Net Neutrality: Treating the Internet Like a Utility (Updated)
There is always the danger, as Charlie points out, that the FCC and its political appointee head could decide that Fox News — or the Huffington Post, for that matter — constitutes hate speech. They could use the rules as a club to limit access to those sites, thereby limiting the openness that Genachowski himself said in a recent speech is the great strength of the net.
In that same speech, and within some of the proposed rules which have from time to time been circulated, Genachowski has also suggested usage-based fee structures. Currently, most people pay a flat rate to their providers for access — much like you do for your cable television — and get all the data they care to download. Under a usage-based structure, this would end up being more like a cell phone plan where you get so many minutes each month and then must pay extra for any overages. The Internet becomes less and less a convenience, and more of a utility like your electricity or natural gas.
Many of us simply cannot do without Internet access. For instance, Charlie and I are collaborating on these stories on net neutrality. Charlie is based in Colorado, and I am in Kansas. PJM is based in California, but some of our editors are in New York and Washington, D.C. Without the Internet, Charlie and I would be unable to do our jobs. Under a usage-based fee structure, I might only be able to afford Internet access part of the month, and would be unable to do my job. My ISP might provide a flat-rate service, but if they can make more off usage-based, that flat-rate might be prohibitively expensive.
I’m not at all certain how openness or fairness are served here.
While it is apparent some sort of regulation is needed, what form it should take is less so. It is also less than apparent where the FCC derives authority to make this particular power grab, as Congress to date has not authorized them to regulate the Internet.
Moreover, the Internet is truly international in scope. Regulations which, whatever the stated intent, tend to limit growth and stifle competition within this particular sector will put the United States at an economic disadvantage globally at a time when we can ill afford any more disadvantages.
Update:
I was perhaps unclear about a couple of things in my post and wanted to clear them up.
ISPs should be free to use the pricing structure which best suits their business model. That, however, is not what the FCC is talking about doing here. What the FCC is discussing is protectionism. Sites like Netflix and Hulu are hurting the cable industry. The FCC is moving forward with regulations which would tend to hurt consumers and have the possibility of putting the burgeoning Internet video industry out of business. As the Washington Post points out:
The FCC will vote Dec. 21 on the proposal, which could could tilt fortunes toward cable and telecom companies battling to keep users from abandoning paid television services for new Internet options such as Apple TV and Hulu.com, analysts say. Those providers are struggling to manage overburdened networks that are seeing a surge in streaming video traffic from sites such as Netflix, which alone occupies 20 percent of all peak broadband traffic in the United States.
This is a power grab by the FCC, pure and simple — despite the fact they have no statutory authority to regulate the Internet, Genachowski plans to simply lay down rules which Congress has not voted on and which may or may not have anything to do with reality. The law of unintended consequences applies.
Moreover, the rules the FCC is promulgating have the potential to kill a new industry as well as stifle free speech. There is nothing “neutral” in anything the FCC is proposing.
The next President (and may he/she be a Republican) needs to put a serious beatdown on the FCC, and reteurn the agency to its core responsibility: issuing licenses to broadcasters. Actually I would like to do away with the FCC entirely because the notion that the government owns the electromagnetic spectrum and can decide who may use it and how offends me. But the genie is out of the bottle on that one.
Since the airwaves do cross state lines the commerce clause would apply for any commercial use.
Just another example of the Federal Government trying to get their claws on to something so that they can either control it or tax it to death. And Obama and his minions wonder why the Tea Parties are so popular with people. They just don’t get that the American people want LESS regulation from Washington, NOT more. If the Feds go through with this, not only will there be an even bigger revolt in 2012, but the Democrats can forget having any sort of majority in Congress for the next generation to come.
Americans have had enough of liberal policies in Washington. But the Democrats, for some reason, still don’t get it.
Oh, the Dems get it all right. Conservatism was driven underground by liberal control of the brainwashing media and had to find other means of receiving real news. Now the Left wants to eliminate those avenues since they are exponentially attracting more and more readers/listeners. Just like with AbominationCare, Obama and the Ship of Fools in Congress don’t give a flip about the will of the People.
