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Friday, October 28, 2016

Faced with the profound issue of net neutrality, America’s consumers still struggle to understand its complexities. Part of the problem may be the usual analogy of express lanes on a highway.

Most people understand the Internet through its impact on them. So they take the fast lane/slow lane description and translate it into their own choices, like paying to take a toll road when they’re in a hurry. They know they pay extra for high-speed Internet to avoid dial-up, and they don’t see anything wrong with that. In fact, some local cable companies currently provide several speed levels for several price levels, which also seems “fair.”

People fundamentally suspicious of government (comparisons to the Post Office and Amtrak keep coming up) only think about their Internet choices at home, and the fact that competing technologies have delivered faster service without regulation, and assume that it will only get worse with regulation.

So let’s try this version instead:

Think of the Internet as the entire interstate highway system, complete with on-ramps, high-speed freeways, higher-speed tollways, interchanges and off-ramps.

At your home, you’re paying for the off-ramp from the system, and you already pay more if you want a 60 MPH off-ramp instead of a 10 MPH off-ramp with a stop sign. The big issue, the one Comcast, AT&T, Netflix, Silicon Valley and serious geeks everywhere are fighting over, is the on-ramp and access to those high-speed off-ramps.

Once your data is on the highway, slower speed only means more delay from the time your packets of data were sent until they are delivered. Not the end of the world, unless you’re a High-Frequency Trader. I’m sure by now most of us know that when we watch “live” television that there is actually a delay. Even switching from low definition to high definition often adds a few seconds’ lag, but seeing the big play in high def can be worth the cost of not knowing as quickly.

That could all change if the “slow lane” turns into a massive traffic jam. At that point, it won’t matter how much you’re paying for your fast off-ramp. If your content vendor can’t or won’t pay for fast transmission at each stage – getting on, transmitting, and getting off, then you might as well have a dial-up line. Remember “buffering?” Without net neutrality, it’s about to make a comeback.

What is really being debated is a brand-new trend in Internet commerce – charging the vendors extra to get faster on-ramps, and charging the vendors again to get access to the faster off-ramp that you’re paying for already.

Silicon Valley hates it, because it’s the land of garage startups, and if you have a hot new application, the $10 million-a-month fee for the fast on-ramp and fast customer off-ramps might keep entrepreneurs from ever getting into business.

The big ISPs (Internet Service Providers) love creating another source of profit from their control of the Internet “backbone” and their exclusive relationship with the end customers. That’s why Comcast is spending so much on Washington lobbyists, and is currently outspent by only Lockheed.

There is an upside to letting the ISP oligopoly continue unfettered by regulation: they’ll have so much money that they may decide to spend some of it upgrading their systems. They may even decide that the extra revenue for high-speed transmission is good enough to extend high-speed service to areas where other providers enjoy monopoly pricing, lowering subscriber prices. Or they could extend their networks to lower density populations, a development that might let the government get out of the business of subsidizing rural Internet deployment.

Just don’t be surprised to hear the ISPs try to call cutting those rural subsidies a “tax” the way Florida sugar growers described the trial balloon of cutting sugar subsidies. For the sugar kings, that tactic killed the idea and they kept their “emergency” subsidy that’s been in place since the Spanish-American War. You can bet the ISPs like that kind of government interference.

For those who argue that regulatory action on this issue will change the Internet forever, just remember, the one-speed-for-all-content network you’re used to is about to change dramatically unless regulation keeps it that way.

So my question to the “free market” folks who are against net neutrality is this: Are you sure that — for the rest of your life — you only want Internet services that the big boys will come up with? If you think Google, Netflix, iTunes, Amazon and a couple of others will invent everything you’ll ever want, and that they won’t gouge you with their pricing, then by all means, oppose net neutrality.

Howard Hill is a former investment banker who created a number of groundbreaking deal structures and analytic techniques on Wall Street, and later helped manage a $100 billion portfolio. His book, Finance Monsterswas recently published.

Photo: Joseph Gruber via Flickr

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Copyright 2014 The National Memo
  • holyreality

    Thanks for that last paragraph.
    I know many an anti government and regulation armchair libertarian who insists Obamacare for the internet will filter out their drudge report while government monopoly will keep them from paying more for faster service.

    Your summary is the best since John Oliver’s takedown except everyone listening was laughing, not angry like we should be.

