The WSJ continues unabated in its campaign against net neutrality [emphasis mine]:

The new policy is a big political victory for Google and other Web content providers whose business model depends on free-loading off the huge capital investments in broadband made by others. Telecom has been one of the bright spots during this recession. Phone companies like Verizon and AT&T have spent tens of billions of dollars on broadband pipe in the past two years. To pick one example: AT&T’s capital investments in the U.S. totaled some $18 billion in 2008, the highest of any company. By threatening to limit what telecom companies can charge and to whom, net neutrality rules will discourage such investment.

The first point is completely nonsensical. Google doesn’t freeload one iota. They offer up websites on the Internet, and people paying for access to the Internet choose to access what Google offers. To characterize such a relationship as “freeloading” ignores the fact that Google pays for their connections, and consumers pay for theirs. There’s no “freeloading” whatsoever.

Net neutrality says nothing about what companies can charge. It only says that you must handle bits according to the rules that the Internet operates by. Again, back to my original example, if your house association started charging food delivery services surcharges for bringing pizza to your door, you’d object, and rightly so. Same with the telcoms. If the telcoms aren’t making enough, then charge more for greater bandwidth. Just don’t mess with the bits, holding up Dominos but letting Pizza Hut sail through.

To continue:

Net neutrality mandates also risk turning broadband service into a commodity and making it much more difficult for potential new entrants to differentiate their offerings. An Internet operator hoping to specialize in video or peer-to-peer file-sharing would be prevented from doing so. It’s as if the government were saying that if you want to start a supermarket, it has to be a Kroger or Safeway because Trader Joe’s discriminates.

Again, beyond dumb. Broadband IS a commodity!!!!! Broadband providers are bit schleppers, whose means of distinguishing themselves is by offering more bits at a higher quality of service at a lower price. That’s it. And there’s NOTHING WRONG WITH THAT. Lots of businesses distinguish themselves similarly, whether it be Dell, or FedEx or Walmart. But value adders they are not. Broadband providers need to lose the star struck attitude and stop thinking of themselves as selling entertainment. Because their customers sure don’t think of them that way.

And the analogy to supermarkets is stupefying. Broadband providers don’t carry inventory. In fact, that’s the whole point. The better analogy would be to FedEx demanding ransom for packages from the intended recipient. If FedEx started threatening to do that, then they would lose customers. Of course, FedEx has competitors. Which brings be straight to this asshat [emphasis mine]:

Net-neutrality supporters claim that if ISPs are free to give preferential treatment to certain websites’ data, they might drastically slow down un-favored or less-wealthy websites, diminishing their ability to offer content and make innovations. A prominent net-neutrality coalition cautions: “If you are an aspiring entrepreneur, you may be impeded from providing the ‘next big thing’ on the Internet.”

But such scenarios are nonsensical. For any of the nation’s competing ISPs to offer customers slow, patchy, let alone nonexistent access to the websites they seek to visit, would be commercial suicide. As for innovation, websites are free to continue using standard, non-prioritized Internet service. The fact that this would be slower than premium service does not mean that it would be slow, just as UPS’s decision to offer overnight delivery did not lead them to suddenly degrade their Ground shipping. Premium Internet services would enable, not stifle, innovation, by giving websites creative options they did not have before.

Commercial suicide, eh? I don’t know what country Alex Epstein lives in, but in the United States, the number of cable companies most citizens have to choose broadband service from is less than two (i.e. one). I am one such American. So what is my choice should Comcast (my provider) choose to degrade the packets I receive from Google, favoring the ones from say, Bing? Is there any? I suppose I could try and move to another town, but the costs of switching are astronomically high.

Again, imagine if the doorman in your building or gated community started harassing certain visitors, demanding tribute before letting them through. Would you stand for it? And that is exactly what the telcos are proposing:

Verizon Communications Inc. Chief Executive Ivan Seidenberg yesterday said he might favor reaching deals with companies to do the same. “We have to make sure they don’t sit on our network and chew up our capacity,” Mr. Seidenberg told reporters.

This mirrors the “freeloading” comment above. It’d be beyond obnoxious in a free market, but at least in a free market consumers would punish ISPs who behaved in such a way.

But let’s face it, there is no free market in consumer broadband. Cable companies are monopolies, and they didn’t gain their monopoly positions by offering better service. They bribed local town officials and cooperated with each other so as to not compete. So for them to now scream that their free market rights are being violated is beyond rich. Let the telcos do what they want once there’s real competition in the broadband marketplace. But until that time, they’re monopoly utilities and need to be strictly regulated as such.

Tags: Alex Epstein, LinkedIn, Net Neutrality

This entry was posted on Wednesday, September 23rd, 2009 at 3:57 pm and is filed under technology. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.