May 18, 2006

How can this discussion even be held when half of the conversants are paid hacks? Stevens33, aka Net Chick, you've been burned. Take your AT&T paychecks and earn them someplace else. You're an example of why Net Neutrality is so important. No one can trust a corporation to do anything but protect its bottom line using any means available. You are trying to stear this conversation your way, and you're doing it to grow your profits, not for the good of any private citizen.
Now, bugger off, propagandists.

Thanks Goose. The feeling is mutual. I've also learned a lot from the discussion.

Mitch, It's taken me too long to get back to this, but I wanted you to know that although I disagree with you on some of this, I really appreciate the time you've taken to reply. I'm smarter for having read this discussion--thanks.

MRT,

You said "nothing has happened yet that makes me want to see any government organization have a large role in determining what goes on in the internet." I think you're missing the core of the argument in favor of a "neutral" Internet architecture, which is that NO ENTITY--neither the government nor owners of duopoly bottleneck facilities--can "determine what goes on in the Internet."

In an earlier IPD discussion of this issue I said:

I tend to agree with Thomas Jefferson, the founding father who pushed hardest to make sure a Bill of Rights was added to the Constitution. He wanted to include "freedom of commerce against monopolies" in the document. But he lost out to the Federalists who had more power at the time (see http://www.thomhartmann.com/restoredemocracy.shtml), in part because there didn't exist then the huge private corporations we have today, so "private company" power was much smaller and less threatening than that of national governments, where they were still dealing with kings. The reality has changed a lot since then.

Like Jefferson, I have a hard time understanding arguments that focus only on problems associated with government power, but ignore problems associated with excessive power by private corporations. To be frank, they strike me as either extremely naïve, based on overly simplistic ideology or, in some cases, as cynical attempts to achieve political aims.

That being said, I respect the desire of incumbent network operators to manage their network and their business to maximize profits. I also understand that there could be undesired consequences and enforcement problems with net neutrality rules.

That's why I think its important to remove barriers to entry for local communities that want to invest in open-access "Internet roads" that retain a FULLY open and neutral Internet access platform and provide an alternative to the two-tiered business model that incumbents intend to pursue. By building a fully open Internet access platform, local communities can insure that NO ENTITY--private or public--can "determine what goes on in the Internet."

I think anyone would be better at monitoring the internet than the FCC. Look at the mess they have caused with radio over the past few years. However, I am still of the belief that nothing has happened yet that makes me want to see any government organization have a large role in determining what goes on in the internet.

Stevens33,

Thanks for the comment. You raise an important point. I think questions about enforcement of net neutrality rules have not been discussed fully enough in the debate (including by me).

Though the technical issues are beyond my level of expertise, I'm starting to wonder whether the IMS-based strategy incumbents appear to be pursuing will increasingly diverge from the "neutral-core/intelligent-edge" Internet model many of us see as important to retain, and that trying to insist that incumbents continue to support the latter to some socially desirable degree will become increasingly messy, from both a technical and legal enforcement perspective.

That's why my preference is to have the federal government do what it can (and not much is needed) to insure that local communities are not restricted from building neutral-core/intelligent-edge" networks, and have some additional good-quality spectrum made available for this purpose (e.g., broadcast "white space").

I think the net neutrality "movement" is a reflection of a broad recognition of the value of an open Internet and a sense that a vertically-integrated unregulated duopoly model is likely to move steadily away from that model. And I think statements made by incumbent execs support the view that this is likely to occur, though how fast and how far remains to be seen. But, as you point out, an important question--which too often gets lost in the heat and smoke of the highly-charged debate--is if and how this can be avoided by some form of net neutrality rules.

The other manifestation of this broad appreciation of the open Internet model and the desire to preserve it is the "muni-broadband/Community Internet" movement. I'm working on a report on this topic and am coming to believe that a strong case can be made to economically justify these networks. The case doesn't depend just on direct commercial (e.g., "triple-play") revenues, but one that also considers the direct benefits to government agencies and public services, and also takes into account an even broader view of the potential "social" benefits (e.g., cost savings and social benefits related to decreased motor vehicle use; more efficient healthcare and education; economic and job growth, etc.).

