by publius
The WSJ has a good policy overview of net neutrality this morning. But the bigger news from the article is that Google (along with other big content providers) appears to be backing away from its support of net neutrality. It’s disappointing and consequential, but not very surprising. [But see the Update on Google's response to the article below the fold].
Honestly, what’s surprising is that Google, et al., ever supported neutrality requirements. After all, one of the primary justifications for neutrality is that it prevents incumbent entrenchment. In this respect, “pay-to-play” access protects big companies like Amazon and Google from future competition from less well-funded upstarts.
Let’s back up. Remember that what neutrality proponents are trying to prevent is “tiered access.” In this brave new tiered world, Internet access providers (AT&T, Comcast, etc.) want to not only charge you, but to charge companies like Google for “prioritized” access to you. Google would thus pay an additional premium to ensure that your computer gets Google faster than, say, Ask.com who might only be able to afford a lower tier.
In the long run, the fear is that it would fundamentally change the Internet by creating a separate and unequal “lane” for companies who couldn’t afford the higher tiers. Thus, new companies (particularly bandwidth-heavier video sites) would be relegated to an increasingly crowded, congested, and slow lane, while richer companies get the equivalent of a HOV lane free and clear.
Anyway, it makes perfect sense why Google and Amazon would support tiered access. Quite simply, they can afford it and new upstarts (the future thems, if you will) won’t be able to pay. In essence, the established companies would be paying a chunk of their profits to entrench their current success – which of course runs counter to how the Internet should be run (according to the old Google anyway).
But even if it’s predictable, it’s an unfortunate development from a legislative perspective. To win anything in DC, you generally need a well-funded lobbying effort. The only reason net neutrality ever got this far was in part because a lot of these big companies were pushing back, thus providing the Madisonian cross-vector. With that pressure gone, it’s going to be much harder for progressive advocates to get a voice with Congress and the FCC. All in all, bad news.
One last thought – what the hell is wrong with Larry Lessig? More on that below.
Lessig (arguably the intellectual father of the net neutrality movement) is quoted as saying:
"There are good reasons to be able to prioritize traffic," Mr. Lessig said later in an interview. "If everyone had to pay the same rates for postal service, than you wouldn't be able to differentiate between sending a greeting card to your grandma versus sending an overnight letter to your lawyer."
Huh? That’s a little bit like Al Gore saying, “You know, carbon emissions aren’t really that big a problem.” I have no idea what’s going on – maybe political posturing for a future appointment? Anyway, it’s a very misguided analogy. As explained here, mail delivery has lots of competitive options. If I don’t like what the Post Office is offering, I can go elsewhere. That’s not really true in the monopolistic/duopolistic world of broadband access. Just baffling.
UPDATE: Google is now saying the WSJ got the story wrong. What Google is seeking, it claims, is to improve service by linking caching servers within broadband providers' facilities (essentially making service faster by moving Google servers closer to you -- that's not a perfect explanation though, so spare me techies). According to Richard Whitt (Google's chief DC lobbying dude), the WSJ just doesn't understand caching. He adds:
Despite the hyperbolic tone and confused claims in Monday's Journal story, I want to be perfectly clear about one thing: Google remains strongly committed to the principle of net neutrality, and we will continue to work with policymakers in the years ahead to keep the Internet free and open.
So there you go. Good for him. But I'd still be wary of net neutrality advocates putting all their eggs in the Google basket. The incentives just aren't there -- so it's unclear how the long the open culture ideology of the company will carry it in this fight. Also, even if Google is still in, others (notably Microsoft) are not.
FWIW, the WSJ apparently also completely mangled Lessig's position.
Posted by: jack lecou | December 15, 2008 at 12:49 PM
Google frames the issue accurately, the WSJ is simply confused and underinformed.
Google would neither need nor want a lack of neutrality in order to make it harder on upstart competition. Upstart competition is hardly a threat to them to begin with. Indeed, it's where a lot of their own innovation comes from: they acquire start-ups all the time to add to their portfolio of products and services. Google knows the Internet has grown so explosively and thrived because of the competition that such openness and a low barrier to entry allows. Without that, the Internet as a whole will suffer, and Internet companies like Google will suffer with it.
It would also give the ISP's an unacceptable level of influence over all content and service providers, even the ones that can afford to pay the ISP's off, but especially the ones that can't.
The objective of the ISP's isn't to ensure priority traffic to bigger companies like Google, it's to get paid *twice* for the same bandwidth (once by the user paying for their connection to the internet, and again by the major web sites the user wants to visit). This doesn't benefit anyone but the ISP, it's a financial nuisance to the big companies that can afford to pay the ransom money allowing their customers to access them, and it's a huge impediment to business, free speech, and the internet as a whole for everybody else.
