Net Neutrality and its Discontents

Saturday, June 07, 2008

Net neutrality (formerly known as the end-to-end principle) means that the people who provide connections to the Internet don't get to favor some bits over others.

-David Weinberger
This is the principle that Net Neutrality advocates rally behind, but in practice what their movement calls for is further corrosion of the property rights of the Internet Service Providers involved. Take this little passage from SaveTheInternet.com.
Writing Net Neutrality into law would preserve the freedoms we currently enjoy on the Internet. For all their talk about "deregulation," the cable and telephone giants don't want real competition. They want special rules written in their favor.
Whether or not it would "preserve the freedoms we currently enjoy" online is debatable, but the method by which this preservation would be undertaken would be to limit the freedom to make contractual arrangements with one's own property. Net Neutrality advocates are in essence telling ISPs that customers are entitled to a specific sort of service, and ISPs, by the nature of their business, are obligated to use their property in a manner specified by government regulation.

I don't pretend to think that that argument is going to persuade anyone to change their minds. It's all that I personally need to convince me to oppose the initiative. However, for those who perhaps don't care as much about property rights as I do, let's take a look at some of the fears that surround this whole discussion.

As far as I can tell, the big scare is that ISPs are going to give more and more bandwidth to giant corporations that pay for it, while everyone else will be increasingly overshadowed and unable to compete. The idea being that new startups who did not have the resources to get an equivalent amount of bandwidth for their projects would face higher barriers to entry, and therefore the overall competitiveness of the web would go down. This passage from the Wikipedia article aptly summarizes that perspective:
Sen. Byron Dorgan, D-N.D., chairman of the Senate interstate commerce, trade and tourism subcommittee, told FTC Chairwoman Deborah Platt Majoras that he feared new services as groundbreaking as Google could not get started in a system with price discrimination.
I personally think that there is little to be concerned about.

There have always been sunk costs associated with starting an internet business. Just look at Twitter; as it has grown more popular, its servers have increasingly crashed. Now that it's bigger, they're going to have to invest in expanding in order to sustain the inflow of new users. That is going to cost them; the reason small sites go through these growing pains is because it isn't worth it to sink your funds into what it takes to support a large amount of users until you're reasonably sure you'll have them.

Similarly, let's imagine the non-neutral world. One scenario might be that there's a standard bandwidth provided for most websites, and then several different premium levels for those willing to pay for more. A startup might be willing to begin at the standard level, or pay a little extra without sinking too much into it. If it gained attention and began to get successful, it would then have the opportunity to spend more on bandwidth; either out of their own pocket or by courting investors looking to get in on the next big thing.

Doesn't seem like a big deal to me. ISPs take the money they make off of selling extra bandwidth to invest back into further expansion, more bandwidth is available to everyone overall.

Here's another scenario, as characterized by this image. Rather than just providing paying clients with more bandwidth, ISPs give customers multiple service options. The cheap internet gives you all of the websites owned by companies who paid the ISPs for the privilege of being included in the basic package. There may be only two packages, or there may be several, with the most expensive being the one that allows access to the whole world wide web.

Frankly, this one doesn't even trouble me. What's wrong with allowing people to decide the level of access they're willing to pay for? The people that pay for the more expensive service, along with the businesses that paid to be included in the basic one, provide the funds that the ISP uses to expand, and again, we're all better off.

I should also add that I don't think the average user experience is likely to change at all, in the non-neutral world. Odds are that services like Blogger, YouTube, and anything that involves hosting will run on the same model it does now. Companies like Google already shell out the money to create competitive free hosting services; that's unlikely to change even if they have to add the cost of contracts for competitive levels of bandwidth to their bill. It may be that some hosting companies like Bluehost would have to charge more for that reason, but when they already provide massive amounts of server space for seven bucks a month, I see little reason to worry about hosting costs suddenly skyrocketing.

SaveTheInternet.com's writers are scared because ISP executives are saying things like this:
William L. Smith, chief technology officer for Atlanta-based BellSouth Corp., told reporters and analysts that an Internet service provider such as his firm should be able, for example, to charge Yahoo Inc. for the opportunity to have its search site load faster than that of Google Inc.
But I think that Smith is absolutely correct. His company provides the service, they should be free to decide how they set their prices. People might argue that they are providing the service to users, not to websites, but I find that a bit difficult to swallow. I can't see how bringing potential customers to Amazon.com isn't a service to that company. Similarly, Google's revenue comes from its advertisements; you mean to tell me that enabling people to get to Google's operations in the first place isn't a service?

Upon closer inspection, I ultimately fail how a lack of net neutrality regulation is likely to make us any worse off. Collusion with a few corporations is not in any ISP's best interest; contracts with as many companies they can get to buy bandwidth is. Moreover, if they can sell their extra bandwidth, it becomes that much more profitable to invest in increasing the amount they can provide. Far from making us better off, net neutrality regulations would cut off one potential source of revenue that could have been invested in higher quality service.

The long and short of it is that I believe Net Neutrality to be unnecessary, counterproductive, and a blatant violation of property rights.

9 comments:

Peter Van Valkenburgh said...
This post has been removed by the author.
Peter Van Valkenburgh said...
This post has been removed by the author.
Peter Van Valkenburgh said...

