Wednesday, December 20, 2017

Some Quick, Unfiltered Perspective on Net Neutrality

Image swiped from as fair use
Net Neutrality is all the rage. Apparently, the sky is falling and plagues of locusts are going to start flying out of every Ethernet port all across the U.S. Hey, I fell victim to the fearmongering a few years ago and copy-pasted someone else's pre-typed thoughts onto the FCC's open comments page, too. But now that we're older, wiser, and apparently in the throes of the apocalypse, let's get some perspective.

In the mid to late 90s, the federal government subsidized the construction of large amounts of cabling to form the backbone of the internet, but most notably, municipal governments engaged in the very same. Given that this was a tremendously expensive task, it wasn't a bill that could realistically be footed by county taxpayers alone so cities and townships set us on a pretty shitty path. Rather than let economic forces gradually build out the network in a fashion consistent with supply and demand, they offered ISPs terms for monopoly status. In most of these negotiations, the municipalities did what most would probably see as an altruistic thing and required the ISPs to build out massive networks that included what would normally have been under- or unserved suburban and rural areas and set high standards (for the time) for network capacity. Given that they'd be guaranteed to make their money back thanks to their monopoly, ISPs agreed and overbuilt networks.
Many of these exclusivity contracts were a decade long or longer. In this ensuing decade, the internet got insanely popular in part because it was far less expensive than it would have been (subsidies) and network capacity was basically unlimited because nothing existed that could use anywhere near that level. So begins the bubble. Soon, pages went from text... to image... to eventually highly compressed video (WHOA REALVIDEO!). Eventually, the monopoly contracts ran out and slowly competition started creeping in. Obviously, the first movers and former monopolies had a significant advantage in the government-granted imbalanced market, so many of these small competitors and local and regional ISPs started losing to the ISPs that had been granted far bigger swaths of land. Kingmaker cities with huge metropolitan markets like Philadelphia and New York birthed ISPs with deep pockets while long-time megacorporation telecoms such as Verizon and AT&T (who also grew out of government-granted infrastructure monopolies of old) started creeping out of their home territories. Much like that "horror" when Wal-Mart comes to your town, these companies could afford to attack market share with the affordability allowed from scale until the local competition died, often being subsumed into the whole.
Flash forward to the mid-oughts as video streaming becomes a greater and greater share of total bandwidth and you start to run up against unforeseeable problems in network dependability and speed. These megacompanies obviously want to build out huge infrastructure and say they're the best, but it's no less daunting a task now than it was before. So, they start reupping their exclusivity contracts whenever possible and, when not, use local government "franchise rights" to ensure at least a sizeable enough market share, pressuring counties to protect their ill-gotten monopoly rights to run wires on telephone poles and in conduits while also granting more and more money in infrastructure subsidies. Think football teams and how they pressure cities to rebuild expensive stadiums every decade. So, the fiber continues to get laid - thanks to a bottomless well of taxpayer dollars and guaranteed customers due to pseudo-monopolies. All are lost but the most behemoth competitors such that most regions have only two providers of high speed internet, and when they see threats from someone like Google Fiber or cities trying to do what Chattanoga did, they simply lobby the hell out of said governments, sue like crazy, and shut it down.

So yes, the situation is fucked. It's fucked from all sides. But you can't just wish fiber cables into being, and as long as they're all owned by Megabucks, Inc., that megacorp will always have unmatched leverage in the market. As such, we either need to: 1. Open up infrastructure to real competition from the other megacorps and random Google moneybags who want to suddenly jump into the fray, or 2. Take all the infrastructure over.
The former would mean eliminating franchise rights and not giving governments the right to spend our taxes playing favorites. It would also mean that companies who want to stay super cheap would need to offer subpar service and limit bandwidth through caps, throttling, or making money on the side through partner agreements and preferential streaming (the legitimate fear of net neutrality activists that will come with or without these rules through some end-around or vertical integration). However, it would also mean that new companies like Google could enter underserved markets and that when companies are losing the price war, they could make their competitive advantage quality, speed, or unthrottled bandwidth and start steering the market based on actual consumer demand. The latter would be a highly unethical eminent domain overreach and would also mean that infrastructure build out would depend solely on taxpayer interest in the topic and political willpower to push for constant upgrading and spending. Given that our roads, bridges, railroads, and electric grid are still stuck in the decades they were first built, I'd say this is not an ideal solution.

What we have right now is a bunch of companies that essentially behave like Wal-Mart: in a stable, static market, price is all that matters. But, there are no Targets or Amazons in this space trying a different angle because when one or two companies enjoy near monopoly status, a comfortable equilibrium of market share is easy to reach. Verizon, Comcast, Cox, Google, Spectrum, and AT&T should be tearing each other to shreds in every market, fighting over who throttles what, who makes it cheaper, who offers the highest speeds, and who has the best customer service. Instead, they're all resting on their thrones that governments granted them 30 years ago, waiting for those percentages of people to convert from DSL and growing their stock prices by adding on home security packages, peripheral devices, and mobility tie-ins.

And so, we arrive at the age of 4k video and Netflix and chill, again hitting the limits of the current network capacities. Why would they want to build more? What's the point? You're already forced to pay them whatever they ask if you want to get online. And your response is to change it from a Title 1 utility to a Title 2? You think that will fix anything? You think that giving the government that tried to put in SOPA and PIPA more regulatory control will improve free and open access to information? You think companies will suddenly feel an incentive to build out infrastructure in response to Title 2 mandates? You think they'll do anything except play the far, far cheaper game of lobbying and fighting their competition with more arbitrary laws and conduit leasing rights? Politicians get in bed with businessmen - you need a crazier businessman to kill a businessman.

So, is this an industry that needs a band-aid of more of the same? No. Let's blow this motherfucker up already and start the free market free-for-all. Some day, I hope internet service is competitive, but it might take the Lord God himself, Elon Musk, and his LEO satellites shaking things up to save us all. Until then, I'll fight for rationality

Disclosures: I have worked for multiple ISPs... and even there, I've been the only one of my coworkers against this non-neutral form of net neutrality where we hand the internet over to the least neutral group of people ever: politicians. Also, the headline image used at the top was satire, obviously.

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