Right. Therefore, my electric company can just start charging me $5000 a month for electricity. Because I have so many options for electricity it’s easy for me to switch to a new one. :rolleyes:
The term you are looking for is Common Carrier. And entities that are classified as common carriers are required to not discriminate unless there is a compelling reason. So under those rules UPS couldn’t say, “we ship everything except flowers grown by competitors to the CEO”.
Well let’s see. In our analogy, the shipping company isn’t paid by the shipper but by the receiver. Flower company customers have an account with the shipper, flower companies receive an order for flowers along with shipping account details, and call up the shipper telling them they have a pickup. Should the shipper (who theoretically works for the customer, not the flower company) have the right to ship things to the customer faster if they are from a source the shipping company gets kickbacks from? As a customer, I should think I would prefer an account with a shipping company that said they’d give me the same service no matter what I bought - after all, I’m hiring them to do shipping, not to curate a list of preferred flower providers. If there was competition amongst shippers, customers might well prefer to sign a contract where the shipper pledged to ship whatever the customer wanted, instead of presuming to make choices for the customer. However, if most people lived somewhere only serviced by one or two shippers, the shipping companies might be inclined to impose contracts on customers that allowed the shipping companies to seek kickbacks flower shops in exchange for not artificially delaying deliveries.
Could this be a poison pill? If one does discriminate and someone transmits stuff like kiddie porn across their network, would that company then be liable because they are not ‘common carriers’?
I don’t think you will save money, but if you want to talk about what benefits there may be:
1- Since the companies providing the services are publicly traded and they stand to benefit, you might chose to invest in them.
2- You should expect your ISP to offer a suite of services that they select for you and make sure those services are fast, this could be good if you like what they select.
3 - you may have the ability to get priority to get to sites you select, you will most likely need to pay for that, but it may help over what is available now.
In short, most of the benefit is for companies and CEO’s and profit. There are changes which may provide a user with something that they may benefit from. But in general one can expect higher prices and more limited ‘walled garden’ services which are fast and the rest of the net which will be slow, Just like the AOL days.
I think your points in general are relevant, but I want to highlight this, since it’s the crux of the issue.
I think that the quoted claim is not always true, and it’s central to my point.
As a customer, it certainly often makes sense to hire a shipping/internet company that will treat all senders the same. It’s simple, it’s fair. It removes weird price incentives and a lot of potential for corruption.
But it’s not the only choice that makes sense. In a world where receivers paid for shipping, if I were choosing between Neutral Shipping Company that does like you said, and some other company that made me an offer like: “We’ll ship you stuff from these five stores really fast and cheap, and everything else costs more and is slow”, it might make sense for me to pick the second one! If most of my stuff is from those five stores, then maybe I don’t care about the other stuff.
Moving back to the internet: One of the things that I’ve read about as one of the possible bad results of non-net-neutrality is that internet plans will start to look like cable television plans. There will be a Facebook/Amazon/Netflix/whatever plan that provides good speeds from a list of sites and has crappy or no service elsewhere. Now, I agree that that is not great for the internet as a platform for new ideas. But! Those plans are actually what a lot of customers want!
Lots of people would happily pay less and only get Facebook. Not me. Not, probably, most people on this message board. But plenty of customers would actually make that choice on purpose, electing just the sort of non-equal delivery service that you are arguing customers won’t choose.
A few people have mentioned that ISPs are different than shipping companies because they are pseudo-monopolies in many areas. I think that’s a strong point in the favor of net neutrality. I’m simply not sure how much a monopoly has to be an actual monopoly and how much what we currently have is close enough to result in a messed up market. For example, cell-network internet is available from a bunch more companies, and while it’s not as fast as cable or fiber, it’s pretty fast, and it’ll keep getting faster. It’s obviously a way that shipping is not the same as internet. I think it’s relevant and important. I’m just not sure that it’s decisive.
Note also that different usage plans exist with heavily regulated public utilities, too. I can pay a time-invariant rate for electricity, or I can sign up for a plan where electricity is cheaper at some times than others, or I (maybe not me as a residence, but some larger institutions) can sign up for a plan where electricity is cheaper in general, but I’m the first one to get cut off when rolling blackouts need to happen, or I can sign up for a plan where electricity is more expensive, but it’s generated with solar power. Those are all reasonable choices that customers might make. And the reason it makes sense for electricity is the same reason it makes sense for internet. All watt-hours are not equally used or created. Someone charging a car overnight has different needs than someone running hospital equipment. And the marginal unit of electricity at peak usage costs more than the marginal unit at other times. Those are both true of internet service as well.
So, even if we consider that internet should be heavily regulated like a utility, it’s not clear to me that “all bits are equal” is the right framework with which to regulate it.
Really it does nothing of the sort, unregulated marketplaces of this type typically end up as monopolies which are the antithesis of innovation and growth. Optimization of investment to maximize returns does not equate to innovation and/or growth, it is on the other end of the curve where you spend money to keep competitors out and usually not by lowering prices or advancement, but by advertising, predatory business practices such as buying out critical components the competitor needs, law suits - things that end up costing us all more and give us less (except the lawyers).