Why this all might be irrelevant :)

from Yochai Benkler's The Wealth of Networks

"wireless communications technology has progressed to the point where it is now possible for users to own equipment that cooperates in mesh networks to form a “last-mile” infrastructure that no one other than the users own. Radio networks can now be designed so that their capital structure more closely approximates the Internet and personal computer markets, bringing with it a greater scope for commons-based peer production of telecommunications infrastructure. Throughout most of the twentieth century, wireless communications combined high-cost capital goods (radio transmitters and antennae towers) with cheaper consumer goods (radio receivers), using regulated proprietary infrastructure, to deliver a finished good of wireless communications on an industrial model. Now WiFi is marking the possibility of an inversion of the capital structure of wireless communication. We see end-user equipment manufacturers like Intel, Cisco, and others producing and selling radio “transceivers” that are shareable goods. By using ad hoc mesh networking techniques, some early versions of which are already being deployed, these transceivers allow their individual owners to cooperate and co-provision their own wireless communications network, without depending on any cable carrier or other wired provider as a carrier of last resort.


More...
"Adopting a regulatory framework under which all physical means of communication are based on private property rights in the infrastructure will therefore create a cost for users, in terms of autonomy. This cost is the autonomy deficit of exclusive reliance on proprietary models. If ownership of infrastructure is concentrated, or if owners can benefit from exerting political, personal, cultural, or social influence over others who seek access to their infrastructure, they will impose conditions on use of the infrastructure that will satisfy their will to exert influence. If agents other than owners (advertisers, tobacco companies, the U.S. drug czar) value the ability to influence users of the infrastructure, then the influence-exaction component of the price of using the infrastructure will be sold to serve the interests of these third parties. To the extent that these influence exactions are effective, a pure private-property regime for infrastructure allows owners to constrain the autonomy of users. The owners can do this by controlling and manipulating the users’ information environment to shape how they perceive their life choices in ways that make them more likely to act in a manner that the owners prefer."

I can't believe I missed all this. That book deserves at least three good goings-over!

Available here (shockingly, for free):
http://www.benkler.org/Benkler_Wealth_Of_Networks.pdf

Adam Gurri said...

I like the first quote, because it shows how private solutions are possible. It gives a sense of how innovation can create alternatives when people aren't satisfied with what they have.

I don't like the second quote, I have to say, because it basically says that property rights aren't good enough. Users are for some reason entitled to receive a certain brand of service from privately owned companies.

Words like "autonomy deficit" are thinly-veiled moral arguments against respecting property rights. And that's fine, if you believe in it. I just disagree, vehemently.

In any event, I really do want to read that book!

t.a. said...

my jaw literally dropped. you want me to feel sorry for Comcast? it's not ISPs like Peak in Corvallis that we're talking about with net neutrality, it's the huge multinationals that are spending the millions on lobbying.

thankfully, Senators like Ron Wyden are not fooled by your kind of dishonesty.

Adam Gurri said...

Yes. Dishonesty. Clearly, if I advocate something other than what you believe, I must have some ulterior motive. I mean, how could anyone actually believe something other than what you deem to be the obvious truth, right?

And I dare you to find a passage in which I asked you to "feel sorry" for anyone. What I said was that I believe in property rights. That is, that if someone is selling you a service, it is wrong to tell them that they can only sell it to you in one particular form. Their service is their own to provide as they see fit.

If Comcast wants to charge companies to get more bandwidth on their sites, that is their prerogative. I'm merely arguing that even if you don't believe in property rights, there's no reason to believe that a non-neutral net would actually result in anything bad. In fact, mechanisms like the ones described in the post could actually be used to expand overall bandwidth capabilities.

But hey, if you want to believe that my argument can be summed up as wanting you to "feel sorry" for the evil "multinationals" because they paid me off to mouth this dishonesty, go right ahead. Just try not to drop your half-assed responses in my comments section, ok? I'd prefer to save the space for people who actually read the post and are willing to respond to specific points that were made in it.

Anonymous said...

I think one of the biggest concerns isn't over barriers to entry but over site access. In a de-regulated internet you might have to buy a special service package from you ISP to visit sites like Myspace and Facebook. ISPs could block out entire websites if a competitor pays them enough.

This is not to mention the fact that outside of large Urban areas ISPs are a virtual monopoly, with only the ability to choose from the most limited of options. I live in rural Kentucky and it's either my local phone company or pay two to three times that for satellite internet service.

I support net neutrality out of pragmatism, but I respect your rejection on the principle.

Adam Gurri said...

I don't think there's any reason to believe that ISPs would block out anyone, because they stand to gain more by simply charging flat rate for amount of bandwidth. Moreover, no one website would gain much of an advantage by attempting to pay whatever enormous amount would potentially be needed to get a competitor blocked, because the effect would be only local; you might block a providor in one area by sacrificing the budget to do the same in another.

I understand your concern, but in my view net neutrality is an entirely unpragmatic perspective. First of all, it's a fear of a potential, rather than anything that anyone's actually seen. If you wanted to make a pragmatic case after you had observed something along these lines actually being done, that would be one thing. Otherwise, it seems like it is all abstraction, with potentially dangerous consequences (IE, getting the FCC as involved in internet as it is in broadcast).

Dana said...

A little openness would prevent a lot of what is feared. Imagine what the reaction would be if someone found out that a business, organization or political interest group were paying not to increase their own traffic but to decrease the traffic of their competitors?

I think the backlash would be strong against whoever attempted it.