Tracing consequences both seen and unseen.
Lee SharpeThe Case Against Net Neutrality
Posted at 10:06 am on August 11, 2010, by Lee Sharpe

What is “net neutrality”? Net neutrality is government regulation which prohibits internet service providers from diffrentiating internet traffic based upon its content and/or the service being used. Advocates are concerned about internet service providers charging different amounts for different types of traffic or manipulating how internet traffic is processed so, for example, to increase the priority of a certain website’s traffic or decrease the priority of a certain website’s traffic.

Generally, regulation advocates point to something happening, identify it as a problem that government needs to solve, and propose regulation they feel will accomplish that goal. This is not the case with net neutrality because right now internet service providers are voluntarily complying with the standards net neutrality advocates seek to codify. This is even after a federal appeals court ruled in Comcast v. FCC that the FCC (at least currently) lacks the authority to prevent companies from engaging in this behavior. Given all of this, one must wonder why is regulation needed to address this in the first place.

Like many other newspapers, the New York Times runs advertisements. The newspaper and advertiser agree on the ad, where it will appear, how much it will cost, and on which printing(s) it will appear. All well and good. And, of course, the New York Times can reject any ad which it does not wish to run. The reason could be because the content is inappropriate for the paper’s readership. It could be because it advertises a competing newspaper. It could be because the editor has a random grudge against a local business and won’t support its ads. Whatever the reason, the New York Times has the freedom to not run certain advertisements. The freedom to refuse to facilitate speech one doesn’t like is part of one’s First Amendment freedom of speech rights. There is no reason this right should not carry over to internet providers as well, just like any other entity.

Many airlines offer passengers who pay for a “first class” ticket improved service for extra money. This extra service is for those willing to pay more. In addition to covering the costs of providing the extra service, this revenue helps the airlines lower fares for the other passengers, so its existence helps them as well. Similarly, television providers (both cable and satellite) offer various premium channel packages for extra fees. Nothing is wrong with these business models. Of course, nothing is wrong with a business model that handles all traffic equally either. Supply and demand will determine which business models are best just fine, just as described above in the airline and television industries. Congress and the FCC do not need to enforce a particular business model on internet service providers, as it might end up that way in the future. It’s entirely possible that at some point poorer consumers will be served by options of cheaper, more limited internet. Under net neutrality, however, internet service providers would be prohibited from pursuing such plans.

Logically, companies in any industry don’t want to be regulated. So it should cause one to pause when companies in an industry come out in favor of them being regulated. Google and Verizon Wireless did just that in a recent joint proposal to the FCC as a suggestion for how to implement Net Neutrality. In the first four of their seven points, Google and Verizon start off sounding like they support their own regulation. (“This means that for the first time, wireline broadband providers would not be able to discriminate against or prioritize lawful internet content, applications or services in a way that causes harm to users or competition.”) However, the fifth and sixth create a couple exceptions to their Net Neutrality propsals for “additional services” (it’s unclear how this is defined) and internet service provided wirelessly.

Now that we’ve examined their proposal, we should ask why would they propose it in the first place? The answer is to gain an advantage over its competitors, an example of behavior known as rent seeking. Businesses can and will use not just market advantages to seek profit, but legislative advantages if it can create them. Verizon is already a leader in wireless internet service, and with its FIOS technology and Google’s constant innovations, it seems like these rules are being constructed to create an advantage over more traditional internet service providers which use DSL or cable lines and would thus be subject to the net neutrality provisions while Google and Verizon are comparitively less regulated.

The common response to this by net neutrality advocates is to reject the Google and Verizon plan and adopt a stronger one instead. Indeed, this is already happening by some advocates. History shows, however, that industry is heavily involved in the regulatory process and puts heavy pressure to implement them in its favor. This is common with regulation, since the benefits to a single given consumer from net neutrality are relatively minor, while the costs are borne by the companies. Since these internet service providers don’t really care about much except internet aceess, they have lot of reason to lobby and shape the regulation to their advantage, and bigger providers have more resources to do this. Consumers care, but it is a small fraction of things they must worry about in their lives, and give the legislation little attention. This results in regulation that hurts consumers by distorting the industry away from customers’ true preferences. For example, exempting wireless from net neutrality may mean that cheap wireless limited internet plans exist, while even cheaper cable ones legally can’t, which hurts consumers seeking this type of plan. The net result of all of this is the FCC implementing policies that actually have significant support from within the industry. However, if the regulation was actually achieving its goals, this regulation should actually be opposed by the industry.

