How could the free market limit the effects of net neutrality's repeal? Specifically, how will consumers' internet access be protected without government regulation?
Asked
Active
Viewed 8,995 times
37
-
80I think your question is based on a faulty premise. Why should the free market limit the effects? Protecting consumers is the point of government regulations, not of the free market. – tim Dec 15 '17 at 16:48
-
That's a good question but formulated somewhat biased. A neutral formulation would be something along the lines of: "How will the net develop in an unregulated free market?". This might actually be more a question for economy than politics because ... well unregulated (no politics involved). – NoDataDumpNoContribution Feb 13 '18 at 09:37
9 Answers
105
Almost all high-speed broadband Internet service providers, except in high-density urban populations, have limited competition, if not full monopolies. A small start-up would have to build out their own infrastructure with no existing customer base, which isn't going to happen, in most cases.
This is why so many people want to treat the providers like a utility. This is why hypothetical "free market" constructs do not apply.
The best way to use "free market" principles or competition to ensure net neutrality is for citizens to demand their municipalities build their own high-speed infrastructure and sell the services as a municipal utility under a net-neutral format. Then there would be actual choice and competition, but if the competition comes from a non-profit government or quasi-government entity, then the claim is that it's socialism, not free market.
As the physical infrastructure and regulatory environment currently exists, there is no free market with ISPs, practically speaking, so using something that does not exist is not a possibility.
Brythan
- 89,627
- 8
- 218
- 324
PoloHoleSet
- 20,854
- 3
- 55
- 89
-
Comments are not for extended discussion; this conversation has been moved to chat. – Sam I am says Reinstate Monica Dec 16 '17 at 03:48
-
22"except in high-density urban populations" Should read "even in high-density urban populations". – jscs Dec 16 '17 at 04:04
-
1I'm not saying that this is realistic, but the "free market" version of your suggestion is not for the citizens to "demand" their municipalities to build something, but for some subset of the citizens to form their own ISP. This, for example, does not require a majority vote in favor of this proposition. It would be like forming a community credit union or, more relevantly, a utility cooperative. – Derek Elkins left SE Dec 16 '17 at 08:44
-
16This otherwise excellent answer fails to note that, in far too many cases, the problem with starting a new ISP or expanding into a given area is that the municipality stands in the way, preventing the ISP from starting up or expanding. – Michael Hampton Dec 16 '17 at 19:17
-
16@michaelhampton while true, there’s a good reason for that in that cities don’t want duplicated infrastructure everywhere. The main problem is we have privately owned infrastructure that is impractical to duplicate (another argument for making the Internet a public utility) – Dec 16 '17 at 23:57
-
9@Michael Just compare Internet with Water. The only difference is that unregulated water will result in a higher number of fatalities than unregulated internet. The same reasons that apply for water regulation apply for internet regulation. No, a few citizens banding together and starting up their own water supply company and laying their own pipes will definitely not solve the problems created by unregulated water supply. And for the very same reasons that solution doesn't work for internet connectivity. – Peter Dec 17 '17 at 16:57
-
- WISPA members won't agree - all started as competition to incumbents, and many more are starting every year. 2) Incumbents are over priced because they are big bank financed, their suppliers know this and load their prices, and they know you will pay... 3) Municipalities building infrastructure will only make it worse, because they too will overpay 4) Technology and economies of scale have pushed down infrastructure prices... smaller operators can already out-compete incumbents... Summary: Be careful what you believe or ask for...your wish may make it true, perpetuating a bad situation.
– Dagelf Dec 17 '17 at 20:55 -
@JoshCaswell There are areas in the country where there are several competing residential ISPs, although even in those places there are technology monopolies. E.g., In the area where I live, I can choose between three or four high-speed providers, but if I want fiber optic service, I have only one choice, and if I want coaxial service, I have pretty much one other choice, and if I want satellite internet, I have one, maybe two choices. So I might have up to four choices, but each choice has caveats beyond price and service. – Todd Wilcox Dec 18 '17 at 14:43
-
1@ToddWilcox Wow, I thought I was lucky to have two options with identical poor reputations. You're extremely lucky to have the number of choices you have, even though they're not apples-to-apples. Most of the US has a single local option, and some only have cell or satellite options with no ISP willing to hook them up. – Carl Kevinson Dec 18 '17 at 16:39
-
5@Peter: But somehow, municipalities have managed to regulate the laying of water pipes within their borders without the intrusion of the FCC. And outside municipal boundaries, private water service is entirely possible, practical, and practiced. – Ben Voigt Dec 18 '17 at 19:40
-
3@Peter in fact this is exactly what is working in Europe. The initial providers who have have laid down infrastructure, according to EU regulations have to allow other ISPs to also use their infrastructure for a regulated rental price. This means that a small company can and does provide access to eg apartment house to which the larger provider doesn't care to put the last mile as the profit margin is too slim. There is plenty of small providers who are usually the guys who live in the house themselves and thus can get Internet for themselves and neighbours. – Gnudiff Dec 18 '17 at 21:15
-
@Gnudiff In the US, a similar thing happened with phone service as part of the AT&T breakup in the 70's. Local phone service remained a regulated monopoly (but different companies in different parts of the country), but they had to allow all long distance providers access to the local phone lines. This allowed the growth of MCI and Sprint. – Barmar Dec 19 '17 at 01:10