  • bobnstuff

    If the providers want to get higher speed why not use the cable network, you know the one that delivers TV to your house already. They can call it interactive TV. Wait a minute don’t we have that already. Greed, the driving force in our country

    • hicusdicus

      Do you consider copper phone lines cable network? I have only cellphone and rural hillbilly internet. That is a string between two tin cans. I don’t really understand what net neutrality is. I have never seen the government make things better. The free enterprise system is so gov. regulated that free enterprise is like god. All powerful , all knowing , and all confusing. Greed is one of the main driving forces of human nature. Without greed there probably would not be any toilet paper. Its the way things are. Greed is behind all wars and someday someone in charge is going to lose it and slam the red button and no more internet or anything for that matter. With greed and stupidity working hand in hand it just a matter of time. What humans consider progress is not always for the best.

      • bobnstuff

        Things the government made better,
        Interstate Highway System
        Food Safety
        Product Safety
        Clean air
        Clean water
        Mass Transat
        Sea Ports
        Fire Department
        I have started and owned four business’s and not one was started for greed. They were started to earn an honest living serving people. I’m living proof that the free enterprise system works but I would not want to leave business’s to there own devises when it comes to my safety.
        Net Neutrality is like you having the same right to the highway as the guy with the Rolls Royce. You have the same speed limits and the same traffic laws.

        • hicusdicus

          Most of the things you have mentioned were built for free enterprise by free enterprise with gov money given to government by free enterprise. In a lot of cases gov intervention is needed but it always seems to go to the extreme. I believe this happens because people are involved. Big government is dangerous when it becomes to big and all encompassing and uncle Joe takes control. As long as we have at least two parties that can squabble with each other we are reasonably safe. I started a retail business for the enjoyment of the product but soon realized that business is a war and to the victor goes the spoils. When any business makes money it is taking money away from competing business. Then the greed war begins. Greed is a genetic implant in all humans and it rears its head according to needs.

          • bobnstuff

            I your life how many times have you run into government regulations that caused a problem?
            Today Governments hire contractors to build public works. They are built or the public use. Much of what government does is still done by government employees.

          • hicusdicus

            The reason I moved to where I am is to avoid government regulations. State local and federal. Government employees run the gov. They do not construct or design or invent anything. Their main product is confusion and a self serving agenda. Gov. is a necessary evil. With out it we would all kill each other at an exponential rate.

          • bobnstuff

            My local government has built bridges so people could get to there homes, built playgrounds and parks, maintained open spaces and controlled growth. I enjoy good police protection and have a good fire department. Most of my services from the state are OK, I live on a state maintained road and they take pretty good care of it. All these things are done by government employee. People don’t notice the things that government does right , it’s only when they either do it badly or don’t do it that you hear about. Government doesn’t construct or design or invent anything anymore then industry does, It’s people who do those things.

          • Allan Richardson

            The real problem is when an ISP is ITS OWN CUSTOMER as well as the service provider, as is the case with Comcast (cable TV which owns one or more TV networks) and Time Warner (likewise owning networks), and in the future Google (a customer who is starting to become a provider). In the early 1900s, a small town undertaker named Alman Strowger began to lose business when his competitor’s wife became the local telephone operator. When a family called because of a death in the family, she connected them to her husband’s business, so they never got to talk to Strowger. His response? He invented the switch originally found in rotary dial phones and the first generation of call switching equipment to be controlled by those phones, taking operators out of the picture for local calls.

            The concept of net neutrality is that the telephone company, or its data-packet equivalent, must connect every customer honestly to the party that customer wants to contact, and provide as nearly as possible identical connection quality to all. Or you may find that if your politics or religion differs from that of the CEO of your ISP, you cannot send and receive emails, access web sites, or make online donations to people of YOUR political or religious persuasion, because they will be charged an exorbitant fee to get and return your data.

            By the way, another thing government built: the GPS satellites which help you find your way were launched, and are maintained, by the US Air Force. Without maintenance, orbits would decay or drift, and the internal clocks on the satellites would lose sync, so your position would gradually become more and more uncertain. The private entrepeneurs who built all these brands of GPS receivers, God bless them for their ingenuity and investments, but their products would be useless without the satellites, just as trucking firms would deliver far worse performance if the highways were not maintained by federal, state or local highway and road departments (in fact, that is already starting to happen), and just as internet firms would be out of business without the internet, which was invented by college researchers under contract to the government. The protocol standards invented for DARPA were used to build the ARPANET, which became the internet (and yes, then Senator Al Gore DID PUSH FOR ITS FUNDING; he never claimed to be involved in its invention, that is just a ridiculous made-up story).