This broader view of economic justification is akin to the evaluation American society, through its government, made of the "social" value of the motor vehicle road system, which led to support of road expansion through "public" (e.g., tax) investments. This particular approach to funding isn't necessarily the best approach to take (e.g., it could be paid for by private investment), but it may very well be both justifiable and preferable.

Some might call this "socialism," but I wonder if they'd say the same thing about the nationwide network of roads this country built with public funds in the 20th century, which helped fuel an unprecedented period of economic growth and empowering mobility whose benefits could not be fully foreseen, let alone quantified, when those early investments were made.

Just like those roads did, a network of high-capacity "public Internet roads"--built with fiber, wireless, open Internet standards and low-cost Ethernet technologies--can create an open-access infrastructure that allows ALL players in the private market (and the public service and volunteer sectors) to take advantage of its capabilities to develop innovative services on a LEVEL playing field. I may be naïve, but isn't that what capitalism in a democratic society is all about? At least that's what they taught me in my college Economics classes.

I'm not insisting that this perspective is correct. It's frankly too early to tell. What I am saying is that individual communities should have the chance to test it out--to explore the potential of these various categories of "public" and "social" benefits. And that we shouldn't impose onerous restrictions on this "public Internet road" model (as some states have done on the prompting of incumbents, and that some in Congress seek to do at the national level) just because it might threaten the cash flow and stock price of telephone and cable companies if it became too widespread.

As I've said before, if incumbents want the freedom to pursue their IMS-based tiering model, which will have significant (and arguably negative) impacts on many other companies and individuals, then let the rest of society (through their elected officials) pursue an alternative model they believe is more broadly beneficial.

Unfortunately, resolution of this and any other policy debate is subject to the distortions we face in our political system, where campaign donations and well-paid lobbyists have undue influence over public policymakers (i.e., one person, one vote is replaced by one dollar, one vote). In my view, incumbent service providers, particularly the telcos, wield too much power in this arena, and often abuse it with well-funded and misleading advertising and PR messages, coupled with what I consider excessive spending on lobbying (at least in relation to spending by the opposing viewpoint).

This problem circles back to the substance of the "neutral network" debate. I've argued here that an "open access" network is inherently more "democracy-friendly" than one based on the ability of political "speakers" to pay a gatekeeper for the ability to speak to their fellow citizens. This aggravates the "one dollar, one vote" distortion in our political system. It also opens up the possibility of politically-motivated discrimination, as was the case in 2004 in broadcast content and advertising decisions made by Sinclair and others, by cable's unwillingness to run telco issue-advocacy TV ads and, in the Internet space, by Telus' decision last year to block its customers' access to the web site of a labor union with which the company had a dispute.

An open Internet is important because it has the potential to help redress some of the unhealthy and growing imbalances in our political and economic system--imbalances that I'd argue are aggravating and causing a wide array of economic, political and social problems. I believe the "fuel" driving the net neutrality and muni-broadband movements is an appreciation of the importance of that potential--and those problems--to our country's future.

As this long-winded post suggests, I think the debate over Internet policy is among the most important and fundamental our country is engaged in. But, to get back to your comment, it remains to be seen whether and which net neutrality rules can lead to a resolution of the issue that does more good than harm. This, in turn, underscores the importance of removing legislative barriers to entry for network initiatives that more fully retain the Internet's openness and innovation.

Mitch- Interesting and well thought out responses. I wonder though, wouldn't many of the same problems emerge under a regulated system that sought to enforce neutrality? That is, given the difficulty of controlling and enforcing such a measure, could not these companies just as easily cause problems with the flow of outside services like VoIP? It would seem to only require the offhand claim that the new regulations have cut profits to the point that maintaining such a network without "jitters" is near impossible. Given that aspect, I'd rather do without regulations, at least for the time being.

Watcher,

I think the approach you suggest is a reasonable one. But I think the reality is that, over time, a system that allocates "priority bandwidth" vs. "best effort bandwidth" will end up with the market for high-bandwidth services (e.g., video) diverging pretty far from the neutral Internet model that many see as important to our economy and democracy.