-
"The best way to use "free market" principles or competition to ensure net neutrality is for citizens to demand their municipalities build their own high-speed infrastructure" That's pretty much exactly what happened in large parts of the Netherlands, and subsequently ISPs started waging a price war to offer the best/cheapest/most featured broadband internet over a now-extant fiber-to-the-home infrastructure. – Shadur-don't-feed-the-AI Dec 19 '17 at 14:25
-
@Dagelf - we have a working municipal model in Chattanooga, which has the fastest, most reliable high-speed Internet in the USA, with more bandwidth at cheaper prices than pretty much anywhere in the USA. It's been successful enough that they are looking to upgrade so anyone, anywhere on their network can get 10GbPS speed. I'm not sure where your "they're going to overpay" vs small startups. There are economies in scale, and, again, outside of major cities, the small ISPs don't and can't serve enough customers to be a realistic alternative. – PoloHoleSet Dec 19 '17 at 15:44
-
@PoloHoleSet Is the financing of this model public record? Can you link to it please? I really find it hard to believe, it may look cheap to you now, but perhaps there is just a hidden tax buried down the line...? @ Gnudiff Almost always the "regulated pricing" is under cost, keeping new competition out because they cant get footing to compete @ Carl\ Kevinson Where do you stay? I will move there and start a cheap ISP tomorrow... or help you do it. People, it is the easiest thing on the planet starting an ISP. All the info you need is free. The hardware cheap. I started a $1m ISP with $500. – Dagelf Dec 19 '17 at 21:46
48
The capitalist answer to this problem is that when there is a real desire for net-neutral internet providers, then the market will create them.
An internet provider could publicly commit to maintaining net neutrality and use that commitment as an unique selling proposition in their advertisement. Consumers who care about net neutrality could then vote with their wallets and switch to that internet provider.
This, however, assumes that there actually is a competitive market for internet access in a given region. If a region is only served by one provider, this is not an option. Also, a neutral internet provider will likely be more expensive, because they do not make any income through preferential treatment fees from content providers.
Philipp
- 76,766
- 22
- 234
- 272
-
Great answer, but one quibble: "a neutral internet provider will likely be more expensive" - citation needed. Every single pro-NN argument I read keeps stating that there's no evidence that NN imposes higher costs on consumers - because if it was objectively agreed it did it would be a powerful argument against NN. – user4012 Dec 15 '17 at 18:23
-
16@user4012: He explained how they would make less money. If non-neutral providers make money by charging from Netflix, Youtube, Facebook, and other big companies (pay us or we'll throttle your traffic), then obviously a neutral provider can't do that. Therefore, they make less money. The difference in profit will have to be made up somewhere. Now, it hasn't been proven that such throttling will certainly happen, but there is clear profit motive towards doing so. And without competition, it's difficult for consumers to pick neutral providers. – Nicol Bolas Dec 15 '17 at 18:35
-
1You should clarify what the capitalist answer is to why people would desire to connect to net-neutral ISPs in the first place. That's the difficult part: according to its supporters, net neutrality benefits the Internet as a whole way more than it benefits individual customers. Individual customers can even benefit from a lack of net neutrality, as in the case of zero rating. So how is the free market going to place the needs of everyone over that of the individual actually doing the purchase? Right now, your post skips all the difficult parts, and goes straight to the obvious last step. – FrederikVds Dec 15 '17 at 18:46
-
@NicolBolas - no, he explained a theory of how they might make less money. It's a plausible theory, in theory; but, seems to be contradicted by actual facts on the ground (as stated by NN proponents, at least). – user4012 Dec 15 '17 at 19:10
-
20@NicolBolas - "Now, it hasn't been proven that such throttling will certainly happen" - what are you talking about? The whole reason why Net Neutrality was formally implemented as a policy was because the throttling already *was* happening. If it already did happen, I'm not sure how you can claim that there's no proof that it would. – PoloHoleSet Dec 15 '17 at 19:59
-
3@PoloHoleSet: The fact that something did happen before doesn't mean that it "will certainly happen" again. It just makes it quite likely, especially considering the profit motive. – Nicol Bolas Dec 15 '17 at 20:05
-
1@PoloHoleSet - it happened in 3 cases, and one of them was successfully squashed by FCC well before 2015 NN rules (Vonage blocking) and one wasn't about blocking at all. You're extrapolating 3 cases out of literally millions onto a generic problem without any reason as to why it won't remain just as rare. – user4012 Dec 15 '17 at 20:05
-
2@user4012 - There were more than three cases of throttling or outright blocking, and it's not like it affected three customers. These were major carriers with millions of customers. – PoloHoleSet Dec 15 '17 at 20:10
-
23@NicolBolas - Let's see.... without the restraints, the companies actively pursued this strategy. Once it was in place, they fought tooth and nail to have it repealed. Now that it's repealed..... it's not certain that the Earth will continue to rotate and that the sun will rise, but anyone who tells you that it's not going to happen is probably being intentionally obtuse. If the companies didn't want to actively pursue this, then they wouldn't have bothered spending millions to get it repealed. Are you contending that what happened before was some kind of freak accident? – PoloHoleSet Dec 15 '17 at 20:12
-
@PoloHoleSet - Vonage (resolved without NN), BitTorrent (which likely would be illegal even with NN rules since they don't affect blocking pirate websites either), and unadvertized data caps (also resolved without NN) were the ones that affected tons of customers. Which ones did I miss? – user4012 Dec 15 '17 at 20:20
-
