Killing Net Neutrality Could Be Good For You 361
Hugh Pickens DOT Com writes "Berin Szoka and Brent Skorup write that everyone assumes that cable companies have all the market power, and so of course a bigger cable company means disaster. But content owners may be the real heavyweights here: It was Netflix that withheld high-quality streaming from Time Warner Cable customers last year, not vice versa and it was ESPN that first proposed to subsidize its mobile viewers' data usage last year. 'We need to move away from the fear-mongering and exaggerations about threats to the Internet as well as simplistic assumptions about how Internet traffic moves. The real problems online are far more complex and less scary. And it's not about net neutrality, but about net capacity.' The debate is really about who pays for — and who profits from — the increasingly elaborate infrastructure required to make the Internet do something it was never designed to do in the first place: stream high-speed video. 'While many were quick to assume that broadband providers were throttling Netflix traffic, the explanation could be far simpler: The company simply lacked the capacity to handle the "Super HD" video quality it began offering last year.' A two-sided market means broadband providers would have an incentive to help because they would receive revenue from two major sources: content providers (through sponsorship or ads), and consumers (through subscription fees). 'Unfortunately, this kind of market innovation is viewed as controversial or even harmful to consumers by some policy and Internet advocates. But these concerns are premature, unfounded, and arise mostly from status quo bias: Carriers and providers haven't priced like this before, so of course change will create some kind of harm,' conclude Szoka and Skorup. 'Bottom line: The FCC should stop trying to ban prioritization outright and focus only on actual abuses of market power.'"
Re:Incentive to not carry data as well (Score:5, Interesting)
Yeah as soon as I read this I had propaganda bullshit sirens going off in my head.
Why stream? (Score:3, Interesting)
Lost me in the very beginning (Score:4, Interesting)
But content owners may be the real heavyweights here: It was Netflix that withheld high-quality streaming from Time Warner Cable customers last year, not vice versa
Netflix except for a few shows it funded, is mostly a distributor. Also if you read up on what really happened [gigaom.com], Netflix found itself with steep interconnect fees due to the actions of Comcast. So it built their own network that the ISP could join. However, any ISP that joined and did what Comcast did would find itself under scrutiny by the FCC. Time Warner wants to spin it as Netflix "withholding access" when really it is Netflix protecting itself.
Re:have your cake and eat it (Score:4, Interesting)
Someone who uses 10GB a month should pay ten times as much as someone who uses 1GB a month
While I agree with you in principle, your pricing structure is way off. There is a physical infrastructure that must be maintained regardless of whether you're using 1GB/mo or 1TB/mo. Your proposal would require breaking out a separate network access fee, which would be the overwhelming bulk of the cost for someone only using 1GB/mo.
Re:ROTFL you said it best - it's allowed, not happ (Score:2, Interesting)
Having worked at an ISP during the 1990s, I can tell you this didn't happen because the people working there had RESPECT for the neutrality of the traffic. They had no desire to prioritize anything and it was considered bad form and, ultimately bad business. If you start caring what the content is going through your wires and even go further and filter then someone could do it to YOU in return.
What we have in 2014 is several heavyweight "ISPs" like Comcast who 1) have shown to have no respect for anything or anyone and 2) are big enough to bully others.
How are small ISP's suposed to compete? (Score:4, Interesting)
I run a very small WISP. We have around 200 residential customers. Most other alternate ISP (not Comcast or CenturyLink) will not sell residential Internet. Why? Less money, more bandwidth. Streaming video uses up to 100 times more bandwidth that typical web surfing does. Comcast gets Level3 (Netflix's bandwidth provider) to pay them extra to deliver there video streams to there customers. We are so small, how are we supoosed to get Level3/Netflix to compensate us without getting laughed out of the room?
The situation is bad enough that we are considering discontinueing our sales of residential Internet.
At least if Comcast was not allowed to charge Level3 for the delivery of there streaming data (Shouldn't Comcast customer my fees cover this?), net neutrality, they would have to pass that expense on to the customer. If there rates went up so could ours. Level playing field.
Re:Ignore the elephant in the room (Score:5, Interesting)
"No, you shouldn't worry about prioritization, in fact it can help startups."
What? Wasn't that what everyone was worried about to begin with? That those with all the purse strings would be able to lock out these very startups you're claiming will benefit the most from this setup?
You're talking about startup content providers, which the likes of ESPN want to put out of business (do you think they actually want to help their competition?).
ESPN is talking about startup broadband providers, which don't exist. If they did exist ESPN would want to help them as they'd prefer to deal with a bunch of small cable companies and not one big Comcast or whatever. However, the last mile is a natural monopoly, so there won't be any startups.
Really it is about coming up with a bogus argument about helping small business so that they can kill it. The only place you'd actually see startups would be on the content side, which is where ESPN plays.
Fixed versus variable costs (Score:4, Interesting)
Someone who uses 10GB a month should pay ten times as much as someone who uses 1GB a month and they should be able to use 100GB if they can afford it.
I'm a cost accountant [wikipedia.org] professionally and your analysis of the economics here is complete nonsense. You are assuming that delivering 10GB/month costs 10X as much as delivering 1GB/month. In reality it doesn't work like that. There are two types of costs, fixed and variable. Fixed costs [wikipedia.org] are things like electricity and salaries and rent that you have to pay every month regardless of how many customers you have or products you produce. Variable costs [wikipedia.org] are things like raw materials or data interchange fees that scale with each unit of product delivered. For companies like Comcast, fixed costs hugely outweigh variable costs, meaning that it costs them only fractionally more to deliver 10GB than it does 1GB. The equipment used is the same, the salaries of their employees are the same, their electricity costs are the same, etc. The cost to serve a customer is generally not affected greatly by the amount of data they use in most cases once the infrastructure is in place to serve them.
What these companies are doing is in many cases creating artificial scarcity and engaging in price discrimination [wikipedia.org] to maximize revenues while minimizing costs. Investing in infrastructure (a large fixed cost) is expensive so companies don't want to do it if they don't have to. Furthermore they know that some people are willing to pay $100 per month while others only $30 so they are using the fact that there is a minor difference in variable cost for data delivery to extract more money out of those who are willing to pay more for faster/more data. Companies like Comcast don't like companies like Netflix because Netflix customers start demanding more out of their existing infrastructure which screws up their cost models and forces them to invest in infrastructure (big fixed costs) soon than they intended.
If you want to charge differential pricing based on usage, then you need to have a flat access fee based off the actual (fixed) cost of providing the service (plus some profit for the ISP) and then you charge a per-byte usage fee for the variable cost of delivering the data. The variable cost in this instance should be a relatively small amount compared to the flat access fee. Right now by paying a flat fee, users who use less data subsidize those who use more.
Re:riiiight (Score:5, Interesting)
This is like buying a computer case from Newegg, paying for 3 day UPS shipping, then the UPS driver that shows up to Newegg and demands a tip to pickup the package because it's too big and heavy and without the tip the package could take much longer to arrive.
The shipper shouldn't get to charge twice for a shipment. Likewise ISPs shouldn't be allowed to sell data delivery to its customers then try to also extract fees from the data providers.