Author: RB

Andy Kessler, that tricky devil, has an essay on net neutrality in the Weekly Standard where he paints both sides as the bastards they are:

IN THE LONG RUN, technology doesn’t sleep. You can’t keep competitive King Kong in chains. But why wait a decade while lobbyists run interference? If Congress does nothing, we will probably end up paying more for a fast network optimized for Internet phone calls and video and shopping. But this may not be the only possible outcome. Maybe the incumbent network providers–the Verizons, Comcasts, AT&Ts–can be made to compete; threatening to seize their stagnating networks via eminent domain is just one creative idea to get them to do this. A truly competitive, non-neutral network could work, but only if we know its real economic value. If telcos or cable charge too much, someone should be in a position to steal the customer. Maybe then we’d see useful services and a better Internet. Sounds like capitalism.

What new things? It’s not just more bandwidth and better Internet video–how about no more phone numbers, just a name and the service finds you? How about subscribing to a channel and being able to watch it when and where you want, on your TV, iPod, or laptop? How about a baby monitor you can view through your cell phone? Something worth paying for. And that’s just the easy stuff.

We don’t even know what new things are possible. Bandwidth is like putty in the hands of entrepreneurs–new regulations are cement. We don’t want a town square or a dilapidated mall–we want a vibrant metropolis. Net neutrality is already the boring old status quo. But don’t give in to the cable/telco status quo either. Far better to have competition, as long as it’s real, than let Congress shape the coming communications chaos and creativity.

He has some interesting alternatives to the bankrupt regulations coming from the content side.

H/t: Red Bank TV.

Commenting on a tete a tete between Tom Evslin and yours truly, Doc makes a a very astute point:

Tom Evslin nails a number of problems with Net Neutrality, while not sparing the carriers, either. Be sure to read the comments, too. They start with one from Richard Bennett. In this post on his own blog Richard points to this Wharton report, which for the most part I agree with.
The key point is Tom’s. What we need is competition.

Indeed we do need more competition, and we’ll get it from Cable going head-to-head with with DSL and fiber-to-the-home, with WiMax and WiFi in the background. And on that note, the Wireless Communications Association has come out in opposition to the regulations.

Jim Lippard points to a the error at the heart of the New Republic’s editorial on net neutrality:

TNR has, like many others, wrongly inferred that rules which applied solely to telco telephony and last-mile networks have also applied to the Internet and Internet Service Providers, when in fact ISPs and backbone providers have been under no such constraints.

They didn’t come to this wrong conclusion without a lot of help; this claim is repeatedly made by the common carrier regulators, but it’s baseless.

Susan Crawford sees dark forces of conspiracy at work in a report by the Center fir Advanced Studies on National Preparedness and neutrality. If you don’t understand how the Internet works, it’s easy to become paranoid and confused as you learn more.

She is soundly rebutted in a comment by Tony
Rutkowski, former head of the Internet Society:

Since the inception of public communication systems, because they are critical to societal and governmental functioning, mechanisms have been instituted to control traffic flows based on priortization. You can find related provisions in the very first international agreements such as the Dresden Treaty of 1850. These capabilities are especially critical during times of national emergency or network restoration.

Today, as public communication infrastructures worldwide increasingly become reliant entirely on TCP/IP protocols, means are necessary to control access and provide varying quality of service on a service and user basis. Much of this work has already been accomplished over the past several years in the context of IMS and NGN work. You should also review the work of the NSTAC – which has existed since the early 80s after the AT&T breakup – in treating this subject.

What Kay is pointing out is that some of the NetNeutrality provisions being bandied about in legislation are antithetical to long-standing concerns about our critical national communications infrastructure. Those are concerns we should all share.

The net neutrality hysteria is fueled by misinformation and ignorance, the only cure is education.

We’ve won a convert. USA Today’s technology pundit Andrew Kantor has seen the light:

A big technology issue in Washington is network neutrality. It’s the debate of how the companies that own the Internet’s “pipes” should treat the information moving over those pipes.

A neutral Net — at least one version of it — would have them treat all data equally, from the slimiest spam to the highest-quality video. The Comcasts, Coxes, Time-Warners, and Verizons of the world wouldn’t be able to give preference to any content, even if someone wants to pay for it.

Proponents of Net neutrality spin it as a way to prevent those big network providers from discriminating against the little guys (who might be competing with them). They want to be sure that Time Warner doesn’t ‘lock out’ companies that compete with it — say, up and comers like YouTube — or give preference to their own content.