9@user4012 Netflix being throttled by Comcast and AT&T blocking FaceTime in favor of ISIS (their clone of FaceTime, not the terrorist organization) – Dec 15 '17 at 23:05
-
14I'm not sure if I should up-vote this, or down-vote it. On the one hand, it does give the classic capitalist answer, but on the other hand, it rather glosses over the fact that most of the US has internet monopolies, or duopolies at best, with virtually unbreakable barriers to new entrants to the market. – Mark Dec 16 '17 at 00:55
-
11The world doesn't work like that. Capitalism and the free market, left to itself without protection, will tend towards market fractioning, information asymmetry and monopolies. A free market needs protection. – Stian Dec 16 '17 at 18:45
-
I work for a small ISP in a rural area (all cities we serve <13,000 residents) that serves about 3000 customers with wireless, Fiber, and DSL, and we have always provided "net neutral" service (and never plan to do otherwise). Just in case anyone needs a counterexample to the "no competition" argument. – Azendale Dec 18 '17 at 18:39
-
@Azendale: "we have always provided 'net neutral' service (and never plan to do otherwise)" - well, has any content producer or similar offered you an exclusive partnership in your area, which would (based upon market forecasts or direct payments as a part of the partnership contract or whatever) significantly increase your revenue? – O. R. Mapper Dec 18 '17 at 20:24
-
2@O.R.Mapper: We're talking about data, not TV channels. So the idea of "exclusive" really doesn't apply. The ways that "non-neutral" would be likely to crop up would be if (for example) Netflix offered them a rack-mounted proxy at Netflix expense which updated content between the hours of 2am and 5am when virtually all customers are asleep. The result would be that during peak hours, customers could watch Netflix in UHD (2160p) but other video streaming services that actually needed to cross the Internet might only be reaching plain HD (720p). – Ben Voigt Dec 18 '17 at 21:17
-
1The only way that would be "exclusive" would be that the proxy box would only host Netflix content, not Youtube, Hulu, Amazon Video, etc. But none of those other services would be disabled or disadvantaged compared to any other sort of Internet-sourced traffic. (Context: I also worked with a rural ISP, different from and smaller than the one Azendale mentioned) – Ben Voigt Dec 18 '17 at 21:19
-
@BenVoigt: I didn't mean "exclusive" as in "totally unreachable otherwise". I meant "exclusive" as in "special deal". For instance, customers getting Netflix (or any other particular online video-on-demand service) at a reduced fee as an optional add-on to their internet connection. – O. R. Mapper Dec 18 '17 at 21:55
-
7@user4012 BitTorrent isn't illegal. It's just a communication protocol. Here are a few legal BitTorrent downloads: https://www.ubuntu.com/download/alternative-downloads – Steve Cox Dec 18 '17 at 22:02
-
@O.R.Mapper We have not been offered something like that, and I think that it would just get ignored. (We really like the "it's just data" view. It keeps things simple.) Also, I know that ESPN tried to get us (and other ISPs, I'm sure) to pay a fee per internet customer so that a few (the interested) customers could stream ESPN from our address range. That pretty much got the middle finger. – Azendale Dec 21 '17 at 02:05
-
If customers don't like the service, they will vote with their money. ... Unless there is no competition in the local market and the customers don't want to go without internet because they rely on it for too many things. In that case, they will tolerate something they otherwise hate and will be essentially powerless to change it.
However, if there is no competition in a marketplace, then a competitor will move-in and compete. ... Unless half the market share does not justify the cost of laying down duplicate infrastructure city-wide. Then they won't, and the monopoly will persist.
– John Sep 05 '18 at 23:40
18
By having a free market. If consumers didn't want plans that delivered some content with better QoS than others or that limited content, they could simply choose to purchase from providers that don't do that. If there's enough demand for it, someone will offer it. And people who don't actually care that much about it can probably buy cheaper plans that do have those restrictions.
Where the problem with this comes in is that the current situation isn't a free market. Many ISPs have government-enforced monopolies in their service area, municipal exclusivity agreements. In the absence of net neutrality rules, these providers can then buy up content producers or make agreements with certain content producers to prioritize their traffic on their networks while excluding others. Thus, they can extend their government-enforced monopolies from content delivery to content production. To solve this problem, ban and nullify the exclusivity agreements, allowing an actual free market to operate as per the first paragraph.
reirab
- 8,261
- 26
- 47
-
Also realize that the government interference includes requiring some of the telephone monopolies to allow competition lease the last mile wire at a set rate (and allow their competition to co-locate in their central offices). This includes for DSL service, but generally not fiber. – Azendale Dec 18 '17 at 18:43
-
@Azendale Generally neither fiber nor cable. Even if there is competition for DSL, DSL is usually much slower than cable or fiber, so it's not much of an option for consumers who are having trouble being limited on their streaming video services by their ISP, since DSL often struggles with those bitrates anyway. – reirab Dec 18 '17 at 18:59
-
@reirab Right. I would love to see a setup where a customer owned Co-Op runs either active ethernet or a PON (both are fiber) to a central exchange point where you have your choice of carriers. That model has worked for power in some rural areas. On another note, in our area, there so far is no enforced monopoly on the cable and fiber networks. So the fiber, wireless, and cable are battling it out while the ILEC has more and more copper loops disconnected. – Azendale Dec 21 '17 at 02:13
10
Net Neutrality is about preventing companies from selling certain products. Asking how the free market can prevent the effects of the net neutrality repeal is asking how the free market is going to prevent Nike from selling shoes that contain no laces.
