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The Case Against Net Neutrality

by in Telecom

I am a strong believer in Net Neutrality. That is, I believe that Comcast is a common carrier and they should be colorblind as to the traffic that they carry. If they sell 50 megabit service they should delivery 50 megabit service for movies and for emails.

But I can see Comcast’s point of view from an historical perspective.

  • Consider the trucking industry. Shipping via a common carrier trucking company is complex. The rate you pay for shipping used computer tapes is different from the rate for new ones. There is a different rate for wool products. And a different rate for plastic articles. This goes back to the railroads which charged every industry differently, based upon what that industry could bear.
  • Airlines charge a child a different rate than an adult, sometimes. A one-way ticket can cost more than a two way ticket. First class is different from coach. A dog ships for a different rate than a box of peanuts.
  • Don’t even get me started on hospitals which are perhaps the most discriminatory of all, penalizing the poor while giving generous discounts to the rich.
  • Your city bus service charges a different rate for an able adult than for a disabled adult or elderly adult.
  • Your power company charges different rates per kWh for homes and businesses.
  • A tollway charges a car a different for a camper or a truck.
  • In California your property tax rate is different than your neighbor’s based upon when you purchased your home.
  • Income taxes are different rates based upon how much you make.

The fact is that pricing in America is highly discriminatory. So I can see Comcast’s frustration that they can’t discriminate and charge you a higher price for watching movies simply because you would pay it anyway.

So the next time you ask your boss for a raise simply because you are worth more than a co-worker, remember that Comcast wants to do the same thing to you. It’s not really any different.

Now, as a matter of national policy I would support the notion that a company cannot discriminate and that they charge everybody the same.  I support Net Neutrality. But keep in mind that the American system is not based on fairness. It is based upon taking the most money it can from people.

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  • Colin, you bring up very good points. Few truly understand network theory (can’t be easily modeled in classical economic supply/demand models) due to things like network effect, and enormous variability of supply (near constant cost declined) and demand (growing and infinitely bifurcating). Turns out with networks nothing is average. Everything is marginal.

    So the trick is to develop a framework and model that can:
    a) establish pricing that clears marginal supply and demand ex ante
    b) develop inter-network and inter-actor settlements such that overall network effect and ecosystem sustainability is achieved
    c) use price signals to act as incentives and disincentives to clear supply and demand rapidly, efficiently and ubiquitously, while
    d) sharing overall network effect value from top to bottom (app to infrastructure) and east-west between actors/networks. We see demonstrated network of value gravitating to the top and core everywhere (both at the logical core of the internet and its physical edges).

    Hopefully academic, policy, trade and capital market participants start developing consensus around these issues and approach the process objectively. A simple outcome is mandated interconnection out to the edge (that will force it’s way to the core which is already horizontal and relatively open in the infrastructure layers by siloed in the control and app layers), while also fostering and monitoring these inter-network settlements. Bill and keep results in the opposite of what most people think. It’s monopolistic, thwarts competition, constrains investment and increases the digital divide.

  • David Maldow

    If the issue was different speeds for different types of content/traffic I wouldn’t be so concerned. Making video fast and email slow isn’t really a problem. My concern is they will make Netflix slow and create a Comcast version of Netflix which is fast. Or make Skype slow and create a Comcast videoconferencing service which is fast. Or make TalkingPointz load super slow and make a new Comcast tech blog load super fast. Without Net Neutrality Comcast can extend its quasi-monopoly of bandwidth (which is a nightmare for customers) to a Comcast quasi-monopoly of content (which would be a bigger nightmare for customers).

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Colin Berkshire is a highly technical HR executive in the Pulp and Paper Industry. Colin has an engineering and voice background, and is currently on assignment in Asia. NOTE: Colin does not respond to comments, and does not Tweet.

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