Net neutrality = neutralize conservatives
I’m not at all convinced that any regulation at all is necessary. The market can sort this one out. Let an ISP charge very low rates for low-bandwidth users, and higher rates for high-bandwidth, and see what happens. I imagine things would sort themselves out quite well and we’d end up with more diversity in ISP choice, always a good thing.
Net Neutrality has nothing to do with “Fairness” or “openness”, basically if those words come from a politician of bureaucrat no matter what way they lean (right or left), it will always be about control and power just different things to control and power for another purpose.
Time to fire them all! Lets get back to Limited Government with little power, lower taxes (flat tax rate for all) and maximum Liberty!
The internet should not ever fall under the FCC or any other Government entity. It will be watered down and cost 10 times what it now does, all for the sake of handing them the power and the money.
Charging users based on the volume of data they use is absolutely the free market approach and is especially beneficial to low bandwidth users like myself who only occasionally browse and do things like online banking. If my rate is the same as yours then I’m subsidizing you. Why should I be forced to do that?
Put me down as another one who doesn’t see what the fuss is about volume pricing. There are problems with Net Neutrality but a move towards pricing based on usage is not one of them.
I come down a little more on this side than Pat — but honestly, the companies can meter the number of packets sent by count, so that you get so many MiB per month, or by rate, where you get so many MiB per second and you’re limited because there are only so many seconds a month. The problem comes in when a Netflix packet coosts the customedr more than, say, a Disney On Demand packet.
Argh. “costs the customer”
It is a characteristic of anal-retentives to abhor freedom, and there is no one more anal-retentive that the statist-bureaucrat. The statist-bureaucrat sees something that is free and he seeks to control it through rules and regulations. They have no compunction about using violence and imprisonment against us who love freedom, and we who love freedom fool ourselves and damn our freedom by condemning any acts of violence and imprisonment against them.
Charging for traffic doesn’t necessarily have anything to do with “net neutrality,” any more than charging per-beer at a bar has to do with bar neutrality. Traffic really does impose variable costs on an Internet Service Provider, and especially as video traffic increases, it may well be a financially rational decision for an ISP to charge for traffic–ie, to charge *its own customers*, not a traffic source such as Netflix.
It sounds like you are arguing *for* regulation which would prohibit an ISP’s ability to make that commercial decision. Are you>?
This is such a dangerous step which must be stopped. Why does the Left always use gentle-sounding euphemisms to enact Draconian laws?
Because that’s what works. If they came out and said “we think we should take control over what you can see and hear” no one would buy it.
What we need is a smart grid, for the internet. The smart grid means that the government will charge you a huge amount, to stick circuits in your computer, which will give them the power to shut you off whenever they want. This is what is happening to your electrical service in order to save the drowning polar bears two centuries from now.
Electricity moves around at the speed of light. It costs money to build things that move it around. The more you move it around, the more it costs. Some times, it is cheaper to not move electricity around. Poor people do not have a lot of money; rich people do. So how do you price the cost of moving electricity around? Who decides? Who holds this power?
We have the same problem with different buzz words: net neutrality, smart grid, wikileaks of secrets (pause here and grimace), or Patriot Act snooping. Coming soon is Onboard Diagnotics III, whereby your new car will call the police if your engine starts to pollute as defined by some bureaucrat. He may shut your engine off.
People who study electricity see one big fur ball. And a loss of freedom.
“The FCC’s proposed power grab could end up sticking you with a usage-based internet bill, costing many of us high-volume users our employment.”
I have lots of problems with most of the Progressive’s definitions of Net Neutrality, which really means egalitarian net nannies making it fair according to UC Berkley Faculty Lounge standards, but…
What is unfair by paying by the Gigabyte? Internet is fundamentally different than Cable TV. It makes no difference in system load or service expense whether I watch TV a few hours a week, or I have 4 TVs running 18 hours a day. It uses the same amount of system resources. My watching TV does not reduce my neighbor’s ability to use the system. Internet service, on the other hand, is bandwidth limited, and if a lot of people start watching HD movies it will use so much bandwidth that other users will experience reduced service and/or the service provider will have to spend more money to improve the performance of the system. Why shouldn’t high volume users of a limited good pay by the bucket full?
