Tag: net neutrality

4Dec

On Net Neutrality

If you’re having problems figuring the “net neutrality” debate out, maybe this will help.

On the one side, you have content providers —online gaming and video rental sites— that want to deliver content to you cheaper than you can get it through physical delivery. This is, in essence, the entire game of “cloud computing.” The network is free, only content counts. On the other, you have the actual network operators who must buy the physical hardware and pay the physical salaries of those who maintain the “free” network. Network equipment, network cables (especially long haul), and network engineers don’t come cheap.

It’s not about content, it’s about volume and flows, and who pays for the infrastructure build necessary to handle them. What amounts to poaching other people’s resources works well right up until you drive that other party into the wall and force them to spend a crapload of money for which they receive nothing in return. That is, they don’t receive any renumeration for the additional expense – but you do! This is the base problem with all overcommitted services where the business model is predicated on fractional use of maximum possible resource consumption. When that model is violated costs go up dramatically. This is ok provided the person who has the cost also gets the revenue that is occasioned by the violation of the original model. But in the case at hand, Netflix and similar get the revenue, but Comcast gets the cost. –Market Ticker

There are two ways to handle the problem. The first is to allow the service provider to charge more for the content provider to connect, so the cost is thrown back to the consumer in higher costs to download the content. The second is for the service provider to charge those who use more bandwidth for their usage directly. The Internet is structured the first way today, but there are many who want the structure to change to the second.

There is another twist to throw in here, of course. Should the local service provider be allowed to prefer services they’re making money off of over services provided by someone else? In other words, suppose there are two broadcasts of a local football game, one made by the local provider, the second by an outside company. Should the local provider company be allowed to treat their broadcast of the game on their network differently than they treat the outsider’s broadcast?

If you put these two problems together, you have the entire net neutrality debate in a nutshell. Right now it looks like the direction the FCC is going is to allow content providers to charge customers directly based on usage, but not treat anyone’s traffic any differently on their network.

The top U.S. telecommunications regulator on Wednesday endorsed the idea that broadband providers could charge extra for providing heavy Internet users with lots of online video or data-heavy services such as videogames. Julius Genachowski, chairman of the Federal Communications Commission, backed “usage-based pricing” while outlining proposed rules that would bar Internet providers from deliberately tampering or slowing legal Web traffic. –WSJ

Whether this is the “right” outcome is still open to debate. It seems, to me, that users should pay for their bandwidth directly, rather than by proxy through the cost of content. It also seems, to me, that the cost of high bandwidth usage should be applied to those who use it, rather than spread across all users. If I pay for one delivery service for telephone, and another for Internet access, and another for television, then I’m paying for those who use high amounts of bandwidth without reaping any benefit.

Competition will truly be fostered when the true cost of the service is given to the consumer. On the other hand, is there anything the government has touched where the regulation hasn’t turned into another reason to limit free speech and favor rent seeking large companies? This is a difficult web to untangle, indeed.

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