SIVACRACY.NET

My favorite example of a neutral network and the adverse consequences it can create is the freeway systems in major cities like Los Angeles and Houston... or any city for that matter.

Imagine how different our urban areas would be today if most roads were constructed as tollways instead of freeways. Cities would be denser, more people would walk, there would be alternate modes of transportation, there would be fewer cars on the street and less environmental degradation. Instead we are stuck in a vicious cycle where it's a "right" to drive your car anywhere, anytime. Any discussion of using the system more efficiently by converting freeways to tollways or HOV lanes is met with a hue and a cry that it is either undemocratic or punishes the poor. And we go on building more free roads frozen in an uncreative self-repeating loop. Sometimes metering a finite resource by price can be a good thing.

Here's my second thought:

Google, which employs 10,674 people, whose business model is to ride free on the internet, collect user data for free and then sell same info to it's clients had a net profit of 29.03 percent last year.

Verizon and ATT collectively employ 421,750 full time plus many more subcontractors. They earned 7.03 percent and 11.67 percent respectively last year. Their business model is to create, install and maintain the pipe and the hardeware that Google and you and I take for granted. Their profit is derived from charging us for it.

Ninety percent of the dollar value of internet commerce is B2B using about 20 percent of the bandwith. About fifty percent of the remainder of the bandwith is pornography. The balance is VOIP, youtube, e-mail, et al.

Whose interests and whose creativity is net neutrality going to protect? Is this really the greatest good for the greatest number?

Jardinero:

Your toll-road example is incoherent. Yes, it's true that making roads less efficient might cause fewer people to drive, which could have beneficial effects. But the same logic suggests that it would be a good idea to plant landmines on the highway, making driving more dangerous and achieving the same reduction in driving. And your argument about privatization applies equally to sidewalks: why should we subsidize people who use the sidewalk more than average, instead of turning city sidewalks into private property and allowing owners to charge tolls?

The answer to both the landmine and toll-sidewalk proposal is, of course, that we wouldn't do either of these things because they're absurdly stupid for dozens of reasons. Discriminatory pricing has terrible social costs, as does privatization of certain goods that have network effects, like roads and communication networks. Both practices have the effect of granting huge subsidies to large market incumbents and creating monopolies while shutting out small market entrants.

Much has been said about net neutrality by very knowledgeable, very wise people. Check out the wikipedia entry on the topic, at least, before ruminating in public like this. The fact is that the net neutrality "controversy" is about as controversial as the truth of biological evolution, or global warming, or the link between smoking and cancer. In other words, it's obviously true but has a lot of money saying it isn't.

Matt, I found your strawman argument about landmines very humorous and I have read the wikipedia entry you refer too several times prior to my posting. Much has been said about the free rider problem I refer to by very knowledgeable, very wise people. Check out the wikipedia entry on the topic, at least, before ruminating in public like this.

What do freeways have to do with free speech, free markets, competition, innovation, cultural experimentation, and democracy?

Good question, I will try to elaborate on my previous posts. I say the freeways are an example of a neutral network that doesn't work well. There are a finite number of lanes and they are filled on a first come first served basis. It doesn't work well for various reasons. One reason would be you have a large number of commuters who ride for one or two exits when the freeways are better suited to long distance travel. Another problem would be that there are few incentives to carpool, et al. In the end you have a system where everyone piles on and slows the whole thing down. An economist might suggest that this is because none of the users pay a cost that is proportional to their use. This is the freerider problem. I suggest that there are better ways to ration the use of this finite resource, tolls being but one example among many. The freeway example is merely food for thought. Next time you are stuck in traffic, remember that you're on a neutral network. I do suggest that the internet suffers from the same free rider problem.

My second post is more specific. Internet bandwidth, in the short run, is a finite resource. How you ration it will create winners and losers. What I ask is who will the winners and losers be in a Network Neutrality scheme such as it's bandied about in the little video you link too. I named the some of the major players, users and what they reap from the status quo. I understand and agree with the analysis of telecom providers as monopolists. The problem with the analysis is that it doesn't match up with the data. Verizon and ATT don't make money the way a monopolist should. What gives? On a social policy level do you want really want to beat up on them? Verizon and ATT and the other lesser telcos provide employment to nearly three percent of the US workforce. What are the other social costs of the Neutral Network? I submit that pornographers would be a major beneficiary. Google is a company whose entire business model is built on being a free rider. Shouldn't Google have to pay for a share of the pipe proportional to what it reaps from the pipe?

I don't believe that, to the players named above, network neutrality has anything to do with "free speech, free markets, competition, innovation, cultural experimentation, and democracy". Although, I believe as you do that those are all worthy things. I think, to them, it's only about profit and who profits from the internet.

Personally, I believe that if the telcos aren't allowed to auction off portions of their pipe to the highest bidder, they will have little incentive to invest in additional pipe. They will keep building pipe as long as there are bidders for it. The Cable Companies are already allowed to do this. TimeWarner runs a cable into my house. Part of it is dedicated to video programming and the rest is internet. What's wrong with allowing the other telcos doing the same and giving TimeWarner a run for their money?

Thanks for responding Siva. I think you and Profs. Bartow and Losh provide an excellent forum and some very challenging viewpoints.

Why do telcos in Europe, Brazil, and Japan offer much more bandwidth than US companies? They have network neutrality rules. Yet they increase bandwidth all the time. How come?

In the US, telcos have increased bandwidth steadily by offering tiered service to consumers. They have succeeded. That market works. With neutrality.

Yet US bandwidth remains far slower than the rest of the world. Why?

That's a question worthy of a dissertation. The places you mention operate under vastly different regulatory schemes with regard to telecommunications. The single biggest difference being that they all have or had state-owned telephone companies to start with. Cell service was rolled out differently and their internet pipe was rolled out largely through the largesse of the state. So there is a big difference in the responsibilities of telecom entities with that historical and political background. There is no comparison between the telecom regulatory climate in the US and the rest of the world. Personally, I think that attempts to compare the two are a red herring.

They are also a distraction from what I keep asking: What are the social and economic costs of network neutrality? Benefits are one thing but they have to be weighed against the costs. Who will be the winners, how will they behave, how will they be regulated?

I'm going to go back to Jardinero's original analogy, since I work in Orange County and often either choose to take a pricey toll-road to attend talks at one of our sister-schools, UC San Diego, or I sit in traffic on the larger, more plebeian freeway heading south. The effect of the toll road hasn't been to encourage walking or more efficient urban modes of sociality, rather it has been to make this part of Orange County an even more exclusive area of ex-urban McMansion sprawl and gated communities. With arteries of public infrastructure that are truly transnational, since the border with Mexico is not far beyond the UCSD campus, a toll road solution ultimately limits competition and commerce as well.

Thanks for indulging me everyone. I am enjoying this, really I am. I don't know why competition keeps getting invoked.