Russia has no netneutrality. A while ago I was hosting couchsurfers from Russia in Berlin that had a contract that allowed them to use Telegram for free internationally. This meant that I didn't communicate with them via WhatsApp/Signal or Facebook messenger (the modes I usually use) but I instead installed Telegram because that allowed us to communicate freely with each other.
The free market isn't doing anything to prevent his Russian mobile company from selling him such a plan, as long as it's a good deal for him to buy it and for the company to sell it to him.
Similar arguments go for plans that provide service-level gurantees that gurantee a customer a low ping for communicating with US servers. Some customers will be willing to pay and others won't but a free market won't result in all customers getting the same ping.
Christian
- 2,087
- 1
- 15
- 27
-
11Zero-rating (the practice you describe here -- not the only thing network neutrality principles prevent, but one of them) raises barriers to entry: If Comcast zero-rates their own streaming video service (f/e), then someone else who wants to compete needs to either pay for similar privileges (if Comcast will agree), or is at a severe disadvantage in terms of pricing. That reduces fair competition, resulting in a skewed market with higher barriers to entry -- hardly conducive to market forces performing efficient optimization. – Charles Duffy Dec 16 '17 at 03:14
-
There's a big difference in the US of A compared to other regions in that many of the ISPs in the US are both internet service providers AND are either content producers or own content producers themselves. So they can easily strongarm people by withholding their content. – Valthek Dec 18 '17 at 11:02
-
2+1 for "Asking how the free market can prevent the effects of the net neutrality repeal is asking how the free market is going to prevent Nike from selling shoes that contain no laces." – guenthmonstr Dec 18 '17 at 15:26
-
@Valthek: "many of the ISPs in the US are both internet service providers AND are either content producers or own content producers themselves" - I'm not sure the net effect (no pun intended) on users is so different when you look at ISPs in other countries that might form something like exclusive partnerships with those content producers instead of being content producers themselves. – O. R. Mapper Dec 18 '17 at 20:25
-
@O.R.Mapper The biggest difference is the stability of the partnership. If you own the content creation pipeline, it's much easier to hold content hostage than when you have to licence it from someone else. If you face backlash because your show can only be seen on your network, on a specific plan, that's an issue. If it's popular enough and you own it, you can keep doing what you're doing. However, if belongs to a third party, they may decide that popular opinion (and the profits that depend on it) are worth finding a different partner who won't restrict their million-dollar property. – Valthek Dec 19 '17 at 08:57
-
1@Valthek: "If you face backlash because your show can only be seen on your network, on a specific plan, that's an issue." - yes, but why would you? Your competitors will face backlash because the show cannot be seen on their networks, and some of their customers will contemplate switching to your network to watch the show. And the owner of the show has little incentive to change anything, because they're getting additional subscriptions from your customers that only sign up because it's so readily available at a discount price at the company they already get internet from. – O. R. Mapper Dec 19 '17 at 09:16
-
@O.R.Mapper Perhaps backlash wasn't the correct word. But consider the mess that happens on the internet when it's Game of Thrones season. Sure, a lot of people watch it on HBO (whose owners own the rights and presumably sell a lot of subscriptions on that base) but a lot more people pirate it because they literally can't watch it. (because of geographical, financial or other reasons) If the content creators were an independent company, they might go looking for a network that's more freely available (netflix?) so they don't lose as much revenue. I could be wrong, but it's a likely factor. – Valthek Dec 19 '17 at 10:01
-
1@Valthek : Independent content producers don't produce expensive series like Game of Thrones. Netflix has a business model that's effective at making money with series like Game of Thrones even if the model is more complex to understand than paying-per-unit. – Christian Dec 21 '17 at 15:36
2
All the FCC did was repeal a rule it made in 2015. That's it. The Internet is now and has always been the free and open platform we know despite an almost complete vacuum of government regulations of any kind. For the past three decades it has plodded along, doing its thing, and changing the world -- curiously absent of the corporatist apocalypse that Net Neutrality's proponents have been warning us about for years. The answer to your question is all around you.
I'm no fan of Comcast or Time Warner Cable. There's a reason that people continually vote them as the worst company in America. But the point is that it's not like they just had this brilliant idea a couple of years ago to use their monopoly powers to put the screws to content providers like Google and Netflix. They've been trying to do that since the 1990's. They're the same evil, greedy mega-corporations they've always been. And yet, here you are, reading this post on your browser or your phone, for the same price that you're paying for all the other tabs and applications you have open right now.