If the government regulates net neutrality, policies for internet access are set by one entity: the FCC. However, if the government stays out, each company will set its own policies. If you don’t like the FCC’s policies, you are stuck with them unless you leave the United States. If you don’t like your internet service provider’s policies, you can simply switch to another one. So which model sounds better to you?

Update: The Electonic Frontier Foundation is also worried about the phenomenon I descibed above (Hat Tip to @wilw):

Efforts to protect net neutrality that involve government regulation have always faced one fundamental obstacle: the substantial danger that the regulators will cause more harm than good for the Internet. The worst case scenario would be that, in allowing the FCC to regulate the Internet, we open the door for big business, Hollywood and the indecency police to exert even more influence on the Net than they do now.


Filed under: Internet, Regulation
Comments: 85 Comments
 

85 Comments »

  1. Sorry, but there ISN’T any competition. And even if there is, they get sued into oblivion. Just as the town of Wilson, NC what happened to them when they tried to make their own ISP.

    Private industry MUST be collared and leashed by a government that has the ability to destroy them if they fail to obey the law or otherwise cause harm to the public.

    Comment by John Antilety — August 11, 2010 @ 8:38 pm

  2. The opening paragraph has an incorrect statement. The incorrect statement is:

    “Net neutrality is government regulation which prohibits internet service providers from diffrentiating internet traffic based upon its content and/or the service being used.”

    This statement is incorrect because Net Neutrality is not government regulation. Net Neutrality is a concept that the Internet has used since day one. It is how the Internet works right now. What the FCC is trying to do is preserve how the Internet works today.

    Much of the Internet’s success comes from Net Neutrality. So, it is important to keep the Internet the way it is and not let it be tampered with.

    Comment by Noel Ferreria — August 11, 2010 @ 8:56 pm

  3. Boy, Scanning many of the comments it sounds like most disagree with you. Reasons against generally center about lack of competition and monopolies.

    Don’t want to spend $10 for a beer at a major league game, find another vender. Oops, they’re all operated by the same vendor. Try another game. Sorry, no other options.

    Don’t like the 2-year minium terms of your cell carrier, try another. Oops, they all require a 2-year term.

    Don’t like you cable provider, sorry, no other options.

    What? You don’t have an alternative newspaper?

    That’s why!

    These companies have been given monopoliy protections and billions of dollars to build out their networks. That is why they shouldn’t be allowed to screw customers.

    Comment by John Doe — August 11, 2010 @ 9:41 pm

  4. Your argument is mostly sound but leaves out two important things. Firstly, as most people said, there aren’t many ISPs in most places(1 maybe 2 providing broadband). Secondly there is some price differentiation by speed under net neutrality. All data can be treated equally even while limited to a certain speed or possibly even total capacity like data caps.

    Comment by Grady — August 11, 2010 @ 9:41 pm

  5. What a crapload of apples to oranges. Newspapers are content, internet is infrastructure. Just like telephones. By your newspaper argument, telcos could censor what you say on the phone. It is their line, right?

    And what cost to the ISP’s is it you are talking about? What cost is there in forbidding something they don’t do yet anyway? Quite the opposite, doing prioritization would probably mean costs, for expensive equipment to look inside the packets.

    Besides, you are confusing what is politically desirable with what is commercially desirable.

    You can have freedom or non-legislation, but not both – when the freedom you want is under commercial pressure.

    Finally, there is certainly a risk that FCC just ends up being owned by corps and help their anticompetitive behaviours, in the disguise of helping you. But is that a problem with the concept of legislation to protect people’s freedom? No.

    If the FCC ends up as a corp tool, it is rather a problem with weak and corrupt politicians, with whom things will go wrong anyway, either way. Fight them rather than the FCC.

