Life After Net Neutrality
For the past few months, in the United States, a fight has been brewing over how the pipes that control the Internet would be ruled. On one side, activists and large Internet companies felt that access to the Internet should be neutral and that all sites should be accessed in the same fashion. On the other side, large cable and phone companies have been arguing that they should have a chance to charge different rates for different types of services. The whole fight was embodied into a campaign called Net Neutrality and made its way into the American congress.
Today’s news that the Net Neutrality bill was defeated may create future problems for American internet businesses but will not kill the Internet, as some have claimed. Instead, it will probably dictate, in the long run, the death of the very proponents of a ban on net neutrality: phone and cable companies which have been trying to overreach in their attempt to fatten up their bottom line.
Looking at the stakes
At issue in this debate is how bandwidth is distributed and whether it should be metered in any fashion. At the current time, in the US, most people who get broadband pay a flat monthly service fee that gives them unlimited bandwidth at up to a certain speed. Under a new model many phone companies and cable companies are trying to popularize, this would change. Their view is that certain services, like phone service or video service, require more bandwidth and therefore should be charged in a different way. they would basically introduce new charges that would offer access to such service for a premium.
The fear from many is that such model would get them into the business of monitoring what type of services are available and being selective in what access they offer. For example, they could start offering access to certain sites at a premium fee but decline access to other sites or degrade the service in such a way that those other sites would not work well on most computers.
Short term impact
In the short run, few will feel the impact of the communication providers’ strategy. A few pockets here and there will start failing but, all and all, only new services will be affected. Where it gets interesting, however, is when new offerings start making their way onto the Internet.
At the current time, the US is already starting to lag in broadband penetration. This will become a bigger issue if the telecommunication providers have their way as they will probably start moderate increase in the basic price of broadband access. Some may consider this view alarmist but history tells us that basic rates on phone service have generally been increasing, which is interesting considering the complains about competition forcing companies to lower their rate. The same increase in rates has been true on the cable side of the equation, where rates of service are slowly moving up.
As price is one of the major levers in increasing broadband adoption, such rise in prices will only slow things down. Of course, it may not be a point of concern until one considers the global marketplace. Unlike the United States, other countries are rapidly moving to increase broadband adoption and the speed of broadband lines altogether. What that will result in is a greater capacity to create and develop next generation applications that they will then be able to resell to the rest of the world.
We’ve already witnessed the rise of foreign companies establishing themselves almost overnight as major player with the recent appearance of Skype, a company that was born outside the US borders and rapidly acquired a following that made it worth several billion dollars. This wealth generation happened outside of the US because broadband was cheaper and more accessible there. I’ve also recently seen offerings by a couple of non-US companies that may follow the same curve and I am getting concerned about the US ability to compete if bandwidth is not widespread, increasing in size and inexpensive enough for all.
Restrictions on broadband access and degraded (or uncompetitive speeds) may ultimately represent a major Achilles heel in the US ability to compete on the global stage.
Long Term Impact
But what if…
John Gilmore, prominent Internet activist, once said
The Net treats censorship as damage and routes around it.
Extending the approach, one could start wondering how the net would work around censorship at the source (which is basically what limited access could become).
Enters the concept of Mesh Networking. In a mesh network, computers can work in a peer to peer fashion to connect to each other. One could envision mesh networks being created out of thin air (using wireless Internet access card) without having to go onto the lines of the telco providers. Of course, the issue would still be in terms of traveling over long distances to ensure that sites that are located in far away locations are still accessible. This problem could be solved by some of the content providers themselves, who could enter in some form of social contracts amongst each others agreeing that they would carry each other traffic back and forth, bypassing some the last-mile telco providers in the process. Under such a model, Google’s data center would allow for amazon to use their bandwidth and vice –versa, Microsoft or Yahoo would allow each other similar rights of way and so on… As they all operate large facilities, they could cover a substantial portion of the US public and bypass the telcos all the same.
Under such a scenario, people would start abandoning the restrictive networks offered by phone and cable companies to access the more free and open network offered by the content providers. The result would be an eventual displacement of the telco providers in the long run and, due to probable resentment fostered in the process, an evaporation of any revenue from their other services as those would probably be tied to line access.
Conclusion
If Net Neutrality goes, US competitiveness will be affected negatively and will result in more new wealth being generated outside of the US than in the US. Furthermore, in the long run, an overreach could result in people abandoning the telcos altogether, if Mesh networks take off.
Related Terms
Broadband, Google, Microsoft, United States, Wireless, Yahoo13 Comments
1Terminal Thought — September 10, 2006 at 9:09 pm
On a random political note: PLEASE support Net Neutrality!! There was a great article posted about it today about what could very well happen if the bill that’s in congress doesn’t pass. You can read it here. I’ve gotten REALLY intense about this issue, since my career is going to be in an internet-dependent field and i would HATE to have to deal with all this crap. On a Google-related note: Google — ogle + d = God. If you want a really good laugh, go
Here is a good read
3Daniel — June 9, 2006 at 2:54 pm
You forgot to mention wireless as another avenue to bypass the phone/cable monopoly. Although most of the major carriers are telcoms, some are not (T-Mobile). Imagine a scenario, if you will, where they offer EvDO/wifi base-stations for homes. While speeds of such a solution do not compete with traditional broadband, that will only change over time.
