you may be able to find a microwave provider. I also have microwave at $45/month for unlimited bandwidth at 10 megs for download. There are a lot of choices out there besides DSL and cable.

  11. Fixed wireless isn’t really “4G”. Wimax has both fixed and mobile applications, but only the latter are generally recognized as “4G”, because the “4″ refers to generations of mobile phone technology.

    I suspect if you tried to download 100 GB a month through any wireless provider, you would quickly find out that “unlimited” is a fraudulent misrepresentation. So called unlimited plans are on the way out in mobile Internet access in any case. The following is informative:

    http://www.infoworld.com/d/mobilize/the-strange-unpredictable-pricing-3g-data-plans-485?page=0,2

    Now of course you can get much more reasonable deals from fixed wireless companies, although much more limited in terms of total transfer than wireline companies, largely because point-to-multi-point wireless is slow (latency wise) and inefficient.

    There is a fixed amount of bandwidth from any “tower” to all the customers that are served by it, and each customer is generally served on a round robin basis. When the latency is large (which it is due to the encoding and error correction algorithms etc) and the customer load is high, throughput for everyone falls dramatically. A brownout more or less.

    This is improving all the time, which is great news for people outside of both the DSL and cable footprints, but it is still and probably always will be a full order of magnitude less performing than a contemporary wireline service in most areas.

    Case in point – I work from my home office most of the time, and I use an interactive SSH terminal session against a remote server all day long. That means when I press a key I don’t see it reflected on the screen prior to a full network round trip. This is flaky on occasion even with wireline service, and noticably worse since Qwest forced me off my old provider.

    With the best wireless service available a couple of years ago it was unbearable, because the latency was always spiking. The more customers you get on a tower, the worse it gets, during the evening in particular.

    Quality of service on the Internet as a whole is declining these days, and there is nothing an ordinary customer can do about it, because the FCC put most of the wireline based competition out of business a few years ago.

    In the past, I just connected to a good ISP (Xmission actually). Now I am stuck with Qwest DSL or something even worse. Like Comcast, or (horror of horrors) a wireless provider.

  12. Geoff in my experience unlimited doesn’t mean the same thing for me as it does the wireless company. I’ll check it out though.

  13. The latest details from the FCC on the new rules are available here:

    http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db1221/DOC-303745A1.pdf

    Three rules: (1) Transparency (2) No blocking (3) No unreasonable discrimination

    The FCC suggests that typical “pay for priority” arrangements are likely to be considered violations of the third rule. I think they need to evaluate what they are doing in that regard much more carefully.

    High quality video and voice communications require some sort of prioritization. If the prioritization has a cap so that priority, real time traffic cannot starve ordinary traffic, prohibiting economic arrangements to achieve it is positively insane.

    Prioritization is not the problem, starvation is. Priority traffic should effectively have reserved capacity so that it cannot swamp other traffic under any conditions whatsoever. Any priority traffic over and above that limit should be downgraded.

    The most neutral, uniform way to support high QoS traffic on the Internet would be to establish a traffic settlement system with different rates for different service bands. IP packets have “type of service” (TOS) bits for this already, they are just stripped and ignored as a matter of practice because no one pays for them.

    What the FCC should do is promote the adoption of a “sender pays” convention for traffic settlements, with uniform, non-discriminatory edge provider-to edge provider treatment of IP TOS bits, subject to starvation limits.

    This idea that a packet is a packet is a packet as the basis for “network neutrality” is ruining the Internet.

  14. MarkD.
    Shouldn’t these companies compete on who who can provide the best, fastest networks, and their financial incentives be rooted in expanding thier really crappy, internationally embarrassing coverage and capacity, rather than give them financial incentive to restrict increased demand?

  15. One issue that is unmentioned in this press release is traffic sensitive charges. Public aversion to those, no matter how reasonable, is the other thing that is ruining the Internet.

    The Internet cannot survive as a high quality network unless users who send and receive large amounts of traffic cease to be radically cross subsidized by those who send and receive much less. Classic tragedy of the commons. The “neutral” treatment of the packets requested at no marginal cost by extremely heavy users is ruining the quality of service of everyone else.

    Since access providers do not earn any marginal income from increases in load, they have no direct economic incentive to upgrade their networks accordingly. One can imagine what the electrical system would be like if it were priced on an “all you can eat” basis. Regular and repeated brownouts, all the time.

    The only way such a system would ever survive would be to brown out the power of the heavy users proportionately more than the power of the light ones.

  16. TT: Shouldn’t these companies compete on who who can provide the best, fastest networks… rather than give them financial incentive to restrict increased demand?

    The problem is precisely that providers have a financial incentive to provide whatever level of service they can get away with, because with fixed rates, as per user traffic increases, provider income remains the same.

    With fixed rates, provider profitability falls the more users use the Internet, unless they delay capacity expansion and make their user base suffer brownouts instead. Traffic sensitive pricing doesn’t have that problem, because providers have a reason to encourage users to use the Internet more, not less.

    The key is that the charges be reasonable. $1/GB marginal rate or less, for wireline access over and above some nominal level. Cell phone providers have scorched the earth for this sort of thing, unfortunately.

    If you look at the Bell system, as a monopoly it had serious problems, but it is unquestionable that quality of service was first rate. End-to-end voice over IP VOIP) over the Internet as it now stands is a hundred year leap backwards in QoS terms.

    If the proponents of Soviet style network neutrality get their way, that will never change.

  17. Final FCC Report and Order here. It is long, but contains important details on some issues.

    One of the points is that the FCC is not attempting to regulate backbone providers, only access providers, and mass market broadband access providers at that. Edge providers (like Youtube) are not regulated, nor does the FCC have authority to do so. Edge providers tend to be among the order’s biggest supporters, for relatively obvious reasons.

    Nothing in the order appears to govern any sort of content or edge provider independent dispute like that ongoing between Level 3 and Comcast. The order also specifically denies any attempt to regulate various pricing schemes or models for broadband access, such as metered pricing.

    It provides for “reasonable network management”, including congestion control, and specifically mentions user based throttling of heavy users during peak periods (which is what Comcast does these days) as an example of what is legitimate.

    The transparency, and “no blocking” rules apply to both wireline and wireless access. Mobile broadband is exempt from the “unreasonable discrimination” rules for now, for technological reasons. I am not sure that makes sense.

Comments are closed.