    Comment by Simon — August 11, 2010 @ 9:42 pm

  6. […] Lee Sharpe criticized net neutrality. Net neutrality seems to be a good concept to me. I don’t think […]

    Pingback by CompuCrunch » The Case For Net Neutrality — August 11, 2010 @ 9:52 pm

  7. You are being disingenuous.

    The FCC doesn’t create our ISP experience.

    The FCC would be establishing *minimum requirements* for service — NOT maximums.

    So there would be Lots of choices — the only ones you wouldn’t have would be ones that provided worse service than the FCC requires.

    This is no way equivalent to deciding between ISP — presuming — as many people have pointed out, that you have any option of another ISP in your area — which is not the case in my area, as I gather is the case in most other areas of the country.

    We are already stuck in the no-ISP choice option. We don’t like it. That isn’t the fault of the FCC — because they have, to my knowledge, only required minimums. If you are saying that having to provided “minimums” is keeping ISP’s out of the market that might provide worse service — then you are creating a false threat.

    If the FCC added more regulation, say — that to enter the phone market (wireless or wired), they must also offer a minimum of 10MB/s connection, I think you’d see more internet offerings, though maybe fewer phone companies.

    Comment by L. Walsh — August 11, 2010 @ 10:21 pm

  8. Your bad arguments one at a time.

    1. People pay for the NY Times because its a printed product not a utility. The publishers are responsible for the content of the NYTimes, in case you didn’t know, ISPs, telephone cos, utilities, don’t have editorial control over the internets. Wow that one took neuroscience to figure out.

    2. The “premium” analogy is dumb. First class passengers and coach passengers are going to the same destination, in the same amount of time. The first class passengers just pay a little more for extra ass padding. We are not speaking of anything to do with the free speech, free assembly, with which common carriers essentially can mediate by adding “premiums” which essentially would allow the wealthy to have free speech over the internets and the poor to have some new version of digital cable (but maybe in this post Reagan cleptocracy we live in its actually reasonable to make the rich free and the poor not). The comparison isn’t even close.

    3. Your last three paragraphs must be the results of sniffing glue or pens. I can’t believe that you argue regulation is fundamentally bad, because we need to prefactor in American ambivalence to the mix that will ultimately make it a net negative.

    This country is fried.

    Comment by B D — August 11, 2010 @ 11:52 pm

  9. “Whatever the reason, the New York Times has the freedom to not run certain advertisements. The freedom to refuse to facilitate speech one doesn’t like is part of one’s First Amendment freedom of speech rights. There is no reason this right should not carry over to internet providers as well, just like any other entity.”

    Yes there is. Telecom operators are considered common carriers. They are not liable for the content of the traffic they carry because they accept all traffic without screening. To selectively refuse traffic, based on protocol, port, or direction, would risk losing that status and accepting liability for the content of the traffic.

    Further, such a service would cease to be “Internet access” as generally understood and would have to be described differently, as “Internet access” is not considered to be access to certain approved sites, or access to certain sites at certain speeds at certain times, but is offered with a quality of service guarantee described as “best effort”. If a service provider could carry traffic between my computer and Google faster than it does, but does not do so because Google does not pay them a premium, they are no longer delivering “best effort” quality.

    The newspaper and airline analogies are not particularly apt. A more apt analogy would be a telephone company that advertises a flat monthly rate for unlimited calling time, but then charges both sides of a call and offers upselles for more reliable or better quality connections.

    You cite a good definition of “rent-seeking” behavior, but seem to have misapplied it in your article. If I use ISP A, and Google uses ISP B, and ISP A then approaches Google for an expediting fee to prioritize traffic between their client (me) and Google (a client of ISP B) then this is rent-seeking behavior.

    One might potentially justify it if one believed that the expediting fees would be used to expand capacity to Google; however, as ISP A actually has no relationship or direct connection to Google, it cannot actually do this, not without the participation of ISP B. The only way this system works in practice is that all non-fee-paying directions have their traffic throttled– again, failing to meet even the lowest level of quality assurance, “best effort”– in addition to being false advertising.