The free market made the Internet what it is today. Attempts to monopolize and control it aren't new, but they have thus far failed to do so. If they ever do succeed, then we can talk about Net Neutrality. But for now, the term "Net Neutrality" is just a pleasant-sounding euphemism for "Government regulation of the Internet". And the Internet and all of the players on it large and small have shown us, consistently, time and time again, that there is little need of the government's "protection".
Wes Sayeed
- 12,075
- 3
- 27
- 48
-
32Funnily enough, it started out neutral, not segregated. No one realized that it didn't technically have to be until just before the NN regulations were put in place-- and they were put in place because that "apocalypse" was actively starting, with Netflix getting throttled by Comcast and FaceTime getting blocked by AT&T. Also, you realize it's literally just been repealed, right? Even for companies as eager to make a profit as that, it'll take them time to roll out changes that they're just starting to make now. – Dec 15 '17 at 23:07
-
6@QPaysTaxes I disagree with your interpretation. Your examples are of high bandwidth consuming services (video), which actively make managing traffic more difficult and costly to the provider. I just see companies trying to control internal costs or make revenue cover them. I see no examples of blocking lower bandwidth sites, like this one or reddit or any other primarily text based site. It is to the competitive advantage of each company to serve up as much of the internet as they can given their infrastructure. – jpmc26 Dec 15 '17 at 23:19
-
11@jpmc26 "I see no examples of blocking lower bandwidth sites" - repro steps please. Show me how you do not see those examples. This would allow me to diagnose your problem. Nevertheless, what about Telus blocking a website supporting a labor strike against the company? What about AT&T, Sprint and Verizon blocking Google Wallet? What do you think about these cases? And finally, what about AT&T saying that it's illegal to put a small plastic receiver snap-on to make the conversation more private? https://www.freepress.net/blog/2017/04/25/net-neutrality-violations-brief-history – Ark-kun Dec 16 '17 at 02:02
-
2@Ark-kun - Telus was fixed WITHOUT Net Neutrality. And was the only prominent example of actual website being blocked, out of literally millions websites and dozens if not hundreds ISPs (if you ignore fully-OK-to-block-for-some-reason-even-under-net-neutrality pirating websites) – user4012 Dec 16 '17 at 03:15
-
1@Ark-kun The Google Wallet issue isn't a matter of blocking traffic: http://www.androidpolice.com/2013/05/01/a-brief-history-of-verizon-and-google-wallet-and-why-the-carrier-is-still-allowed-to-block-it/. It's a matter of hardware control and possibly security issues. It took me about 5 minutes to find this out. So I don't think you've actually researched the other side for any of the things you're complaining about. – jpmc26 Dec 16 '17 at 03:26
-
1@Ark-kun The Windstream thing is probably covered under current laws about fraud. (If not, we should address that rather than use a net neutrality kludge.) Peer-to-peer technologies are commonly used for the delivery of large binary files (like video), so this is also likely a bandwidth problem. Tethering means also increases network bandwidth usage. So, yeah. I'm still really not seeing your case here. It seems to me the demand for high speed transfer of large amounts of data is just growing faster than the supply. – jpmc26 Dec 16 '17 at 03:39
-
5
-
3@blip The "real" cases that have been shot down thoroughly in the comments? You, like most proponents, ignore the fact that the massive demand for high bandwidth represents an actual problem that costs money to solve. Businesses aren't sitting around twirling their mustaches trying to devise ways to screw their customers constantly. They're trying to keep and attract their customers who pay them money. Historically, it's when the government sticks its nose in that things go awry. – jpmc26 Dec 16 '17 at 08:01
-
8@jpmc26 you, like most opponents, don't understand the issue. No one is complaining about charging more for bandwidth. It's about selectively charging based on type of data – Dec 16 '17 at 08:14
-
4
-
-
1@jpmc26: "They're trying to keep (...) their customers" - somewhat tangential, though I think it does play into the question whether customers can change their ISP: Unfortunately, locking customers into contracts they can only leave after 2 years and letting the switch to another ISP be as painful as possible to the customer (e.g. creation of contract possible online, termination of contract only possible via tracked paper letter; delays to be expected before the new ISP can take over, leaving you without internet for days, if not weeks) is an effective strategy for keeping customers. – O. R. Mapper Dec 19 '17 at 11:59
-
@O.R.Mapper Not sure it is. I know people who switch back and forth between Comcast and Verizon just to get the better rates when you switch. – jpmc26 Dec 19 '17 at 19:48
-
@blip Just wanna leave this here for people who don't wanna dig through the chat. I know very well what monopolies do: https://youtu.be/-VA9VZeox3g, https://fee.org/articles/41-rockefellers-standard-oil-company-proved-that-we-needed-anti-trust-laws-to-fight-such-market-monopolies/. History shows that it strongly depends on whether the monopoly is caused by artificial factors from government or whether they achieved market dominance via efficiency. – jpmc26 Dec 19 '17 at 19:52
-
@jpmc26 not sure what your point is...though in the context of NN, this is about both...monopoly status via government and efficiency and, in addition, economic dominance. It also goes well beyond internet service into the realm of content ownership. That's where things get really complex. To use your Standard Oil analogy, it would be like Standard owned 90% of the oil industry, and only supported their oil working in their own model of Standard cars. – Dec 19 '17 at 20:08
-
@jpmc26: Of course, my personal experience is merely anecdotal, but I know that these obstacles made me stay with my ISP for 9 years even though I felt cheated by them already since a rather severe incident in the first year. I finally switched half a year ago ... to another ISP where I had to evade something that could be called a fraudulent tactic already while signing up. Because, frankly, every single one of the ones available in my place seems to have a comparable catch. The point is: ISPs do not necessarily rely on just offering a great service to attract and keep customers, at least ... – O. R. Mapper Dec 19 '17 at 20:50
-
... some do very much use procedures that, in practice, do amount to "screw[ing] their customers". And apparently, a free market with several competitors is not sufficient to keep this behaviour at bay. – O. R. Mapper Dec 19 '17 at 20:51
1
Easy! Through competition! If you dislike your current service, you may select another service.