People got used to unlimited service because the Internet was new and was overbuilt because the service providers had the foresight to plan for a future where usage increased, which meant that for a while there was more capacity than demand. Unlimited plans made the most sense in the market under those conditions. Now that potential use outstrips supply, the billing plan that makes the most sense is to pay a base charge and then pay for the amount of bandwidth you use.
I have two providers of Internet available to me, ATT & SBC. Since ATT showed up in the cable business, SBC miraculously became price competitive after years of ever increasing rates. If we make sure there are at least two providers, market forces will keep the $/Gbyte in the reasonable range.
I don’t see how any Libertarian, Conservative, or Capitalist could complain about this.
The problem is that many areas have exactly ONE Internet Service Provider available to pick from. So competition is pretty much non-existent already, causing prices to be very high. Moving to a usage-based model would make them even higher for everyone involved, even the low-end users.
Don’t think it could happen? Take a look at AT&T and Verizon’s new Mobile calling plans and compare them to their old unlimited plans. The lowest tier they offer is MORE than the old unlimited plan was. Moving to usage based was nothing more than an excuse to jack prices up while giving out LESS in service! I already think I’m getting ripped off by my cell provider, why would I want that for my ISP too?
Over and above that, The dirty little secret of the ISP business is a form of collusion that the ISPs deal in with regards to market exclusivity. That is, they ACTIVELY work with one another to “stay out of each other’s way” to keep from having to compete in local markets.
Add on to that local right-of-way contracts and you have a series of regional and local fiefdoms that the ISPs have either a monopoly or a duopoly in, thus absolutely preventing any kind of real competition and price flexibility.
Even if we were to completely do away with right-of-way issues, punish the collusion and GUARANTEE that prices won’t immediately rise when the usage model is rolled out, there is still the issue of the insanely high barrier-to-entry in the market for new players.
To roll out a modern ISP in today’s dollars and dealing with today’s regulatory market takes BILLIONS to do, if it can be done at all. Which means that perhaps 10 companies could currently do it, and none of them are showing any interest in starting a new ISP.
The point is that it’s not as simple as we might think if we want the Internet to remain as it is. It’s going to take a comprehensive as well-educated approach that will encourage market competition and allow ISPs to profit as much as possible but without taking advantage of consumers. What that is I am not yet sure, although I’m exceedingly uncomfortable with adding yet more layers of regulation as they almost never do what is intended.
I don’t know about where you live, but I have both a local phone company and a cable company which compete for internet business. Actually two phone companies, ATT & SBC. I incorrectly wrote SBC when the name of our cable company was Charter, so that makes it three. But most people have two providers, cable and phone.
Internet is not unreasonably priced. I pay $35/mo for a 1.5 Mbit DSL line with unlimited volume. I started out in 1996 paying $25/mo for a 50Kbit line that used my telephone which reduced its usefulness, and if I had bought a second phone line for just internet, it would have been about $35/mo total. I don’t think my current prices are unreasonable, I am getting a 30 times better product for the same price 15 years later. Heck, I pay $40/mo for water.
As for the rant about cell phones, I pay $160/mo for 4 unlimited data smart phones, or $40/mo each. Quite a deal for an internet connected pocket phone/computer. I spend $40 each time I feed the Buick.
All this stuff was only available on Star Trek not that long ago; now Conservatives are bitching because they can’t get it for a subsidized low price? I must be in the Twilight Zone.
Oh, please. I live on an island with Comcast and Centurytel. Comcast, of course, is trying to furnish telephone service, and Century is trying to furnish video over their DSL lines! In addition, the 4G cellular providers are trying to get into the act. Am I delighted with my choices? No. When I lived across the water, I lived in a city with two cable TV providers, and there, it was much better. But given the low density here, I’m amazed at the choices I do have.
Give me a break with these paranoid conspiracy theories. The providers are clawing each other in order to survive.
The FCC has no Constitutional legitmacy for the vast majority of things that it ‘regulates’ right now…and Congress has no authority to grant it further powers of regulation over the Internet.
Not only must ‘net neutrality’ be obliterated – as yet another statist power grab – but we must also work to strip the FCC of all its illegal functions.
These are private networks (Comcast et al) and the network owners have the right to make business decisions about how their IT infrastructure is managed. The customer agrees to a contract of service…you don’t like it? Don’t sign up. You have no right to Internet access.