    Comment by dmjossel — August 12, 2010 @ 12:42 am

  10. so we have 50+ ppl all screaming “but theres only 1 ISP in my area!”
    why is this the case? if we SCRAP the FCC rather than enlarge it, more competition will arise

    Comment by vroman — August 12, 2010 @ 12:49 am

  11. “if we SCRAP the FCC rather than enlarge it, more competition will arise”

    Not so. Phone, cable, electrical, etc all have to run wires. This includes not only tremendous amounts of cost, but also things like obtaining right-of-ways, dealing with injunctions brought up by the existing local monopoly (who certainly won’t let you encroach their territory without a fight) and so on.

    Even if you could pull together the probably 100s of millions if not billions of dollars it would take to string a whole new set of wire, you still have enormous legal hurdles to go through, FCC or no FCC.

    That sort of barrier to entry is about as close to a natural monopoly you can get without it being actually “natural” (in the sense of “if I cut down that tree, you can no longer sit under it”).

    The FCC is simply trying to prevent such monopolies from taking advantage of your internet access. Will they screw it up? Maybe. But an unregulated monopoly will almost certainly be a problem as soon as the spotlight is pointed another direction.

    Comment by Erin — August 12, 2010 @ 1:37 am

  12. “if we SCRAP the FCC rather than enlarge it, more competition will arise”

    Yeah, cause deregulation worked GREAT for this country, didn’t it? Go look at what happened after everything deregulated back in the 80s. All the businesses went apeshit and shot themselves in the foot.

    Free markets don’t work. Period.

    Comment by TOGSolid — August 12, 2010 @ 2:20 am

  13. Just about every net-neutrality discussion misses the point. Net neutrality is about limiting monopolistic and anti-competitive practices. The big players were attempting to extort protection money out of content providers, and I mean this quite literally. Pay us off or we shut you out of our network. In the case of Google, they were arguing that Google was getting a ‘free ride’. Never mind both the content provider and the content consumers were both paying for their own bandwidth to deliver and receive. Still I’m against any kind of law and trust me on this, you don’t want the government involved. This is their big in and they will exploit and use it to expand their powers onto the net. Every net neutrality law proposed has been very very bad.

    Comment by Shred — August 12, 2010 @ 8:56 am

  14. As another person said, internet is infrastructure, not a medium.

    Tell you what. Let’s sell access points the the interstate system. Anyone can use the purchased access points. Everybody gets to go 65mph. Well, except that since I purchased an access point, and I own a trucking company, whenever one of my trucks gets to my access point, I stop everyone until my truck is on the highway. Yes, it’s a public access point, but I’m prioritizing my traffic over yours. And when other trucking companies start paying me to use my access point, all other traffic slows down. A lot.

    It isn’t a perfect analogy, but it’s a lot closer to what we face without net neutrality than the ones posted in this article.

    Comment by Carp — August 12, 2010 @ 10:01 am

  15. Personally I do not care about “monopolies” of ISPs. There are actually very specific reasons why you typically only have one cable company or one phone company in an area and it is of no real fault to the companies themselves. They benefit from it, sure, so they don’t do anything to change it, but they are not the cause.

    But that is not the issue. The issue is government intrusion into things it shouldn’t be intruding into. We as a society have become way too lazy and dependent on the government to take care of stuff.

    All the other “pros and cons” aside, this would be more government regulation. Which is bad and dangerous. No other argument matters.

    “Those who would give up essential liberties for a little temporary security deserve neither liberty nor security” – Benjamin Franklin

    Comment by Unr3a1 — August 12, 2010 @ 10:34 am

  16. “Efforts to protect net neutrality that involve government regulation have always faced one fundamental obstacle: the substantial danger that the regulators will cause more harm than good for the Internet. The worst case scenario would be that, in allowing the FCC to regulate the Internet, we open the door for big business, Hollywood and the indecency police to exert even more influence on the Net than they do now.”

    We have as much (or as little) control over whether the FCC regulates net neutrality as we do over what those regulations are. There is no reason to think that by opposing regulation that serves our interests we will prevent regulation that does not serve our interests.

    Likewise, the companies are not opposed to regulation, just regulation that does not serve their interests. If they thought regulation would be to their advantage, they would (and will) support it. No one will need to “open the door” for them, these large companies are perfectly capable of doing that for themselves.

