Occam's Machete

It looks like another go around in the net neutrality debate. Comcast announced today, “a 54 percent rise in fourth-quarter net profit to $602 million, or 20 cents per share, from $390 million, or 13 cents per share, a year earlier. “ At the same time they defend their practice of restricting the bandwidth used for certain practices that they find questionable [1]. This comes at a time when the congress is debating a new try at legislating net neutrality.

Is there anything wrong with Comcast throttling bittorent traffic? After all it is traffic that primarily steals revenue from Comcast itself. I mean if you download a movie and watch it rather than pay the PPV fee to Comcast it would be like, oh I don”t know, like the phone company (DSL) letting people use Skype. The fact that in both cases the pipe owners are getting paid regardless of the use of their pipe makes the question interesting. Do we have the right to demand unrestricted access using their pipes? Of course we do and this is my concern. The real issue here is that consumers have the right to know what they are paying for and to have a choice. This is the essence of the free market. If we know that Comcast is choking traffic for their own reasons we might just choose DSL. The legislation being considered would make it illegal for Comcast to throttle based on traffic type. That would keep a level playing field but seems counter to the principal of allowing companies to choose the features of their own products.

If we assume that capitalism is basically sound then how do we put market forces to work to solve this problem. First we would need to make the restrictions on access transparent to users so they can exercise their choice. Then we would need to have a choice. Fortunately in most places in the US we can get high speed internet access from either cable or DSL. We can vote with our money. Congress should protect our interests until such time as market forces take over and we can choose what is in our best interest for ourselves. Maybe we should be looking at breaking up the duopoly of one cable company and one phone company rather than regulating internet access. I know, that seems a bit much to ask for but it does make sense doesn‘t it?

The first version of Napster allowed anyone on the internet to share music with anyone else. The music industry killed Napster because, they said, it violated their copyrights on digital music. Digital Rights Management (DRM) was conceived to protect copyrights to digital media. iTunes, Napster V2, and others were created to fill the need for music downloads that protect the rights of the music publishers.

But the demand for open file sharing didn’t go away. In some ways it has only strengthened over the years since the victory of the music industry over Napster. Witness the growth of programs like LimeWire. While LimeWire accommodates DRM one has only to look at the content available to see that most of it is in MP3 format and lacks license information.

To get a quick overview of LimeWire follow this trail I found on Trailfire.

The term Net Neutrality is being used to describe the idea that packets on a network should be delivered with equal speed. In other words data comes from OccamsMachete.com just as fast as it comes from Google.com. This has been the norm for the entire history of the internet. As bandwidth increases it is available to all content providers equally. Now some network providers have noticed that they have virtual monopolies on access to the internet. Almost everyone gets high speed interenet access through their telco (DSL) or cable company. This duopoly has hit on the bright idea to charge extra for the speed of access to some content.

One way they can do this is to charge you the consumer for fast access to certain sites. Think $10 for basic internet plus $10 for premium internet with “faster” Google and MySpace. I don’t object to this so much because it is at least visible to the consumer. I know what I am paying for. But the other more insidious model for a two-tiered internet is where the content provider pays to get access to the consumer. In this case the consumer pays $10 for high speed internet but what they don’t know is that some content is being slowed down because the content provider is not paying the network provider for their top speed. This makes a lie of the network providers speed claims and the consumer has very little way of knowing this.

Regulation has been proposed and debated in Congress to guarantee Net Neutrality but I am skeptical or regulation in general. Regulation often just distorts and convolutes, making it more difficult to find a natural balance. Two things are needed to make this work for network provider, consumer, and content provider:

• Speed fees must be clear to those making purchasing decisions, i.e. the consumer.
• The consumer must have a real choice in what network provider they use. This is a big one. The telecom deregulation act in the 90s didn’t really give us a competitive landscape. Until this is fixed you will have only one choice—telco or cable. This is too great a limitation on competition.

If the duopoly is allowed to pass on fees for speed to content providers, in the opaque way they are proposing, consumers will have no way to know what they are really getting.

Put on your rant filters because I’m all over-stimulated about the state of Western consumer markets. Somewhere along the road from WWII to the post-modern world economy we got really used to every advertising and marketing trick employed to grab our attention. In fact we have become addicted to the next big thing. The thought came to me when my wife was telling me about a Starbucks in Shanghai where the Chinese manager wanted to serve spaghetti on Fridays in some sort of bizarre attempt at Western marketing. My first thought was, “how naive and childlike.” After all we gave up Spaghetti Fridays back in the 50’s didn’t we?

Anyway it got me to thinking about how product categories and the sophistication of our marketing campaigns have evolved over the years. Take personal computers. They began as a home brewed tangle of user built pieces and evolved into a standardized mass produced product and then into a commodity with little to distinguish one brand from another and now we see signs of the computer as fashion. You will see what I mean along this trail.

One can argue (so I will) that this trend exists in the software industry. First there was custom built software crafted by in-house programmers (stacks of Fortran cards) then the major application and OS categories coalesced (Windows and Office) followed by commoditization (open source). Is Web 2.0 just the natural tendency of any mature technology to become fad driven? Is MySpace only the fashion of the day to be replaced by FaceBook tomorrow and TagWorld next month? Can we begin to plan for churn in the software industry based on waves of fad as the fashion industry has long done? If so it means a major shift in the way we see software. No longer will need drive the decisions of software consumers—now what is cool or fun will rule the day.

Classic white Gmail anyone, or would you rather have the U2 endorsed subversive black version?