In Thomas J. DiLorenzo's Myth of the Natural Monopoly, we can see many examples of competing utilities before government regulation stifled competition and limited choices.
There is no evidence at all that at the outset of public-utility regulation there existed any such phenomenon as a "natural monopoly." As Harold Demsetz has pointed out:
Six electric light companies were organized in the one year of 1887 in New York City. Forty-five electric light enterprises had the legal right to operate in Chicago in 1907. Prior to 1895, Duluth, Minnesota, was served by five electric lighting companies, and Scranton, Pennsylvania, had four in 1906. … During the latter part of the 19th century, competition was the usual situation in the gas industry in this country. Before 1884, six competing companies were operating in New York City … competition was common and especially persistent in the telephone industry … Baltimore, Chicago, Cleveland, Columbus, Detroit, Kansas City, Minneapolis, Philadelphia, Pittsburgh, and St. Louis, among the larger cities, had at least two telephone services in 1905.
Government was lobbied (as today) to prevent and stifle competition.
The history of the Gas Light Company of Baltimore is that, from its founding in 1816, it constantly struggled with new competitors. Its response was not only to try to compete in the marketplace, but also to lobby the state and local government authorities to refrain from granting corporate charters to its competitors. The company operated with economies of scale, but that did not prevent numerous competitors from cropping up.
"Competition is the life of business," the Baltimore Sun editorialized in 1851 as it welcomed news of new competitors in the gas light business. The Gas Light Company of Baltimore, however, "objected to the granting of franchise rights to the new company."
This shows that government control over private services are empirically bad for consumers. It's a case of concentrated benefits, dispersed costs, and of rent seeking.
As a further empirical example of the benefit of the absence of government regulation, Somalia has the best internet in all of Africa due to its government collapse.
After the start of the civil war, various new telecommunications companies began to spring up in the country and competed to provide missing infrastructure. Somalia now offers some of the most technologically advanced and competitively priced telecommunications and internet services in the world. Funded by Somali entrepreneurs and backed by expertise from China, Korea and Europe, these nascent telecommunications firms offer affordable mobile phone and internet services that are not available in many other parts of the continent.
After forming partnerships with multinational corporations such as Sprint, ITT and Telenor, these firms now offer the cheapest and clearest phone calls in Africa. These Somali telecommunication companies also provide services to every city, town and hamlet in Somalia. There are presently around 25 mainlines per 1,000 persons, and the local availability of telephone lines (tele-density) is higher than in neighboring countries; three times greater than in adjacent Ethiopia.
As an example of the various competing services available in the USA, there is
- Verizon FIOS
- Cable Modems: Comcast, TimeWarner, Cox, etc.
- ISDN
- T3 line
- Cellular internet: TMobile, AT&T, MetroPCS, Verizon Wireless, US Cellular, etc.
- Satellite internet: Hughes, Dish Network
- DSL line
- Dial-up connections
When people complain there is no choice, what they usually mean is they are afraid of change. Now that censorship is a factor in comparison shopping, they may find a slower alternative preferable to no access at all.
Here is a news segment showing the many cheaper alternative choices for internet access in a Canadian city, and an analysis with a consumer psychologist for why people do not use them more often. Some of the main reasons people do not switch to another provider over larger corporations are
- Fear - they fear the unknown
- Habit - they have a habit of paying their current provider
- Quality - they perceive that a cheaper alternative may be lower quality
- Trust institutions - they tend to trust large institutions
Personally, I believe those people deserve to pay higher prices, like a tax on the stupid.
After all, would it make sense to sell electricity at a fixed price? Where some users would use 100kwh/day, and others only use 1kwh/day, but both pay the same price?