    I think it is also important to realize that the whole purpose of charging for improved bandwidth is to sell a competitive advantage on the basis of something other than consumer/user preferences. They are paying for an advantage over their competitors.

    Comment by Ross Williams — August 12, 2010 @ 10:56 am

  17. It’s interesting that most of the comments are FOR the government regulating the web. That may be because most of IT has little understanding of how the free market works or why it is essentially a self-regulating process that is inherently responsive to the needs of the market. The fact that we don’t have a free-market is precisely due of government interference (often at the behest of the providers who don’t like competition). The solution, as John Osmon, pointed out is access neutrality (actually less government rather than more). It seems most of IT only knows the frustrations of working with ISPs that have been put in survival mode due to existing government regulation. To compound the problem, the current FCC chairman, in conjunction with the ‘regulatory Czar’ (Cass Sunstein), seem primarily interested in expanding the regulatory power of the FCC. Whatever initial benefit the FCC provides to users will be at a cost borne by taxpayers that ultimately leads to less service rather than more (think USPS). As usual, there is no free lunch.

    Comment by Dick Epler — August 12, 2010 @ 11:36 am

  18. Your advertisement example is extremely faulty. While newspapers choose their ads, comparing that to ISP’s providing ads is a non sequitur. In an accurate comparison, the ISP would be the neutral road one walks to the newspaper stand to get the paper. That is why neutrality is vital. ISP’s provide a gateway to content, a gateway that is largely built by public funds and technology. ISP’s have no right to infringe on personal choice.

    Comment by Adam — August 12, 2010 @ 11:54 am

  19. Man these arguments against the fundamental point of this article are such a complete load of crap.

    90% of all the arguments have to do with “but my area only has 1 provider”. Well no shit sherlock, the various state and local governments under have essentially made it that way through the use of franchise monopolies. By law, any ISP which wishes to operate in a particular region must get a big stamp of approval from whoever the franchise granting body is. In other words, for a competitor to come in and to attempt to let the market process actually work, one must bribe a bunch of politicians to even be allowed to provide the damn service.

    http://ideas.4brad.com/remaining-neutral-network-neutrality-its-monopoly-stupid

    Get rid of the damn franchise monopolies and the problem will essentially go away.

    I love how many of the commentators believe it is appropriate to blame the “free-market” for the way things are currently structured when historically ALL telecommunications services have been one of the most regulated industries in the US. People assume that just because they are charged a price for something that they are paying a “free market price”. This is such a stupid assertion to hold that I cannot believe that any human being who has the necessary brain function to even breath can believe it.

    Before mindlessly commenting that you have only one provider, or better yet justifying this absurd policy by saying that we need it to be a monopoly because it is a “public utility”, I would kindly ask that you use some semblance of logical economic theory to show me WHY these particular services ought to be monopolies. Or even that a “public utility” can even be established in some given industry in a non-arbitrary manner.

    The author uses airline travel as an example, but for exactly the wrong reasons. He should have pointed out how we had a federally enforced monopoly (of various providers making it a cartel in reality) under the Civil Aeronautics Board, and once that was dissolved we had far greater levels of competition than ever before. We would have even more if airspace were privatized and we got rid of the FAA.

    Comment by Slim934 — August 12, 2010 @ 11:57 am

  20. Another note which I have forgotten.

    Another reason NOT to entrust any power to the FCC is that the FCC was one of the primary INNOVATION DECORATORS during the 20th century. It held back cable television by atleast a decade during the 60s and 70s ehrn the dominant media petitioned the FCC to hold down its development.

    Once you set the FCC as even a small, defined regulator of the internet it will have the natural tendency to expand its reach for numerous reasons which have been developed in the school of Public Choice economics.

    Do you really want an organization with such an anti-competitive past as the FCC deciding what the kind of uses for the future of internet should be?

    Comment by Slim934 — August 12, 2010 @ 12:10 pm

  21. Excuse me, INNOVATION DECELERATORS, not DECORATORS.

    That would be silly.

    Comment by Slim934 — August 12, 2010 @ 12:10 pm

  22. http://www.cato.org/pubs/pas/pa034.html

    This article is more than a bit dated, but given that Franchise reform efforts have only been taking place within the past 5 years or so it is still quite pertinent when taking into account exactly what the non-reformed states have to deal with.