          • Rippie

            So as a balance, you’re saying that it is okay for a business, instead, to decide who lives or dies and to what you and your family may be exposed for ideas and news and entertainment? You don’t want a non-commercial enterprise to make any decisions on your behalf, mostly to guarantee freedoms or protect your safety, but it’s okay for a corporation to make decisions for you which limit or bias your freedoms, real and perceived, to what is profitable and which protect THEIR safety? And all this while also providing you with FAR less recourse to complain or affect change?

            You, sir, are an idiot. The Internet was intended and built, such as the crummy version of it we have here in the US is, to handle data indiscriminately. Data is data is data.

            The highway is supposed to be fast and broad for any data, and there is supposed to be no knowledge or care for one packet over another.

            The speed at which data gets on the highway, and at which it gets off, is up to the access built and paid for by those subscribers. There should be no effect on data once on the highways.

            If a company launches a Yugo onto the Net, it will get on the Net with the limited speed and capacity of a Yugo. Once on the Net, it moves with the other traffic and nobody has a care,

            If the consumer of that service builds a parking space (offramp and all) only big enough for the Yugo, then that’s that. But if they build their own connection with spaces for 100 Yugos, paying for the service, it is NOT the ISP’s right to decide that they can’t have 100 Yugos use their choice of offramp and parking, but that they CAN accommodate, say, 15 of the ISP’s favored Buicks… or 2 Bentleys, but only the models they like.

            Clearly, it is outrageous for the Highway Department to determine who can visit your home, or how many. So much for family reunions if your name is “Yugo,” and you aren’t really in all that good shape if your name is Buick, either.

            So you build a bigger offramp and parking lot at your house. But the Yugos are still not allowed to all come and visit, and definitely not the ones painted orange! They just simply will be pulled over and ticketed over and over once on the Highway.

            If you really think that’s how the Internet should work, then move to Iran or, better, to North Korea. Even China is at least relatively honest (sort of) about aggressively filtering everything online… EVERYTHING.

            So, the CCP does it there, through Businesses.


            This is the most important “not a big deal” act that Obama can make happen. LONG after people realize that Healthcare is something all people deserve without profiteering, the effects of this decision will either be the Beacon of a Free America or the biggest mistake and assault Against Free Speech and Expression EVER, an irreparable wound that hastens the downfall of the nation.

            Yes, Net Neutrality is THAT important.

          • hicusdicus

            You like to call people idiots because they don’t agree with your opinion. I would like to enlighten you that the gov. consists of humans. Its a few humans telling a whole of humans what do. But a even small group of humans tell the gov. humans what to tell the great unwashed mass of humans what do. Everything to do with humans has to have checks and balances. Their was a man whose name started with H and he saved his country. He got the currency, the railroads, heavy industry and jobs on the fast track and everybody loved him enough to die for him. So with out the consent of his beloved people he started WW11. This is what gov. can do if not held in check. What your talking about is one human having ultimate say over internet,. health care and anything else they decide to control. I am sure glad you did not write the constitution. You have a simplistic naive outlook on human nature.

          • Rippie

            First of all, I usually don’t reply to teenagers. Based on your stunning display of spelling and usage errors, I can only assume you’re a kid.

            Second, I call people idiots for not seeing what’s obvious in front of their faces and being duped. Your Hitler analogy (by the way, nice fast Godwinning maneuver when it was utterly unneeded and unrelated) shows me what you’re REALLY upset about, aside from being an easy to program hate-bot of the Rightwingtardz… You still pissy that Obama was elected. Twice.

            So you think this is about Obama deciding what you can see, read or hear online. And that makes you an idiot.

            It’s the EXACT OPPOSITE of that. Net Neutrality assures that NOBODY, not Obama, not Comcast, not your church (assuming they let noisy brain-damaged ballast like you attend), not your school, your mayor, your reps or anyone else can affect who can get online or whether they can be accessed EXCEPT on their physical property.

            This means that at church or school, they can block content… and they do. But they can’t block or slow or degrade content coming into your home.

            Your ability to view a small content provider is protected as much as for sheeple to view big providers.

            Without Net Neutrality, that little weird church your’e interested in finding out more about them? The big churches can get them pushed off to the super-slow-lane so you can’t even get their website to load.

            And if you want to watch alteranate programming online, your wonderful cable company can decide to not let you, crushing competition illegally. How’s that for naive human nature?