-
6The electricity comment is not comparable, the marginal cost on units of electricity is real, the marginal cost on bandwidth (or even more specifically, access wrt to specific sites as opposed to others) is effectively 0. Getting rid of NN would allow for far greater price discrimination, with effectively 0 marginal cost to the producer, which is a classic example of rent seeking behavior. It would allow for artificial blocks on access to extract a greater amount of consumer surplus. – Teleka Dec 17 '17 at 03:32
-
4@Algid Every time a transistor switches states, it consume power and produces heat. With more data, that means more transistor switches and higher clock speeds. True, one byte from one user is minuscule. But if you have 100M users watching 4K video, it's no longer minuscule. I don't know the costs as I don't own an ISP, but it's a non-zero cost. Maybe the greater cost is ensuring enough capacity for everyone else whom you've promised a minimum level of speed? – Chloe Dec 17 '17 at 16:58
-
7This answer relies upon false equivalence (the various services listed as "competing" offer different capabilities; i.e. there are numerous activities that cannot be completed using slower speed connections) and a faulty assumption that multiple service options are available everywhere throughout the US. – Beofett Dec 18 '17 at 14:41
-
2@Beofett, please note that neither government nor a free market guarantees that multiple service options -- "equivalent" or not -- will exist in all areas of potential interest. This answer indicates that monopoly -- a government-created phenomenon -- often prevents competition. – Christian Conti-Vock Dec 18 '17 at 16:33
-
4@ChristianConti-Vock All monopolies are government-created? Citation required. Regardless, the question is about how free market can limit the effects of net neutrality. This answer says
Easy! Through competition!, and then claims that no monopolies exist because of choices that are not equivalent, or even necessarily available. Whether or not multiple service options are guaranteed is completely irrelevant to the question or this answer. – Beofett Dec 18 '17 at 16:51 -
2@Beofett, regarding monopoly, please consider "Capitalism and the Misunderstanding of Monopoly" in addition to "Myth of the Natural Monopoly", linked in this answer. – Christian Conti-Vock Dec 18 '17 at 17:53
-
@Beofett There are numerous activities that cannot be completed using lower residential electrical services, like smelting iron. Multiple options are available everywhere throughout the US, like satellite, unless you live under a mountain. Dial up is available everywhere. Should people in Chicago pay and subsidize service to people who choose to live in Antarctica? – Chloe Dec 19 '17 at 19:16
-
@Chloe we do that for roads, electricity, phone, etc. As a nation, we've always subsidized our infrastructure for the benefit of all. – Dec 19 '17 at 20:10
-
1This answer completely ignores the problems that competing private utilities and public services created...usually at the expense of the consumer. – Dec 19 '17 at 20:12
-
1And as for the Somalia example (as clever as that is!) it also ignores the fact that any new wireless infrastructure over a small land mass can clearly out-perform legacy land-line infrastructure over massive spaces that the US has--government regulation--or the lack thereof--have little to do with that. – Dec 19 '17 at 20:14
-
1Finally...(Sorry! So much to comment on)...the 'fixed price' argument regarding electricity is irrelevant to NN. NN has nothing to do with restricting ISPs from charging consumers based on different bandwidth needs (they already do that). We can debate if that's something that should be done or not--but that is not the issue in the context of NN. The issue if if you were charged for different TYPES of electricity. For example, if you were charged $1 per KW for using the Electric companies bulbs but $10 per KW for using a competitor's light bulb. (not the greatest analogy but...) – Dec 19 '17 at 20:18
-
1@Chloe As blip already pointed out, that argument would be valid if the type of electricity delivered by residential services was incompatible with iron smelting. Its an apples-to-oranges comparison, much like the claim that the fact that dial-up is "everywhere" is evidence that there is an equitable alternative to broad-band services. As for your Chicago/Antarctica comment... that seems to be a complete non sequitur. Surely if there is no monopoly, then the utilization of services in one region could not possibly impact the cost of delivery in another region. – Beofett Dec 19 '17 at 20:56
-
@blip You demonstrate that you did not read the linked article in the answer. "As a nation, we've always subsidized our infrastructure..." No, we have not always subsidized our infrastructure. I cannot spend time debating with people who do not read. I'm sorry. – Chloe Dec 19 '17 at 21:11
-
@Chloe I did read. As your article points out we stopped doing it and the reasons for that you omitted from your answer which I am arguing defeats the entire point of your argument. Free market infrastructure often leads to great inefficiencies, lopsided availability to consumers, and no guarantee of better service for a better price. A simple example being that we can't have 5 cable companies all running 5 sets of cables on every telephone pole. Or, worse...5 sets of fiber for 5 ISPs all digging up streets 5 times to lay the fiber. – Dec 19 '17 at 21:46
0
One approach is to have a large virtual private network. So Netflix and others could send their videos over this network directly to consumers. Since Comcast and Verizon can't see the packets, they would be hard pressed to control the traffic.
Of course, there are issues with this. How much would consumers and businesses have to pay to gain access? Who would regulate this private network, etc? Is it run by a private or public entity?
Michael Silver
- 199
- 4
-
But Level 3 didn't even have to do that. The problem was that the connection that Level 3 (Netflix's ISP) happened to use for Netflix traffic was overloaded. If Level 3 had simply routed around that, they could have bypassed the problem. I'm not sure people realize the extent to which Level 3 is acting as a free rider, forcing other ISPs to adapt their networks to Level 3's topology. – Brythan Dec 15 '17 at 22:28
-
10The ISP can just block the VPN, back before NN the only internet provider at my house blocked vpn and ssh on residential lines. They claimed those were business class features and not traffic that they would permit on the home plan. – Ukko Dec 15 '17 at 22:32
-
1
-
4@Ukko Another likely scenario would be that both Netflix and the VPN would be equally slow by default, unless they paid the extortion fees to get whitelisted for better speeds. – Batman Dec 15 '17 at 23:03
-1
One possibility is that Google Fiber may pick up again. They stopped rolling out to new cities in 2016 presumably because of financial pressure. It was pretty clear that Google Fiber was rolled out to prevent a practice of ISP's charging providers for faster access to their content. As long as NetNeutrality was in effect, this practice was (at least in theory) curtailed. So Google Fiber couldn't distiguish itself in the market place of ISP's as a better-quality ISP for their customers based on voluntary neutrality of delivery of content. If ISP's do start charging content providers, then Google Fiber would become a distinctly better alternative.
grovkin
- 6,958
- 3
- 22
- 54
-9
The question is extremely vague in that it doesn't specify what needs to be "protected". As such, the answers differ:
Certain anti-competitive behaviors will be protected against because they have nothing to do with FCC's Net Neutrality Title II issue; and are "not OK" either way, under pre-2015 FCC/FTC purvue.