We have flat-rate access now because this is what customer pressure demanded. Don’t underestimate the motivation that “wanting to stay in business” can influence corporate policy. We (the customer) don’t own them, we have no right to their service (other than what is contractually agreed), but they do exist to serve us or go out of business. Remind them of this before whining.
And that’s precisely the point bob. When i first started paying for internet access back in the mid-90s you paid for a certain number of hours per month. ISPs which stuck to that pricing scheme quickly went under.
The market has already shaken this out. People want flat-rate access. This isn’t about “neutrality,” or “fairness,” both of which are codewords for “naked power grab.”
Patrick
“…I don’t see how any Libertarian, Conservative, or Capitalist could complain about this…”
Agreed…provided that this change in plans takes place in the open private marketplace, and not in DC.
Bottom line its another attack on the first amendment. They want only government approved views heard and communicated. And that is not fairness. It should be stopped now.
Any time the gov’t gives itself control in a new area, everything becomes corrupt and/or screwed up.
Wow, I would not have expected a freeloader whining here at PJM…
You spend the bulk of your article making a perfectly valid point, that the content should be 100% neutral and free from government regulation for “fairness.” Great start!
However you then descend into anti-market arguments in favor of your ability to be a freeloader. Providing bandwidth has a cost, people who stream massive amounts of data (videos) clog the internet and in many areas slow down service for everyone else. Why shouldn’t you pay for what you use, just like a utility? Why should my price subsidize your job? Do you want to pay part of the gas bill for everyone who commutes while you work from home on the web? Even if there was to be unlimited access, there sure as hell needs to be tiered pricing.
Aside from Ruben Navarette’s usual immigration trash, this may be the worst article I have read here in months.
You miss the point here TMK, tiered pricing already exists for most ISPs. I wanted more than the minimum available bandwidth and so I pay extra for the 16mbs pipe instead of the 8mbs. (In small words, I needed a faster connection for my work and play and so I’m paying for it, not you.)
You’re not subsidizing my job, nor am I asking you to. I pointed out my situation simply as an example. Moreover, I still commute to work every day. Granted in a small southeast Kansas town my commute is all of about 5 minutes. but I do not work exclusively from home.
The FCC’s plan would not be “fairer” to low bandwidth users but would stifle net use.
Moreover, usage-based pricing sounds good in theory, but has been tried by ISPs in the past. It simply doesn’t work. Consumers didn’t like it. The explosion in people signing up for Internet access correlates precisely with the introduction of flat-rate pricing.
I’m all for the free market, which has already settled what it is consumers want.
Patrick
Mr. Richardson:
I’m sorry, but you are the one either missing the point of TMK75′s post or deliberately ignoring what TMK75 wrote.
As TMK75 correctly notes, “You spend the bulk of your article making a perfectly valid point, that the content should be 100% neutral and free from government regulation for “fairness.”
Then you switch at the very end to imply that (at least as I understood it) that ISP’s should NOT be able to charge usage rates. I would argue that ISP should be able to do so. And if this pricing tactic is already the market failure you mentioned, you have NOTHING to worry about.
Your article was a bait and switch on topics.
Finally, just to be on the same page, paying extra for faster speeds is NOT a usage fee.
In point of fact I have no issue with ISPs which choose to do so charging based on usage. This system has been tried and failed once before. The problem is the rules the FCC is looking at would favor the cable companies while putting business like Hulu and Netflix out of business.
What the FCC has in mind is protectionist, anti-competitive crap.
Patrick
Again, look up at my comment above. Whether it’s by number of MiBs or number of MiBs/sec, it’s perfectly fair to have pricing determined by usage. What’s not fair, in the context of the Internet as a content carrier, is to make me pay a surtax on my MiB of open-source code in order to make sure someone else is connected, or to nmake a MiB of Netflix cost more than a MiB of Disney, or to say that if I consume a MiB of Rush Limbaugh I should be expected to subsidize the delivery of MiBs of Kieth Olbermann for “balance”.
Net Neutrality is another authoritarian pretext to control your life.