            FYI, Obama does not personally control your healthcare or the internet. Listening to morons like that slack jawed wanker Terd Crudz is exactly how people become idiots.

            And if I wrote the Constitution, I’d make sure the 1st Amendment had penalties built into it to help back it against short-sighted ignorant fatheaded kids like you, among some other Amendments or clauses.

            If you really think that Americans having more and guaranteed greater choice online as a result of a very simple and sensible bill is likely to start a war, you are truly a mental flycrap among idiots.

          • bckrd1

            You’re right. Most people experience State government and equate it as the same. Our state govt leaves a lot to be desired.

            But…Every city is different so we all have to start getting involved at the local level and make our voices heard. Will it take work? Yes. Who will do it if not us though. When do we say enough is enough?

            The GOP will do everything it can to give the Corporations the power and cut regulation so we will have no legal recourse. That is what they do right?

          • bobnstuff

            I live in the republican stronghold of Westmoreland County, local government is all republican. Unlike the national party they do a pretty good job. They are what the party used to be, good businessman. My taxes aren’t cheep but I get good value for my money. Most people don’t realize how important local government is. My local taxes are a little bit more then my income tax and the local laws impact my daily life a lot but people show little interest in local government. I was a ward chairman for a while but I didn’t like the way the state and national party treated us. They could care less what we had to saw but they always liked our money.

      • bckrd1

        The politicians saying it doesn’t work are the ones breaking it.
        They let if not MAKE, by passing a law, the big ole bad govt give their corporate masters subsidies and corporate welfare. But they call you and me takers.

        They are the takers.

  • 788eddie

    I think I’ve heard this before.

    Let’s see; let the ISPs remain unregulated – they get richer – they will, with so much more wealth then decide tospend some of their wealth to upgrade their system, and then can charge more for service, and thus get even wealthier.

    Trickle-down economics, anyone?

  • Rippie

    US Internet speeds are poor compared to most of the Western world and even to much of the 3d world in all but a few places. While streaming services are a huge consumer of bandwidth for ISPs, nobody should forget that the ISPs themsleves are selling streaming services, creating the “problem.” Competition, based on how the Internet and the Web actually are “designed” and work, is intended to be product and service based, not based on letting the air out of the other guys’ tires.

    End users pay to access the web/net. They are charged extra to access more data more quickly, so they are already paying for more bandwidth. It’s paid for.

    Stifling small voices and players by, essentially, saying that their cars and tires cannot travel the same web/net speeds as those who pay to fly, means that the majority of the web gets jammed into the slow lane, as it were.

    Essentially, ISPs will be able to selectively revert their systems BACKWARDS to the performance levels of much older web/net service since nearly no web service is going to pay off ISPs around the world for speed. None but a tiny handful could afford to do so.

    And what about embedded content? Many major companies embed content on their main websites. Uploading videos to Youtube or high res photos to Flickr, they syndicate their own created content hosted there on those, no doubt, “happyish to pay for speed” services (one owned by Yahoo! the other by Google).

    But if your company is a little 9-employee startup and you’re just trying to populate your website with functional visual content, the ISPs see YOUR domain name… a cheap4zz no-pay speed-hog bandwidth pig, even though you have very little traffic. And you end up with complaints about your website and do NOT meet projections as a startup and crash’n’burn.

    And so, Comcast and all the rest giggle in delight at suffocating another little startup, one of them swooping in for the kill, buying the company to either exploit or bury the idea once and for all.

    Compaines already pay to gain speed online as their bandwidth goes up: they buy more and faster servers and pay for their own much faster “onramps” with T1 (which used to seem superfast) and other small-backbone quality pipes onto the web/net.

    The highway analogy is the one that the ISPs WANT you to envision: only so many lanes, one can be the zippy Fast Lane, 2 can be good enough for most people and then the slow lane… on the right… with the tractors and people in moving trucks for the first time. Where the ISPs would love to dump most traffic.

    This allows them to CLAIM speeds they aren’t delivering unless it’s to consume THEIR content… for yet an additional fee.

    Subscribers pay for the amount of bandwidth they pay for and once it has been inserted into the internet, data is data is data.

    A better way to look at this is that the Internet is a gigantic pipeline. It is the bulk of the traffic that includes the WWW or Web, which is what most people use. The thing is that every time you click, you force some company somewhere to insert a little or a lot more data into the gigantic pipeline.

    Not really a big deal if the ISPs are charging fairly for service, which is debatable separately, and invest it in bandwidth capacity and in delivery to underserved areas. Let’s not forget that the last area to be switched over to touch-tone service got that modern contrivance just literally a handful of years ago.

