Re: Observations of an Internet Middleman (Level3) (was: RIP Network Neutrality

[Andrew Fried <andrew.fried () gmail com>]

++1

Andrew Fried
andrew.fried () gmail com

On 5/10/14, 2:42 PM, Patrick W. Gilmore wrote:
> Nice discussion about history & motivations. Not completely correct, but it's always fun to argue over history, and 
> over motivations, since both are open to intepretation.
>
> Personally, I am interested in the future, and specifically in market-driven solutions to our problems. Call me a 
> capitalist if you like, but I believe in a functioning market, we can get a very good approximation of "fair".
>
> If Company A and Company B have a mutual customer, and that customer needs both companies to perform a task, the 
> market will find a way to make those two companies work together. Either that, or the customer will replace A or B, 
> whichever the customer feels is underperforming, with Company C.
>
> We have that situation today. Streaming Company wants to send End User of Broadband Company some content. If 
> Streaming Company sucks - not enough titles, lousy customer service, high price, poor performance, etc., etc. - End 
> User is free to select Streaming Company 2. And contrary to popular belief, there are plenty of "Streaming Company 
> 2s" available. Besides NF, there is Hulu, Amazon, iTunes, iPlayer, etc. They might have different models, but they 
> all allow you to access streaming content, so choice is available.
>
> And here is where we get into the problem. Should End User believe Broadband Company sucks, they frequently cannot 
> choose Broadband Company 2. I know I cannot, my choices are Comcast @ 100 Mbps or Verizon at 1.1 (yes, one-point-one) 
> Mbps. So when Streaming Company sucks, but they suck because Broadband company is doing something I do not like, I 
> cannot "vote with my wallet" and pick Broadband Company 2. I have no choice but to pick Streaming Company 2, even if 
> I think the problem is Broadband Company's fault. (To be clear, I am not a NF subscriber - any more - and so this is 
> not a NF/CC thing, I'm just talking generalities.)
>
> Put more succinctly, there is no functioning market. therefore there cannot be a market-based solution.
>
> Personally, I view that as about the most Un-American, Un-Capitalistic thing there is.
>
> Lots of people have suggested a simple, if very difficult, fix to this problem. Make the underlying physical 
> infrastructure a regulated monopoly, i.e. a Utility. Then allow anyone to run services over that physical 
> infrastructure.
>
> This is not  pipe dream. The UK does it today. People there pick ISPs based on service, price, features, etc., not on 
> "who paid off my local PUC".
>
> And before anyone brings up the whole "the UK is more dense than the US", I preemptively call BS. There is more 
> choice, faster speeds, and lower prices in the middle of no-where UK than downtown manhattan. Please just leave that 
> argument where it belongs, in the dung heap.
>
> Why can we not do something similar in the US? because the companies who own the lines have enough money to pay 
> enough lobbyists to avoid even the promises they do make. (If anyone on this list is un-aware of things like the 
> telcos promising ubiquitous high-speed BB years ago and never delivering, but never giving back their tax breaks or 
> monopoly positions, you should be ashamed of yourselves.)
>
> But hey, a guy can dream, right?
>
> In the mean time, let's stop pretending that 'oh, L3 paid CC so they must be best friends'. L3 paid because They Had 
> No Choice, and maybe because they see some long-term strategic benefit (e.g. they can charge others more later).
>
> This is not a functioning market. This is a few players with Market Power charging Rents, which any first year econ 
> major will explain is a _very_very_very_ bad place for the market to be.