The Dark Side of Net Neutrality

Net neutrality, however idyllic in principle, comes with a price. The following article was written to shed some light on the big money behind the propaganda of net neutrality. It may change your views, but at the very least it will peel back one more layer of the the onion that is the issue of net neutrality.

First, an analogy to set the stage:

I live in a neighborhood that equally shares a local community water system among 60 residential members. Nobody is metered. Through a mostly verbal agreement, all users try to keep our usage to a minimum. This requires us to be very water conscious, especially in the summer months when the main storage tanks need time to recharge overnight.

Several years ago, one property changed hands, and the new owner started raising organic vegetables using a drip irrigation system. The neighborhood precedent had always been that using water for a small lawn and garden area was an accepted practice, however, the new neighbor expanded his garden to three acres and now sells his produce at the local farmers market. Even with drip irrigation, his water consumption is likely well beyond the rest of the neighborhood combined.

You can see where I am going with this. Based on this scenario, it’s obvious that an objective observer would conclude that this neighbor should pay an additional premium — especially when you consider he is exploiting the community water for a commercial gain.

The Internet, much like our neighborhood example, was originally a group of cooperating parties (educational and government institutions) that connected their networks in an effort to easily share information. There was never any intention of charging for access amongst members. As the Internet spread away from government institutions, last-mile carriers such as cable and phone companies invested heavily in infrastructure. Their  business plans assumed that all parties would continue to use the Internet with lightweight content such as Web pages, e-mails, and the occasional larger document or picture.

In the latter part of 2007, a few companies, with substantial data content models, decided to take advantage of the low delivery fees for movies and music by serving them up over the Internet. Prior to their new-found Internet delivery model, content providers had to cover the distribution costs for the physical delivery of records, video cassettes and eventually discs.

As of 2010, Internet delivery costs associated with the distribution of media had plummeted to near zero. It seems that consumers have pre-paid their delivery cost when they paid their monthly Internet bill. Everybody should be happy, right?

The problem is, as per our analogy with the community water system, we have a few commercial operators jamming the pipes with content, and jammed pipes have a cost. Upgrading a full Internet pipe at any level requires a major investment, and providers to date are already leveraged and borrowed with their existing infrastructure. Thus, the Internet companies that carry the data need to pass this cost on to somebody else.

As a result of these conflicting interests, we now have a pissing match between carriers and content providers in which the latter are playing the “neutrality card” and the former are lobbying lawmakers to grant them special favors in order to govern ways to limit access.

Therefore, whether it be water, the Internet or grazing on public lands, absolute neutrality can be problematic — especially when money is involved. While the concept of neutrality certainly has the overwhelming support of consumer sentiment, be aware that there are, and  always will be, entities exploiting the system.

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4 Responses to “The Dark Side of Net Neutrality”

  1. Tom Phelan Says:

    The question of course is whether or not your analogy is accurate. What if the situation was that your community was served by only one water company who controlled the pipes to your homes. But let’s say you could choose to buy water from multiple companies including the water company who controls the pipes. Now you see where I’m going.

    Are the ISP’s with their monopoly or near monopoly for a huge number of homes using this leverage to extort money from content providers, or are the content providers underpaying for their data?

    I honestly don’t know, but I do agree with what I think is your primary point that the Net Neutrality debate is not black and white. Anybody who still thinks it is black and white should spend an hour or so reading both sides of the Comcast vs. Level 3 spat.

    However, my biggest concern is the ISP’s because of the lack of competition for the last mile. If they get there way it will be very difficult for new companies. The Google’s and other well financed companies will be able to strike a deal with the ISP’s, but the next Google/Facebook/Hulu/etc. will have no leverage or cash making it next to impossible to challenge the big boys. What’s scary is that some sort of content provider payment serves interests of both the ISP’s and of the established content providers. The ISP’s because they get more money, the established content providers because it makes it much more difficult to challenge them with new and innovative services.

    Lastly, while I’m pretty pessimistic how it will turn out, I would still rather take my chances letting the market sort things out then unleash a bunch of government regulators.

  2. Ken Says:

    One of the problems I see with the arguments against net neutrality and for usage based billing is that in most cases they compare them to existing utilities. One huge difference is that water, power and gas utilities are selling a commodity. there is a cost to producing power, drilling for oil, etc. Internet service providers are simply a transmission company. they own the ‘pipes’ that get the water to you, but there is little or no real cost of providing the data.

    A better analogy for your water system might be if you had a huge reservoir, larger than anyone could ever consume, with pipes of limited size connected to each house. If you want more water, you need a bigger pipe. The WSP (Water Service Provider) could install a new pipe for you, and then charge you for the increased usage. Since the reservoir is unlimited, it should make no difference to the WSP if the user leaves his tap open all day, every day.

  3. Chris Says:

    Ken, you got it wrong!

    The entire Internet is (still, and more than ever) built on the “contention ration” principle. If your neighbor gets all his home PCs to dot torrent downloads 24/7 you and the other that share that contented (sp?) allocation won’t be happy campers.

    Looking at it another way: if you are quite poor and just want to do txt emls, why should you pay the same “huge” amount as the mansion across the tracks that has 4 kids with 2 gaming computers each? The poor subsidizing the rich?

    The problem is NOT the reservoir, it is the PIPES THEMSELVES! If I’m not mistaken electric utilities nowadays are often split in “transporters” and retailers, etc.

    You can bet the “transporters” mostly charge by the “flow”.


  4. NetEqualizer News: March 2011 « NetEqualizer News Blog Says:

    […] Posts The Dark Side of Net NeutralityNetEqualizer YouTube Caching FAQSupport ArchivesNine Tips And Tricks To Speed Up Your Internet […]

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