FCC should be abolished or at least it must be restricted to a point of irrelevancy. The more government rules and regulations the less individual freedom your Choice
There are companies that charge rates based on how much you use… one can always look for one of those if they are unhappy with their current plans. No one is forcing companies to do an ‘all you can eat’ approach, and there is no reason for the FCC to do anything on this. Comcast already throttles service to large downloaders and those individuals are free to get their service from someone else.
Actually, at this point, the complaints about the FCC have come from all parts of the spectrum over the years, what with it not making available low power station capability for neighborhood broadcasters.
And how long will it be before a wireless mesh system starts to stand up that is generally untethered to landlines? Less than a decade is my guess on that, and then the ability to regulate what is done on open spectrum within a few hundred feet disappears into the vacuous wish list of those wanting power over you. The wired internet is a transitional form, only, and no one can say exactly what it will look like in 10 years just as the cellphone changed calling habits drastically from 1999-2009. That is coming to the internet just as it has morphed each decade since the 1980′s into something that only a very few speculated about… all without government ‘help’ or ‘regulation’.
I have used Satellite internet (Hughes Net, now something else) and am currently using a direct microwave link, that runs pretty quickly, I think they said 5mbps. But I’m on 24/7 usually with 2 computers. I play Everquest on one, and use the other for email, facebook, etc. Since Everquest allows me to stand in a “bazaar” with a character in trader mode I need to have a unlimited connection and I pay for it. Keep the FCC out of my gaming. It’s none of their business. Nor is what I say or download.
Look people, the “Anointed One” makes his chess move’s and us babbling humans need to realize that the unbelieving conspiracy “heathen” understate the issues when they say that Obama is a radical. Alas, they know not the secrets we are all going to witness. The “Anointed One” is amazing (and according to Biden: he’s so brillant), and takes the people at the highly efficient Post Office and sends them right over to the Student Loan Program. The “Anointed One” knows all. Twitter messages were machine-gunned to cell phones at mach speed. Facebook and MySpace groups spread across the Internet like digital fire. YouTube videos featuring celebrities ricocheted across the globe and into college students’ in-boxes with devastating regularity. All the while, the Obama mega-money-raising engine whirred on at high speed, until the result became inevitable: an unthinking mass of young voters marched forward to elect the “Anointed One.”
I am not surprised to hear these stinking lies about our “Anointed One,” it should be apparent to anyone that this was coming down the pike. I do have a couple questions about future process steps concerning these developments? When the “Annointed One” decides to start bar-coding everyone, will we get to decide if the mark is on our hand or forehead? Allot of people will prefer the hand, (especially women of course), unless your a porn actress or something along those lines. Also, my girlfriend was wondering if the Administration will be getting fashion advice from Hollyweird or the New York City crowd? We are both agree that the Administration “Maoies” as the “Anointed One ” so lovingly calls them,will be getting uniforms similar to the SS uniforms in Germany in WW2. With big letters abreviating “Barack’s Socialists.” So shall we start calling them the BS?
Hey! When he starts his private citizen army, I’m signing up. Best way to get the bennies and besides, termites work from the inside.
It’s getting worse by the moment. The FCC envisions total control.
Michael Copps, who in a speech suggested that broadcasters be subject to a new “public values test” every four years.
http://thehill.com/blogs/hillicon-valley/technology/132195-fcc-proposal-to-regulate-news-draws-fire
“Under a usage-based structure, this would end up being more like a cell phone”
It’s important to understand that the FCC is not saying that it will force Internet providers to implement a usage-based structure. It’s saying that it will not stand in the way of providers if they do implement such a structure.
One of the complaints that Internet providers have against net neutrality is that it will limit their ability to manage their networks. The FCC is saying, “Yes, we will regulate your ability to restrict certain types of traffic (particularly streaming video), but on the other hand we won’t stand in the way if you want to charge more money to people who use the service more than other users.”
Another thing to keep in mind is that if Internet providers are allowed to prioritize some traffic over others, what is to prevent them from taking a payoff from company A to restrict traffic from company B? Or even worse, to prioritize traffic from company A at the expense of all other traffic, such as email and blogs?
as high-demand protocols such as streaming (and torrents)have been added to the ‘Net the original pricing model now needs to be updated.
it is UNFAIR to expect ordinary users to subsidized the costs incurred by those who use these special protocols.
if you need 5GB/day pull out your checkbook. but don’t expect those of us who need only 5MB/day to pay for your entertainment.