    Comment by Slim934 — August 12, 2010 @ 12:17 pm

  23. Free markets self regulate in a specific set of conditions. Simply making a claim like that about a market as tricky as the telco industry without backing it up seems foolhardy. Perhaps the IT folks simply remember that the reason the market is heavily regulated now is that it has already dramatically demonstrated that it does not, in fact, self regulate.

    Comment by Maciej — August 12, 2010 @ 12:40 pm

  24. you are correct: free markets do self-regulate during a very specific set of circumstances.

    When they are left alone.

    Given that this is largely the case concerning such unbelievably complex items as any modern physical electronic device, it seems to me that the exact opposite is the case. Prove that a fully unfettered market is not self-regulating. You certainly will not be able to do so from a theoretical standpoint.

    Or perhaps the IT folks only think that because that is what they have been told to think their entire lives. Given their lack of real historical knowledge on actual market conditions at any given time, and it seems pretty obvious that this is likely the case.

    Comment by Slim934 — August 12, 2010 @ 12:57 pm

  25. “Simply making a claim like that about a market as tricky as the telco industry without backing it up seems foolhardy.”

    A slight addendum: this viewpoint assumes that legal regimes for markets exist BEFORE a market for any particular good has actually organically formed in an economy. This is the historical inverse of every single product class in the history of mankind. Products and their exchange occurs FIRST, and legal regimes arise afterward to take care of problems relating to property rights infringements given those products.

    This is why cable/isp service cannot possibly be considered a legitimate free market. The state set the rules for its use before it could even be sold on the market, which heavily influenced the manner in which the service would be developed in the future.

    If the service were a true market like many other goods, it would be fantastically more productive than it is right now. Even if we were to totally deregulate it, it would probably take atleast a decade for it to develop to where it actually stablly acted like a free market. This is the fault of the state. It should not be given more power to make the matters worse.

    Comment by Slim934 — August 12, 2010 @ 1:04 pm

  26. I agree with your analysis, but I would add that much of the talks of internet regulations are akin to price controls.

    Economic theory and history show price controls to have very negative effects on availability and innovation. Yet, people keep bringing them up…

    There is another point which a commenter (#61) above brought up: right-of-way. It is interesting to see that, once again, prior government intervention is causing more problems and inviting even more intervention (surprise!).

    There have been many interventions in the telecom space (including the government-granted monopoly of Bell, to supposedly mitigate a hypothetical “natural monopoly” situation), but the specific prior intervention I’m referring to is the government control of roads and highways.

    Since cables and fiber optics are closely related to roads, and often times require digging holes in them, cable companies obviously need permission, which does act as a barrier to entry for competition.

    Comment by Julien Couvreur — August 12, 2010 @ 3:15 pm

  27. You really screwed the pooch Lee Sharpe. I hope you post a retraction.

    Comment by Arby — August 12, 2010 @ 3:40 pm

  28. The ideological free marketers here seem to be a bit ignorant of real markets. In the real market businesses are trying to maximize profit, not service. There is nothing in this proposal that is going to allow end users to decide what kind of service they receive.

    The newspaper analogy is pretty close. Newspapers do not sell advertising based on their reader’s preference. There is no limit to how much advertising they will provide. They don’t care if their reader’s are happy with it any more than dairy operators worry about whether their cows are happy to be milked. The readers are a product, their customers are the advertisers.

    If you apply that to this situation, it is possible that an ISP will provide a discount to content that helps attract a larger audience. But if their primary source of revenue is content providers, then your service depends on the content providers’ decisions, not yours. If you want high speed connections to content from a provider who doesn’t pay for bandwidth, it just isn’t going to be available at any price from anyone.

    Just imagine a competition between Facebook and Myspace where Myspace pages load instantly, but Facebook pages load like you were still on dial up. Do you really think the upstart Facebook would take away Myspace’s market, regardless of which product is better?

    Comment by Ross Williams — August 12, 2010 @ 6:00 pm

  29. One other thing to remember. In order to charge a premium from some content providers, the non-premium service has to remain substantially worse. And, the worse it is, the larger the premium you can charge.