Leaving municipal WIFI aside (another possibility) couldn’t Google/Yahoo/MSFT enter into MVO agreement and operate it at as a loss leader? They may even be willing to subsidize T-Mobile for expanding their network or even buy it outright.
The reality is that most people are used to the Net as it is and will not agree to any limitations. They will find a way around it.
Net Neutrality, but he seems to be having some problems since his upgrade to WordPress. As such I have posted it here. You forgot to mention wireless as another avenue to bypass the phone/cable monopoly. Although most of the major carriers are telcoms, some are
5Lemi4 aka. fERDI:) — June 10, 2006 at 5:26 am
>… could result in people abandoning the telcos altogether, if Mesh networks take off.
Could the telcos in turn target mesh-networking infrastructure in retaliation? Or even mesh-networking related industries? And if the telcos can, are they crazy enough to try it?
Should turn into an interesting business war, should it come to pass…
6Jon Garfunkel — June 10, 2006 at 8:46 am
What’s interesting in your piece and others is how Google, eBay et al are seen as “good” and the cable/telcos are seen as “bad.” Is it because the former give stuff away for free, while the latter have the nerve to charge us money? Or the former are seen as “creatives” while the latter are just service providers?
Something to consider. I don’t quite think that the broadband companies will price themselves out of existence– why would they? No service provider went broke ever charging too much; they can always charge less.
Here’s a solid treatment of net neutrality by Dave Passmore of the Burton Group– and don’t let the April 1 publication date fool you.
to broadband providers, said Rep. Ed Markey, the Massachusetts Democrat behind the Net neutrality amendment. This vote will change “the Internet for the rest of eternity,†he warned. Tristan Louis has a post, Life after Net Neutrality, that’s also worth reading. Today’s news that the Net Neutrality bill was defeated may create future problems for American internet businesses but will not kill the Internet, as some have claimed. Instead, it will probably dictate, in the long
never get Net Neutrality from the carriers, from lawmakers or from regulators. But we can get it from each other, in the form of new businesses that can grow skyscrapers in the market holes the carriers choose to ignore. Let’s start focusing on that.Here’s one idea. Oh, one more thing. The bill that passed the house flipped a large bird in the general direction of the nation’s municipalities, which have held franchising authority over local video services for a long time. There are cases to be made against that
[…] There doesn't seem to be much new in that piece to people who are interested in that space but I would contend that, when you look at it in perspective, it explains a lot about why TV stations are so interested in ending net neutrality. The fight over net neutrality is about imposing artificial barriers in order to protect monopolies. However, the new threats presented by upstarts like myTube are upsetting the apple cart and traditional companies are now trying to find a way to ensure that their monopolies are protected. Of course, they're never going to say it that way but, ultimately, the fight over net neutrality is a fight over what content will be available. As I've mentioned in my earlier piece on net neutrality, the battle is primarily one happening around the future of the internet in the United States. And, in thinking some more about it, I've come to the realization that, at the end of the day, the US companies opposing net neutrality may be fighting not only for the benefits of the telco providers but also for the benefits of the large content producers. in Convergence, News, Business — — - […]
So the Net Neutrality bill was squashed by Congress last week. No worries. According to Tristan Louis there’sLife After Net Neutrality. Should the phone/cable interests continue to get their way, Tristan posits that the short-term prognosis is indeed a degradation of the web as we know it today. At least in the grand olé US of A. Companies outside the United States will leverage
[…] Listening to Pandora. My stations are all electronica except one. So far they are Paul Van Dyk, Paul Okenfold, Hybrid, and Ulrich Schnauss. Guess I sort of like Der Gerrrmans and the Brits. Also fooling around on Stumble!, specifically writers’ sites, but sort of disapointed today. The best site I found today was a blog post called Life After Net Neutrality. It’s worth a read because it suggests that the Internet will only get stronger using Mesh networking and the telcos will be shooting themselves in the foot. […]
[…] I tried to enter this as a comment in Tristan’s blog in response to his post on Net Neutrality, but he seems to be having some problems since his upgrade to WordPress. As such I have posted it here. You forgot to mention wireless as another avenue to bypass the phone/cable monopoly. Although most of the major carriers are telcoms, some are not (T-Mobile). Imagine a scenario, if you will, where they offer EvDO/wifi base-stations for homes. While speeds of such a solution do not compete with traditional broadband, that will only change over time. […]
[…] Louis has a post, Life after Net Neutrality, that’s also worth reading. Today’s news that the Net Neutrality bill was defeated may […]