This wouldn't require any "abuses" per se, only the reality of increased bandwidth demands from new video services confronting the limits of cable and telco network capacity and operators responding with tiering strategies that make the best business sense from their perspective. I think that, as bandwidth demands increased, the "tiering" of IP services would become more and more dominant in the market, once it had become standard practice. Nothing sinister here, just the natural evolution of business driven by operators' business priorities, bandwidth constraints and a duopolistic market structure.

For those of us who value the existence of a neutral Internet, this scenario would increase the importance of the other part of the solution you propose: "to remove whatever blocks exist to true competition."

If you and I were sitting in a room negotiating this with congressional leaders, and I was representing organizations and individuals that want to retain a neutral Internet, I'd want to make sure that provisions to "remove whatever blocks exist to true competition" were explicitly part of any agreement. Specifically, this would include:

1. A provision that prohibits state laws that restrict the ability of local communities and city or county governments to deploy municipal broadband networks (something like the bill proposed last year by Senators Lautenberg and McCain). I think the financial hurdles facing any "third network" ventures are extremely high, and may prove too high for standard "private investment" models (as witnessed by the sudden shutoff of capital flows to CLECs and "overbuilders" after an initial rush of post-Telecom Act enthusiasm). As I see it, municipal networks have unique advantages they bring to the "third network" investment equation (e.g., internal cost savings and efficiencies for public agencies, public safety, etc.; non-monetized benefits to the local communities they serve; longer-term investment horizons, etc.), and they should be allowed to leverage these strengths, just as incumbent operators want to leverage the competitive advantages they enjoy (decades operating as virtual monopolies; incumbency, market share and existing cash flows that give them the flexibility to price very aggressively to starve startup competitors' revenues and scare off investors; ability to tier services and favor their own retail services, etc.)

2. A provision that authorizes unlicensed use of unused broadcast "white space" spectrum once broadcasters return their analog spectrum. This is supported by Intel and Microsoft, among others, and is included in several bills that have been introduced in both the House and Senate.

That seems like a reasonably fair tradeoff. Incumbent operators would get to pursue the tiering model they prefer, while local communities would not be restricted in their consideration and possible pursuit of "neutral network" models using fiber, wireless (including some new slices of unlicensed spectrum) or some combination of the two.

The positions of the ISPs as I understand it is to provide priority bandwidth to those companies willing to pay without affecting the "best effort" system for those companies that don't pay. Granted, stated intentions and actual intentions aren't always the same thing, especially in the corporate world, but what evidence is there that the telcos will abuse their power to control bandwidth? Can't regulation be instituted when and if such abuse is documented?

Wouldn't a better solution be to remove whatever blocks exist to true competition, put all of the different broadband providers (cable, DSL, satellite, fiber, wi-fi, etc.) on equal footing, and let market pressures and the desire to win the most customers regulate the ISPs?

keepitfree,

In my view, there's little doubt that the world of web-based services and related technologies has generated FAR more innovation than cable and telephone companies. I also think that the Internet (and by this I mean the "neutral access" Internet we've had so far) may be the most innovative, efficient and value-producing large-scale market economy that ever existed. So that means a lot is potentially at stake here.

Some opponents of net neutrality would say "keep the Internet free of government interference." I think this is a valid point to make. But I think the more immediate threat to the Internet's freedom lies elsewhere. I think it lies in the prospect of interference by vertically-integrated owners of bottleneck access facilities who, absent regulation, appear to have the ability and incentives to "unlevel" the playing field to maximize their financial benefits at the expense of healthy competition and innovation, the two key drivers of consumer value in history's largest and most efficient market system.

I'm not dismissing your point, I'm just arguing that, on balance, the more important loss of innovation is on the side of the many companies that develop web-based services and technology vs. two sectors that have not been anywhere near as innovative. Innovations that stifle larger amounts of more valuable innovation are not beneficial innovations on balance. Public policy is all about tradeoffs, and about facilitating an environment where healthy competitive markets can thrive. And while regulation can have unintended and undesirable consequences, its pretty clear that the same can be said about a lack of regulation, especially when we're dealing with cases of extreme market power in the control of bottleneck facilities.