    Comment by Ross Williams — August 12, 2010 @ 6:09 pm

  30. Ummm… You keep saying Monopoly, but I do not think it means what you think it means.

    Cable companies have a “Franchise Agreement” with local municipalities to govern a “right of way”, basically the city’s permission to give the cable company right to run it’s lines and provide service to the city. Most municipalities only have 1 cable company because of two things:

    Wiring costs and franchise fees.

    If you open your cable bill, in addition to the usual run of State taxes, you’ll see a “Franchise Fee”.

    Lets start with wiring costs. Your standard Fiber Optic line runs about 20 cents per line foot. When you consider the number of lines necessary to wire even a small city, the costs could easily get into the 10s of millions on Fiber costs alone, including installation. That is 1 part why most cable companies won’t compete head-to-head. The upfront cost to run separate lines (they wouldn’t share), the installation of such lines, and the governance associated with getting approval to run them makes it not worthwhile to add services in areas with an existing provider.

    Let’s get to those pesky franchise fees. Each cable company submits to a LGA or Local Government Authority. They have to submit to them in order to operate their lines (the lifeblood of their service). In order to maintain those lines, the city imposes a tax or fee on the service in the franchise fee. The city will collect as much as 10% in some markets (the averages are usually between 5-6%) in the form of a lop off the top of your cable bill.
    Now, if you switch to some cities that have competing cable companies, you’ll find that the city is only able to collect about 0.5% to 1.5% in franchise fees. You might think that to be a drop in the bucket, but those fees add up when there are 20,000 or 200,000 or 2,000,000 customers. A lot of cities use this money to supplement their state’s local government aid. Why would your city agree to allowing another cable company, when they’re going to lose approximately $750,000/year in a 20k cable customer town, and up to $75 Million in a 2 Million customer town. Hey, LA could use that kind of dough.

    One thing, I’d be willing to be that 99% of people wanting the FCC to run ISPs are Bit Torrent Users. That’s right, they’re people who are technically breaking the law themselves, but are quick to point out that their ISP is blocking them from breaking the law. I’m not trying to be high and mighty here, but I see this as the pot calling the kettle black.

    Comment by Joe L — August 12, 2010 @ 7:47 pm

  31. Writer assumes that providers aren’t monopolies with locked resources. Apparently he lives on mars.

    Comment by David — August 13, 2010 @ 7:44 pm

  32. For you folks griping about lack of choice in ISPs: do your homework, and you’ll see government regulation is at the root of that reality.

    Comment by Joe Cassara — August 17, 2010 @ 1:38 pm

  33. Why not look into a country (one of many) where net neutrality is in fact mandated by law. I’m happy to live here in Finland where we have net neutrality mandated by law (we can also run servers on our home DSL connection without paying for “premium business” service like one US citizen blogger just wrote about having to do – he was not complaining, that was something normal to him). We have cheap DSL’s and we have cheap wireless connections, we have even cheaper DSL’s if you are willing to use only 5/1Mb connection, but my 24/2Mb is not exactly expensive (it’s rather cheap).

    None of the threats you make are reality here where this net neutrality by law has been reality since late half of 90’s. I know that without these laws I would have to pay more to get what I have now and I would not like that. I know which way I would vote if I were a US citizen – but luckily (for many reasons) I am a finn and don’t have to worry about this. I thank my ISP for their fine service (which also makes it possible for me to run that blog site of mine on my home system – with no extra fees).

    Comment by Jani "robsku" Saksa — August 20, 2010 @ 3:41 pm

  34. […] access are so few and far between, it is likely that they could be in violation of some law by censoring certain content. But some of that legal jargon is over my […]

    Pingback by What’s the deal with “net neutrality”? « An Oklahoma State of mind — April 17, 2011 @ 9:16 pm

  35. […] Lee Sharpe↩ […]

    Pingback by Clusory Connection: Should Net Neutrality be Actively Upheld? - Café Clusory Café Clusory — December 10, 2014 @ 12:41 pm

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Henry Hazlitt"[T]he whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
Henry Hazlitt, Economics in One Lesson
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