ISPs have been targeted for such issues (for example, misleading data caps on "unlimited" service; or blocking Vonage) under FCC/FTC jurisdiction before; and the current official NN repeal rules re-instates that - and, arguably, strengthens it by comparison to pre-2015.
Most dire predictions used to emotionally drum up support for NN ("they will block off your Google/Wikipedia/StackExchange access unless you buy 'Google enable internet plan' ") fall under this.
Certain behaviors may not need to be "protected" from in the first place.
Charging less money to preferred content providers's content (aka "zero rate") may not be fair to other content providers, but don't necessarily negatively affect any consumers. One can make a cogent argument that they benefit consumers, at least on tactical level.
Certain behaviors arguably don't deserve NN Title II protections.
As a NetFlix user, you may want NN rules to ensure you get to stream terabytes of high def video for low cost. Other users who don't do that have opposite priority (not to subsidize such behavior) - I'd love to pay less with a lower cost lower-bandwidth plan, like I do for cell service. Bringing the entire weight of federal government's Title II to adjudicate this preference dispute is not necessarily the best, and definitely not the only solution.
user4012
- 92,336
- 19
- 225
- 386
-
11Point #3 misconstrues what the issue is. It's not about cost of data consumed--it's about discriminating amongst the type of data being consumed. – Dec 15 '17 at 20:36
-
9Point #3 also is exactly the way it is right now. I can get a data plan for X Mbps for Y GB and once I've reached my Y GB limit the throttling takes place. – CramerTV Dec 15 '17 at 21:16
-
1@blip - no. If Netflix pays extra for their terabytes of data (either out of their pocket, or out of pocket of consumers of its data), there will be no "discrimination". Everyone pays fairly per GB. – user4012 Dec 15 '17 at 21:34
-
13No. Net neutrality means you can pay different amounts as a consumer for different speeds...or different volumes of data...but the ISP can't discriminate on the TYPE of data. – Dec 16 '17 at 00:05
-
2@blip So net neutrality means an ISP can't prioritize traffic used for a remote medical procedure over cat videos? – jpmc26 Dec 16 '17 at 03:58
-
8@jpmc26 or, more realistic example...Comcast can't prioritize cat video corp's content over remote medical procedure just because they have a business deal with cat video corp. – Dec 16 '17 at 07:43
-
1@blip I doubt anyone even remotely sane would try to do a remote medical procedure without a specific service agreement with the ISP that included something about the reliability and priority of the connection. – jpmc26 Dec 16 '17 at 07:51
-
5@jpmc36 again, that's not the issue. Reliability contracts and bandwidth plans aren't the issue. The ISP can charge the hospital for whatever bandwidth and reliability they want. – Dec 16 '17 at 08:19
-
3#1 on the FTC issue, ISPs can metaphorically murder kittens provided they clearly declare "we metaphorically murder kittens" at the point of sale. In a functioning free market, on seeing this, consumers would choose another ISP. In reality most consumers have no such choice, so there is no penalty to the ISP. #2 You basically argue here that it's ok to torpedo an existing (mostly) free market in content, so clearly belief in the free market is not the reason for your anti-regulation stance. #3 is a desperate strawman argument - NN does not prevent pricing by volume. – DeveloperInDevelopment Dec 17 '17 at 03:33
-
1@DeveloperInDevelopment - there is no effective free market in content. I'm perfectly happy to get rid of Google/Facebook /Twitter cesuropoly – user4012 Dec 17 '17 at 13:19
-
2No one is arguing that ISPs shouldn't be able to charge X per GB of data, many already did that. What has people enraged, is the idea that they can decide a GB of data going to facebook is worth Y, but a GB of data going to youtube is worth Z. Or even better, that they can just block access to a competitor's product. – Jack Of All Trades 234 Dec 18 '17 at 16:04
-
1@blip : You are wrong. Nobody who's an expert has a problem with discriminating based on type of data. Not doing so would mean the internet would get massive problems because it would lose a tool of fighting DDoS attacks. The issue is about whether they have to treat the same type of data the same way. That means treating every video equally but not necessarily treating video the same as other data types. – Christian Dec 21 '17 at 15:43
-
@Christian I think that's a valid point...though I'd argue that the 'types' of data aren't actually that big of a difference vs. the 'source and amount' of data in the context of NN. – Dec 21 '17 at 16:02
-
1@blip : There are people who do want their torrents to not be downregulated in speed as they were in the last decade. – Christian Dec 21 '17 at 16:08
-
@Christian for sure. Not sure that's the primary argument for NN, though. It's more about favoring data sources than types of data. – Dec 21 '17 at 16:16