With regard to discouraging investment in network upgrades (which you didn't specifically mention, but which others have), I'd make two points. One is that the telcos have no real choice but to upgrade their networks to deliver video and attempt to counter the revenue erosion they face from cable and independent VoIP services. The other is that telcos have a long history of promising upgrades to avoid or eliminate regulation and then not following through on their promises. So, I'm not inclined to accept on face value any such arguments related to net neutrality, and would hope that regulators wouldn't either, in light of past experience.

Loungin,

You make a valid point about the less-than-idealistic motives of web giants and also in raising questions about whether any rules need to be set up now. But I'm less concerned about web giants like Google, which can afford to pay premium access fees, then I am about the many startups that can't afford those fees, some of which might become the next Googles, Yahoos, etc. if they weren't forced to pay access fees to owners of duopoly bottleneck facilities.

And I think enough statements have been made by telco and cable execs regarding their intentions to implement "two-tier Internet" schemes that it's not premature to implement rules restricting their ability to do so if public policymakers make a determination that such rules are clearly in the public interest (i.e., they promote healthy competition, innovation, economic growth, and delivery of value to end users).

I think a strong argument can be made that it would be harder and more disruptive to implement net neutrality rules once significant steps were taken down the road of a two-tiered Internet. And, to be blunt, I think that's partly why telcos and cable operators are making arguments along the lines of "don't fix a problem that doesn't exist yet," because they know it'll be harder to muster the legislative will to fix "problems that do exist." It's generally harder to undo an undesirable reality then it is to avoid it from ocurring in the first place. As the old saying goes, "an ounce of prevention is worth a pound of cure," especially when the path to a cure has to travel through Congress and, most likely, the courts.

Mitch,

The fear is that this regulation will ultimately extend to dictating what companies can or cannot do in terms of charging for their services. That is a dangerous precedent that disincentivizes innovation by inhibiting the means by which to profit from that innovation. That is a legitimate concern, and one that makes me leary of regulation that is designed to address a problem that does not yet exist.

I'm not sure we need Congress to figure this one out though. It's a bit disingenious to say that this is a David vs. Goliath battle between telcos and the garage guys, considering that there is plenty of corporate muscle on the pro-NN side. I would guess that they're not there because they're inherently good - more likely because this impacts their businesses. We should let these giants spar for a while and see if the market works things out, before we codify this without any idea of how it will turn out.

Goose, No I don't think so, and this is based on what I hear from tech innovators, not just what I think.

My sense is that "the guys working on the 'next big thing' in their garage" are more worried about cable and telephone companies having too much control over the future prospects of the "next big thing" they're working on (by setting up a two-tiered Internet), than they are about having government create rules that try to maintain the principle of network neutrality.

I think most innovators in the tech world (working at both big and small companies, and for themselves) believe (from their direct experience) that having a "neutral" Internet has been instrumental in creating an environment that has generated an unprecedented amount of innovation and value. And they want to keep it that way.

And while there's not great enthusiasm for government regulation in general within the tech-innovation world, I think the majority of its entrepreneurs and innovators support some kind of net neutrality rules. I see evidence for that everywhere, and virtually none to suggest otherwise. Since they're the ones doing the innovation, I'm inclined to trust their judgement as to what's in their best interests and in the best interests of technology innovation in general.

Mitch, Don't you think the guys working on the "next big thing" in their garage should worry a lot more about the regulations a bunch of legislators with very little expertise impose on the internet than a tiered internet?!

Hello Net Chick and Luv2Box. I don't follow your logic. If you want to convince anyone of your position, you might consider answering these questions:

For Net Chick: Where does the bill "say in plain language that competition will end and the government will take to MONITORING our internet searches to make sure this regulation is enforced," and what is your understanding of what that monitoring would entail?

For Luv2Box: Exactly how would the bill "keep innovation and new technology from being developed and entering the Internet?"

Has anyone read this bill? It says in plain language that competition will end and the government will take to MONITORING our internet searches to make sure this regulation is enforced. Can anyone say Big Brother?

Network Neutrality is the core? The core of what? Keeping innovation and new technology from being developed and entering the Internet? This gentleman clearly has no understanding of how the Internet works and how this bill could potentially hurt all of us. Boo and shame on him!