Without a Net neutrality law, those proponents say that providers would be able to, in the words of Chris Johns of Public Knowledge, “look at the packets going over their lines, and block or degrade access based on how much protection money their clients have paid them.”

Not too long ago, I was very much on their side. “Imagine you make a phone call to a friend,” I wrote then, “but instead of hearing it ring, you get a recording: We’re sorry, but the person you are calling has not paid Verizon to carry his or her conversations.

But I was wrong.

We all want fair and non-discriminatory treatment of all the services on the Internet, the debate is about how we achieve that end. The regulations proposed by Net Neutrality advocate are sadly out-of-date and counter-productive. Kantor’s a bright guy, so let’s hope he’s the harbinger of more conversions.

The Wharton School convened a panel of experts to analyze network neutrality regulations. Here’s a summary of their findings:

Network neutrality became a hot issue last fall when top executives at AT&T and BellSouth noted that companies like Google, Yahoo and Vonage were essentially distributing their services for free on the backs of telecommunications companies. “For a Google or a Yahoo or a Vonage, or anybody, to expect to use these pipes for free is nuts,” said Ed Whitacre, chairman of AT&T, in November.

That comment set off a heated argument on the issue that became “even more crazy than most debates in Congress,” says Gerald Faulhaber, a Wharton professor of business and public policy. Indeed, on the eve of the June 8 vote, Internet giants were lobbying intensely for the amendment, with Google CEO Eric Schmidt urging users in an undated open letter to “take action to protect Internet freedom.”

Faulhaber convened a meeting of scholars — including David Farber, a computer science professor at Carnegie Mellon, Christopher Yoo, a Vanderbilt law professor, and Michael Katz, an economics professor at the University of California Berkeley’s Haas School of Business — to consider the issue. The group concluded that mandating network neutrality could have adverse effects on Internet development and result in unforeseen consequences. Any legislation “is a problem when the Internet is in a state of flux,” says Faulhaber.

I don’t agree with all of their facts, but their conclusion is certainly correct: this is not the time to impose new regulations on broadband providers. Regardless of how we assess the potential dangers of a smarter Internet, it’s way too early to know how to regulate it.

Yesterday I posted a brief note on the Trevor Roycroft “study” promoted by Free Press as if it were some sort of substantial piece of the Internet regulation debate, stressing the inappropriateness of the telephone monopoly regulatory model to the Internet. I didn’t pay much attention to Roycroft’s economic analysis, preferring to leave that sort of thing to experts. The Phoenix Center has done such an analysis:

Shortly thereafter, Dr. Trevor Roycroft, of Roycroft Consulting released a critical response to the paper. Upon our request, Dr. Roycroft agreed to allow the Phoenix Center to post his comments on our website In his critical review of our work, Dr. Roycroft’s analysis is “an examination of our economic model.” Dr. Roycroft lists what he believes are four “fatal” flaws in our economic model:

1. the “economic modeling does not address economies of scale in last-mile broadband access networks”;

2. the “economic modeling assumes policy makers, by pursuing a policy of network neutrality, can completely eliminate product differentiation among broadband access providers”;

3. the model “fails to acknowledge the impact of the abandonment of network neutrality on the consumption and production of Internet content, service, and applications”;

4. “the conclusions depend on the existence of low levels of sunk costs associated with constructing new last-mile access networks.”

In an effort to ensure the accuracy and legitimacy of all analysis performed and released by the Phoenix Center, we have evaluated carefully Dr. Roycroft’s response to see if he presents any legitimate criticisms or offers any material improvements to the analysis in POLICY PAPER NO. 24. At the Phoenix Center, we appreciate criticism and comment, since such review can be used to either affirm or improve our analysis, thereby making our work more useful for policy decisions. In some cases, comments on our work provide direction for future research. By all accounts, Dr. Roycroft’s comments confirm the relevance and importance of the general theme of POLICY PAPER NO. 24.

Curiously, none of the “flaws” claimed by Dr. Roycroft are actually present in our analysis. In fact, all of the alleged errors and omissions claimed by Dr. Roycroft are dealt with squarely in our paper. For example, the very purpose of our model is to argue that because scale economies are present, service differentiation is necessary for entrants to successfully enter the market. Yet Dr. Roycroft claims we “do not address economies of scale” and that we “ignored the fact that new entrants will likely need to charge higher prices than incumbents.” As such, this criticism has no merit. Dr. Roycroft’s other arguments, to the extent they address key issues in the Network Neutrality debate, are in fact not criticisms of our model at all and are, in fact, specifically incorporated into our analysis, either formally or informally.