There is no reason Google, or *any* other company, no matter how big, dominant, or well established it is, should want to grant the ISP's that much power.
Posted by: ttrygve | December 15, 2008 at 12:54 PM
This is way off-base. Google and Amazon would be idiots to be OK with the tiered system. They'd become beholden to the ISPs in such a ridiculous way -- the ISPs could charge whatever they wanted and once the system is in place, they could jack up the price every week if they wanted and Google and Amazon would have to pay. Yes, Google has a lot of money (though I think Amazon is still barely profitable) but why on earth would they want to change the system to give someone else the ability to cut into their profit margins arbitrarily when their market share just keeps going up anyway in the current system? They are not afraid of the little guy at this point.
Posted by: Miles | December 15, 2008 at 01:25 PM
What would happen if I invented a way to send internet traffic at 1000 times the speed but it cost a little more? Cogent does something like it. Does net neutrality forbid me from charging the extra that I require?
Posted by: d'd'd'dave | December 15, 2008 at 02:21 PM
it depends on what you mean. if you're offering to customers like us, then of course not. you pay for the speed you want. nobody has any problem with that.
if you're talking about charging content providers... again, these companies pay a lot of money for broadband access. if that price went up, they would obviously be required to pay it.
what neutrality prevents is providing your new super fast transmission only to people you cut special deals with and denying it for everyone else.
Posted by: publius | December 15, 2008 at 02:33 PM
Let's see if the WSJs Tuesday edition will have a correction of the story...
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Posted by: G | December 15, 2008 at 05:20 PM
Followup:
I'm assuming my invention would be available on a limited basis at first. Both to prove it's value and because it would take time to scale up. I would hope to be able to charge a premium price for it and the number of customers would be limited by my capacity to serve them.
you say //what neutrality prevents is providing your new super fast transmission only to people you cut special deals with and denying it for everyone else.//
All the deals I cut are 'special' to me and I would be in the position of denying access to others because of a lack of capacity.
I confess that I am skeptical about the legislature getting involved in pricing. Look at all the distortion that happens because medicare forbids billing anyone else less than medicare for the same procedure.
Posted by: d'd'd'dave | December 15, 2008 at 07:35 PM
No, Dave, it looks like you have it upside down: Medicare doesn't forbid anyone billing less than Medicare for the same procedure. In fact lots of doctors won't take assignment because Medicare pays LESS than what they can charge private pay clients. Only in an alternate universe would anyone be dumb enough to bill for less than Medicare allows. Often it's less than the procedure costs to do, let alone overhead, etc.
Posted by: Elliot Lake | December 15, 2008 at 08:58 PM
Elliot.
Medicare does in fact say that they cannot be billed more than any other patient receiving the same procedure. Then medicare pays only a small percentage of what is billed to them. This has served to make the official price unnecessarily high.
Posted by: d'd'd'dave | December 15, 2008 at 10:12 PM
elliot followup:
Q:Can you direct me to the law that states a Medicare provider cannot charge a Medicare beneficiary more than a non-Medicare patient?(10/08)
A:This regulation is part of Section 1128(a) of the Social Security Act entitled “Exclusion of certain individuals and entities from participation in Medicare and State health care programs.” This section can be found on the Internet at http://www.ssa.gov/OP_Home/ssact/title11/1128.htm.
Posted by: d'd'd'dave | December 15, 2008 at 10:21 PM
Dave--
If you have a super-innovative new service, I suspect you'll find you have to sell it at a discount just to get people to try it. And if you want to hook your invention up to the Internet, that highway designed largely if not wholly with public money, then you may have to put up with some regulation, the way you do when you take a vehicle out on the public highways.
Posted by: John Spragge | December 15, 2008 at 10:42 PM
I can't see Google or any other content company wanting to end net neutrality. They don't want to have to pay every single end user's broadband provider, as well as paying the (no doubt hefty) bills for their own pipes. Not to mention every other ISP their traffic might get routed over. They might see an interest in blocking out the competition, but if they have any sense they'll anticipate the ensuing bidding war and back away from the idea.
And Google of all companies should know that end users and small startups have a way of putting a stop to this kind of bullsh*t. Remember the pay-for-play search engines people were trying to build just about when Google appeared? It was the obvious way to "monetize" search ...
I suspect the whole thing is a shakedown operation by the broadband providers who keep trying to find ways to "add value to" (ie control) the content that goes over their pipes. At one point Cisco was trying to do the same thing by selling "quality of service guarantees" (ie preferential routing) to application's companies. Don't think that ever went anywhere either.
Posted by: Simon K | December 16, 2008 at 12:59 AM