In the New York Times, Randall Stross echoes some points made by Larry Lessig about network neutrality. And, like Lessig, he cites unfavorable comparisons between U.S. broadband speeds and prices and those found in other developed economies, including Japan (100 Mbps for $25/mo.) and Stockholm (1 Gbps for $120/mo.).
Today, the network carrier has a minor, entirely neutral role in this system — providing the pipe for the bits that move the last miles to the home. It has no say about where those bits happened to have originated. Any proposed change in its role should be examined carefully, especially if the change entails expanding the carrier’s power to pick and choose where bits come from — a power that has the potential to abrogate network neutrality. This should be taken into account when Baby Bells say they need to extract more revenue from their networks in order to finance service improvements.
Consumers will pay one way or the other, whether directly, as Internet access fees, or indirectly, as charges when a content company opts for special delivery and passes along its increased costs to its customers. It would be better for the network carriers to continue to do as they have, by charging higher rates for higher bandwidth.
Stross’ last point strikes me as very important. If pipe owners start charging both end users and independent web service providers for use of their access networks, it seems they’ll have strong economic incentives to reduce the price of access, while increasing the fees charged to service providers that compete with services they provide themselves.
And, since we’re assuming they won’t be required to charge their own service units these same fees, the logical extension of this pricing system is that pipe-owners will have powerful leverage to squeeze the profit out of any competing service provider’s business model, by simply lower the price of end-user access and bumping up the fees charged to service providers. This seems all the more likely when we have a duopoly in access networks. Its pretty much what has happened in the broadband ISP business.
Understandably, cable and telephone companies would rather have only each other to compete with. From a duopolist’s perspective, that’s smart business strategy. But the question we need to ask as a society, is it a smart strategy for creating the next-generation Internet?
Mitch Shapiro at 12:15 AM|Comments(0)
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