Two Terrible Ideas in One Day
Wednesday, June 25th, 2008 by Harry Lewis1) Comcast and Time Warner are experimenting with metering Internet usage, on the principle that the Internet is like the water supply system. Problem with this idea is that there is no bits shortage as there is a water shortage. They should be building more pipes rather than maintaining the pipe scarcity and jacking up their prices for the water.
2) The FCC wants to auction off a piece of the spectrum to someone willing to use part of it to build a nation-wide, free, wireless Internet. The catch? This parallel universe will be censored. According to the Wall Street Journal, “Details about how to define what content would be unacceptable for viewing over the free network is still under discussion.”
Neither the FCC nor any other government agency has any business in Internet censorship, as the courts have repeatedly held. (In fact, the FCC has no business in broadcast censorship any more either, but see Chapter 8 of Blown to Bits for that story.) There are so many problems with this idea, it’s hard to know where to begin, but Scott Bradner’s column would be a good start for those wanting to know more and to get some of the background. Fundamentally, the flaw with this proposal rests on another metaphorical failure. See also David Weinberger on this.
June 25th, 2008 at 4:54 pm
Regarding your first point,
How do you propose they build the new pipes? With what money?
Service providers’ revenue is flat-lining and profitability is stagnating.
And there may not be a bit shortage but there is a bandwidth shortage.
And what is to prevent these pipes from being filled with more P2P traffic?
And why, if I only use my internet for email, should I pay the same as someone who is slamming the “pipes” downloading hundreds of movies and songs a month.
Your solution of “build more pipes” does not factor in simple economics, I would love to hear your response.
June 26th, 2008 at 1:59 am
The ISPs are acting rationally, given that almost everywhere in the US, the local ISP either has a monopoly or is one of a duopoly. Better, if you are a monopoly, to limit capacity and raise the rents, rather than to make capital investments to increase capacity. The “terrible idea” is for the nation not to recognize that in the long run, economic progress will come with greater and cheaper Internet services, and that the US will (and is already) falling behind other nations. I would be delighted to have the market take care of this problem, and it would if there were actual competition in broadband services. That was promised but never came to pass. So either more competition must be created (and I mean for open delivery services, not for Chairman Martin’s bright idea of a government-censored Internet), or the existing monopoly/duopoly must be regulated. None of the obvious analogies, e.g. rural electrification or the move from dialup to broadband, is exactly right, but they are partly right. If there is no national policy agenda to expand Internet services, it will expand only where there is the biggest private payoff from the least investment, and most of the country will become or remain dark. What exactly are the right mechanisms for the national investment in pervasive, high-bandwidth Internet services, to be returned in the future through general enlightenment and public prosperity, is a matter on which much has been written, but the current model won’t achieve it. Some pointers can be found at http://www.savetheinternet.com/.
June 26th, 2008 at 10:23 am
Despite the recent consolidation, I don’t see evidence of monopolies. Yes there is typically only one cable company in a particular region, but Verizon and AT&T are starting to add competitive broadband services, AT&T is investing nearly $20B in its network this year, and Verizon just filed a $10B shelf for amongst other things capital equipment. Regardless, there are things such as natural monopolies, and looking at the sluggish revenue growth and cash flows of the MSOs and telcos, I don’t see any evidence of unfair competition. I agree economic progress is dependent on communication and inexpensive internete access. But internet bandwidth gets cheaper every day. And your response was classic evasion of any of my questions, no addressing of bandwidth hogs or unfair pricing. The economy is not going to grow from merely creating more bandwidth for P2P up/downlading which is 44% of all internet traffic currently (look it up). If you make bandwidth hogs pay for their use then the internet gets much more open, fast, reliable etc., revenue and profitability goes up, profitability attracts competition and spurs investment in capacity. Econ 101.
July 24th, 2008 at 9:20 pm
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