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 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.