    ISPs are NOT investing in the capacity to support the growing subscriber bases they seek. They whine that it’s expensive. Yes, providing what you say you will does mean fewer Rolls Royces and IWC watches among the board members.

    So, the reality of the private consumer Web is that it places a strain on the Internet that is amazing: Between streaming content (music and video) and downloaded content, of which 70% is STOLEN, WELL over half of the traffic on the Internet is made up of this content.

    Some say it’s as much as 90%, in some parts of the (third) world.

    If this is the nature of the use people get from the Web, it’s in large part because the ISPs put people up to it, showing families in advertising, all using big bandwidth on every device, and they have SO many devices!

    Then they sell you by saying they “give you the speed and capacity for everyone to enjoy their many devices, at the same time.” But that’s not what they do (hence the throttling scandals already) and not what they want to do.

    Subscribers are already paying for the speed and volume they want. The pipeline is enormous and has to be expanded. That is done on the backs of users who pay based on how their subscription costs. Everyone pays for the on and off ramps they want, but once the content is in the big pipeline, it’s just data.

    That’s what this is about: not free service, not unfairly making companies pay for their own infrastructures or access, but the unbiased treatment of all data in the main pipeline(s) equally.

    Competition will kill off stuff that doesn’t satisfy consumers. A small operator with few users isn’t using that much bandwidth. However, their users should not be in a gulag just because it’s a service the ISP doesn’t like or is afraid of in competition.

    A thought, too, is that this would result in corporate censorship on many and massive levels. Users can choose to view or not on their own. We do not need our ISP making those decisions for us “for our own good.”

    Taking a popular service and dumping it in the small, old, rusty pipe alongside the big shiny new one, is a great way to kill political or social voices an ISP’s management disagrees with.

    This is, as a result, a First Amendment issue. As with the 250 channels of crap on TV (also the ISP’s fault, since they are cable companies largely) jammed down our throats just to get the 20 we want, if consumers do not have choice, and right now, in order to get some blood-n-guts channels, you have to accept some gay or fey ones, and vice-versa, it is tantamount to forcing one’s voice into the paying subscriber’s consumption while suppressing other “unwanted” voices, all without the subscriber’s input.

    No wonder the Republicans like this so much: it offers leverage they don’t otherwise have. Small upstart political and social voices would be so bogged down once discovered that nobody would return to them to check them out further. If they don’t load when they are hot, who cares if they will later? Rightwing mission accomplishafied!

    Data is data. Consumers pay to choose what they want to access, and they pay for the speed and volume of service they choose.

    If a company is too slow and users get pissed, if it’s the company’s fault, that is one thing. They will take the complaints and act on them, and if they don’t, ta-ta.

    But once they’ve invested in as much speed and volume as they can afford at their end, while on the actual Internet, data is data is data.

    If the bandwidth and speed capacity of parts of the main pipes are not up to speed, then they need to be brought up to speed, AS THE SUBSCRIBERS ARE PAYING FOR.

    Everyone pays for the web/net to be there and fast and reliable. They pay MORE for their own personal slice of speed or volume, but nobody gets even close to the speed of the big pipeline.

    When you sell something, be prepared to have more available as people buy more. The solution is not disallowing content that you don’t like or that doesn’t pay more. It is NOT the ISP’s choice, it’s the subscribers’ choice.

    Provide what’s being sold and paid for and stop whining.

    It’s like making sure that people who speak Arabic can never get a decent phone connection.

    JUST like that… and it’s WRONG, even to a little kid.

  • bobnstuff

    This is a freedom issue. Why are our freedom loving friends on the right not jumping up and down and screaming about it?

    • bckrd1

      Because most people don’t know about it and as the article states, how it will affect them. They don’t realize it just gives these companies total control over you. You are nothing but a guaranteed income stream and they want to take as much while giving you as little as they can.

      • bobnstuff

        From what I have read the brain of right wing Mr. Rush is telling his minions that net-neutrality is bad because the government regulates it. I guess he doesn’t like the FCC.

  • bckrd1

    “People fundamentally suspicious of government (comparisons to the Post
    Office and Amtrak keep coming up) only think about their Internet
    choices at home, and the fact that competing technologies have delivered
    faster service without regulation, and assume that it will only get
    worse with regulation.”

    The Republican talking point PO/Amtrack to trick people to vote against it. So easily duped.