Read the whole thing if you want cool broadband someday, and the original study here.

I never cease to be amazed at the dishonesty of the neuts.

The Network Neutrality consumer groups are flogging a study by one Trevor Roycroft attacking Christopher Yoo’s arguments in favor of Network Diversity. Roycroft is an economist whose grasp of communications technology is virtually non-existent. The study, ECONOMIC ANALYSIS AND NETWORK NEUTRALITY: SEPARATING EMPIRICAL FACTS FROM THEORETICAL FICTION consistently confuses the Internet with the telephone lines that parts of it use for consumer access.

But the meaning of Network Neutrality finally comes across: these people want to force-fit the Internet into the regulatory framework that was devised for the old monopoly analog telephone network back in the 1930s. It’s a great example of the old saw “if the only tool you have is a hammer every problem looks like a nail.”

The differences between the Internet and old telephone network are so vast I hardly know where to begin in pointing them out, but here’s a stab:

1. The Internet is not a single network, it’s a meeting place for large number of private networks, some of which sell access to the public.

2. The Internet isn’t a single-service, analog network or a digital clone of one. It’s a multi-purpose packet-switched network formed by loose agreements of thousands of carriers and supporting dozens of applications.

3. Packet-switched networks manage resources in a dynamic way and have to deal with loads that are highly variable. Consequently, forcing resource management schemes on packet networks that originated in the circuit-switching world is asinine and counter-productive.

4. It’s almost impossible to define “discrimination” in packet network management practice because every packet affects every other packet. It’s more like a market than a centrally controlled and rigorously predictable telephone network,

5. Misapplication of the telephone regulatory framework to the Internet will certainly make the Internet behave more like a telephone network than it does today: limited services, low speeds, and no capital investment.

Network neutrality is a colossally stupid idea. The Internet is cool because it’s not the telephone network; it’s way more powerful and way more capable of doing new and interesting things because it construction applies more intelligence to more dynamic conditions. Forcing it into a regulatory straitjacket devised for analog monopoly is the surest way to kill it.

I recommend a report in the New York Times on the massive super-computer complex Google has built on the banks of the Columbia River in order to control Internet search and download:

THE DALLES, Ore., June 8 — On the banks of the windswept Columbia River, Google is working on a secret weapon in its quest to dominate the next generation of Internet computing. But it is hard to keep a secret when it is a computing center as big as two football fields, with twin cooling plants protruding four stories into the sky.

The complex, sprawling like an information-age factory, heralds a substantial expansion of a worldwide computing network handling billions of search queries a day and a growing repertory of other Internet services.

And odd as it may seem, the barren desert land surrounding the Columbia along the Oregon-Washington border — at the intersection of cheap electricity and readily accessible data networking — is the backdrop for a multibillion-dollar face-off among Google, Microsoft and Yahoo that will determine dominance in the online world in the years ahead.

Oddly, the site is close to the former headquarters of the Bhagwan Sree Rajneesh cult, best known for its criminal activities:

In 1981 Rajneesh’s cult purchased a dilapidated ranch in Oregon, U.S., which became the site of Rajneeshpuram, a community of several thousand orange-robed disciples. Rajneesh was widely criticized by outsiders for his private security force and his ostentatious display of wealth. By 1985 many of his most trusted aides had abandoned the movement, which was under investigation for multiple felonies including arson, attempted murder, drug smuggling, and vote fraud in the nearby town of Antelope. In 1985 Rajneesh pleaded guilty to immigration fraud and was deported from the United States.

Is history repeating itself? Naw, Google’s a business, not an insane cult set on world domination. I used to live a stone’s throw from the Columbia, downstream in the Portland area, and I visited the Bonneville Dam a couple of times. They have a nice fish hatchery and a place where you can see some huge sturgeons up close. The dam is a massive public works project capable of generating enormous amounts of power relatively cheaply, although my power bill didn’t reflect any cost savings.

This article puts the lie to the claim that Google supports the misapplication of the old telecom regulatory framework to Internet routing because they want to preserve low entry barriers for their competitors. The only way for them to hang on to their dwindling share of the search business is to outspend Microsoft and Yahoo. Keeping a lid on corporate Internet access fees is obviously vital to their survival.