Patrick…two specific questions:
1)Do you think Federal regulations should *forbid* an ISP from charging its own customers based on traffic?
2)Do you think Federal regulations should *forbid* an ISP from applying a fee to entities such as Netflix when they are not its own customers but rather direct or indirect sources for traffic that is destined to those cusomers?
David:
No and no, with caveats. Part of the problem here is that in a perfect market we would let ISPs duke it out with their pricing structures and then the customers would decide.
Unfortunately, we do not live in that perfect system. In most cities, and even in major cities, there is exactly ONE ISP. Often Comcast. Customers who do not like a usage-based fee structure are unable to vote with their feet — or their check books.
The problem here is people are missing the forest for the trees. We’re getting hung up on what sort of pricing structure is “most conservative” and forgetting that the FCC is trying to take over and regulate the Internet even though they have no statutory authority to do so.
Patrick
“Under a usage-based fee structure, I might only be able to afford Internet access part of the month, and would be unable to do my job.”
I think this is silly. If you are getting more than your money’s worth now who is making up the difference? Light users who pay for unlimited service but use much less than the heavy bandwith users.
Usage-based fees will most likely reduce costs for most users. Those heavy users will then have to pay their fair share. I’m a light user subsidizing you means I don’t have money for other things I’d like to spend it on. Now tell me why I should spend my money so you can do your job? If you can’t sell your work for more than it costs, you have to find a profitable line of work just like everyone else.
But this has nothing to do with net-neutrality.
I agree the fcc should keep it’s paws off the internet. I’m not sure about the original meaning of net neutraliy.
I can see why an isp would restrict heavy users downloading movies from ruining the performance of the internet for ordinary users just browsing web pages. Why should one (or a few) person(s) have the right to use so much bandwith that it slows down the internet for everyone else?
On the other hand, I don’t think it’s a good idea for comcast to slow down verizon customer’s data that migh have to traverse the comcast network to get to its destination, because then you’ll have isp’s sabotaging each other and the internet will become a chaotic mess.
I’m still confused as to how you’re subsidizing me when I’m paying a premium for a larger pipe than the standard my ISP provides. Seems to me I’m subsidizing you.
Patrick
One more thing…
Most ISPs do not charge based on what a high-end user costs them but rather on an average. So while they might be losing money on a heavy user such as myself, breaking even with a moderate user, and making money on a light user, it all comes out in the wash. Plus, as I noted above, power users such as myself tend to pay for larger pipes for that very reason.
Patrick
I may be confused here, but aren’t you just paying a premium for speed (“larger pipes), regardless of how many MB you send upstream or download? You aren’t paying a premium based on the amount MB you receive, are you?
Implicit in that larger pipe is that I will be downloading more because I can, and wouldn’t need the extra speed if I weren’t.
So yes, I’m paying based to some degree on the amount of traffic I will generate on the ISP’s much larger pipe. They aren’t charging me per-gig but it actually costs them nothing to allow my house to have 16 megabits per second rather than the standard 8. (My community is fiber to the home, and the ISP has a fiber connection all the way to the AT&T backbone about 20 miles away so their bandwidth is essentially unlimited.) So they’re charging me a higher rate based on the assumption that if I need more speed I’m going to be down/uploading more.
Patrick
http://en.wikipedia.org/wiki/Concern_troll#Concern_troll ???
I’m not quite sure what the problem with usage-based charging is. Capacity is how the networks themselves are resourced – carriers pay for a certain amount of throughput (either by buying it or laying it) and they recover their costs from customers. The more their customers use, the more it costs them to allocate or upgrade those resources.
The problem here seems to be that high-throughput users want occasional users to subsidize their internet connection. That’s just silly.
And it cuts both ways – if the people who own the wires also happen to have paid TV services, and those paid TV services aren’t competitive, then they need to either improve those services or cut them loose and make their money from shipping bytes around. If they try to use their control over the infrastructure to stifle internet competition, then they deserve to lose customers for that. It’s a competition problem, and yes, it’s probably due to some sort of stupid regulation.
If those cable networks really are struggling, then the market is apparently ready for some new investment – which might just leapfrog the cable providers entirely. Maybe the right question is – why hasn’t it happened already?