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Tuesday, December 21, 2010

Net Neutrality

The new FCC "net neutrality" will be dumped into our laps today.

The FCC Chairman, Mr. Genachowski, wisely decided that the internet was not a "telephone system" and that he would not use his telephone regulatory powers to control it with government regulation.  This was back in May.  Telephone regulation, which has deteriorated along with the use of antiquated "telephone service", was very harsh and focused to a larger degree on tight regulation across the board - the idea being that any "monopoly" had to be tightly controlled by the government to ensure that it treated everyone and everything equally.

What this meant, among other things, wast that the telephone company (the old "Bell System") had to charge rates that the government thought were fair.  These rates included profit so retired little old ladies that owned the stock would get reliable dividends, investment so that there could be things like Bell Laboratories to create new products, service so that there was always a "dial tone" when you picked up the phone and infrastructure advancement so that year after year there would be improving service.

So the "Bell System" could live and grow but it couldn't charge too much to do it.  It had to include in its service areas those in rural, hard to reach areas as well as those in big cities.  This system worked okay for about a century or so.  It created one of the best telephone systems in the world - reliable, relatively cheap and accessible.

All this came to an end in, appropriately enough, 1984, when telephone companies were "deregulated".

The result of deregulation is what you see today - zillions of methods of voice and video communication - most which did not exist in 1984.  Intense competition on features and cost.  Constant innovation and change.

The FCC was in charge of all this prior to 1984 - it was their big claim to fame.

The new "net neutrality" appears to be a problem in search of victims.  No one I know, and I've been a net user since before it was publicly possible to do so (1981), has ever had a problem accessing the internet.  Sure you might have had to use dialup because other alternatives were too expensive, but it was always possible.  For a long time Lexigraph used T1 service - 1 Mbps up and down - connected to your office via phone wires.

The new net neutrality is an obligation of the FCC since one of the FCC's priorities is to ensure the broad spread of technology like the internet across the country.

But the real issue, as I see it, is one of money.  The growing spread of interactive and streaming video is putting a strain on some parts of the internet.  High speed broad band and content like this blog go well together - not much data volume and lots of places for it to go very quickly.

Video is a different story - much more data intense and thus it hogs up much more bandwidth.

So the question becomes very simple.  If I am a cable provider, say, like Comcast, that sells Mr. A internet service is it "fair" that Mr. A acquires Netflix online and streams HD video over my wires to his house to watch movies that he would otherwise get from me.

When just a few Mr. A's did this it wasn't a problem, but as more and more do it, the Comcasts of the world are forced to improve bandwidth to each household.  This costs Comcast money.

One option for Comcast was be, for example, to simply block Netflix.  Comcast actually block BitTorrent sites for a while until they were caught.

Under the new net neutrality Comcast would not be allowed to do this.  Nor could they "slow down" Netflex sites so that the movie quality sucks and no one would want it.

Currently companies like Comcast and Netflix must work out these sorts of issues on their own in a free-market sort of fashion.  For example, Comcast requiring Netflix pay an extra fee for hogging up Comcasts bandwidth.  Presumably the price differential would be covered in the fees Netflix charges its customers.  This is considered to be self-regulation.

The real questions as I see it are this:

1) Companies that need to maintain a bandwidth balance have a reason to do so without the FCC.  Blocking popular sites will results in a hue and cry that will create embarrassment and shame for those involved, and, more importantly, cost them customers.

2) Secret blocking and slowing of sites can and does occur, e.g., Comcast and BitTorrent, but currently there is no "court of last resort" for anyone to go to resolve this; the new net neutrality establishes the FCC as this court.  (In 2008 Comcast demonstrated in court that the FCC did not have the authority to regulate this sort of action.)

3) There is strong pressure for "special interests" on both sides to turn the internet into newer versions of telecommunications, radio, TV and media companies replete with special interest lobbies, special laws, and so forth that I believe must be eliminated for an open internet.

The big win for everyone is a free, open internet.

The big loss for everyone is a free, open internet. 


Without regulation corporate "robber barons" will take charge and tax and regulate and control the content, speed and access.

With regulation "big government" will constantly meddle in the guise of fairness, ultimately taking charge and taxing and controlling and regulating content, speed and access.

What's really required from the FCC is the "dim mak" (deft touch) approach. 

Leave the playing field open and clear of government intervention and obstacles while maintaining just enough sheriffs in the wings to ride out and stomp out trouble if they see it.  The corporate big boys will want to steer clear of potential trouble and work out their issues on their own.

Yes, I know its fantasy land...

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