Really your post is a common point raised which sounds good to those who don’t understand economics or don’t care to understand and will accept it in a simple soundbite and assume they are experts.
This actually depends on your state. Many have deregulated their utilities so that there are in fact several suppliers competing to sell you electricity and/or gas. Most big states, like New York, Penn., Texas, Cal, Ill., Ohio. and Mass., have done so.
But in every state, utilities are under something equivalent to what New York calls the Public Service Commission, which rides herd on pricing so that suppliers cannot charge whatever they want. They instead have to make a “rate case” for what they charge.
The Internet is new, but the concept of “natural monopolies” has been around for over 100 years. Most people don’t even think about issues like “common carriers” because those arguments were mostly settled before they were born. The internet argument was bound to arrive: no matter how many times people yell and kick and scream “the internet is different” the fact is that it ain’t. The notion that some large customers can’t get better or faster or preferred service is a nonstarter. It was bound to happen. Economically, it should happen. I don’t expect to pay the same price to mail a package that Amazon can negotiate for mailing a billion of them. That’s all that non-neutrality is.
My guess is that most people won’t notice much change Your rates won’t go up more than they have been doing, but your average speeds will increase just like they have been doing. Some big companies will get faster or cheaper service because of their volume, exactly like with every other industry in the world since forever.
This is a better scenario than the flower company getting into the shipping business IMO, but it ignores a few things. For one, the shipping company is gonna have to be the ONLY way to get packages. In that case, then yeah, I don’t want them also providing the thing being shipped: that’s a blatant monopoly in at least 2 areas.
This is more like having the guy who owns the roads also tell you you can get whatever you want, but you can get his brand of stuff shipped to you fastest at no extra cost while he also controls the speed at which other products are delivered to you. His stuff gets to you overnight, but other brands take weeks for no discernible reason. How long before you stop ordering other brands?
That might be the case if the ISPs themselves weren’t among the companies that would be favored. Which VoIP service does AT&T want you to use? Which video streaming service does Cox want you to use? The answer isn’t “whichever one negotiates the best deal”; it’s “none of them”.
It sounds like one critical question is how much of a monopoly ISPs actually are. Clearly, an unregulated monopoly is problematic.
Closest I’ve found to a cite is the graph partway down this page, which shows that (as of a few years ago) 91% of “Developed Census Blocks” had 2 or more “fixed” ISPs that offer 10Mb/s down. 99% have at least one additional satellite provider at that speed. 71% have 2 or more ISPs at 25Mb/s down (no data on satellite at that speed).
Now, 10Mbps isn’t amazing. But Netflix says you need 5 for an HD stream. 2 simultaneous HD streams doesn’t seem like the backwaters of the internet. I’ve worked remotely (VNC into a server) on half that and been pretty productive. People with 10Mbps are going to be able to do reasonable things online.
Since population isn’t evenly distributed, those are going to correspond to higher percentages of people (not sure how much higher).
There’s also mobile internet, although I’m guessing that the places that have just one fast-ish ISP are probably pretty far out there, so mobile might not be a good replacement.
All that together makes me think that there aren’t many people who actually have only one reasonable ISP to choose from.
The problems of a monopoly don’t necessarily go away just because you have two companies to choose from. In most of the country, where there are two ISPs available, you can choose the one that wants to strangle VoIP, or the one that wants to strangle streaming video, and there’s still no option for an ISP that doesn’t want to strangle anything.
They don’t completely go away, but there are lots of basically functional duopoly/oligopoly markets. So in most cases they mostly go away.
I recently saw (but can’t put my hands on at the moment, so I’ll keep looking) a chart that showed the price of some drugs as they went from production by a single company to more. The vast majority of the price reduction occurs going from 0 to 1 competitors (as it should).
That’s what I’d expect. When you have no competition, you behave like a terrible monopolist. As soon as you have a competitor, incentives change. Adding a second or third or tenth competitor matters, but it matters a lot less than the first.
Cite?
We’ve already seen an analogy of “ransom to carry”. Every so often a cable company refuses to pay a TV channel the amount demanded to allow them to carry the channel. Customers simply don’t have their channel until the dispute is settled. The difference is the cable companies pay the TV channel, whereas ISP’s expect Netflix to pay them.
The reason Cable, Phone are regulated, and perhaps now ISP services should be - the installation of the last mile has to compromise all sorts of property rights. Cables have to go over or under streets. Municipalities would prefer everyone share one set of poles, instead of having multiple sets of poles in every neighbourhood. Every construction/installation job may inconvenience traffic. As a result, they tend toward monopoly/duopoly - which means without regulation, the result tends to be highway robbery. Even cellular has a limited bandwidth (and needs lots of towers) so it too is limited to this companies that have the money to bid on spectrum and build the coverage infrastructure. Some items are not a market free-for-all. We don’t have a dozen sets of roads and no Toyotas allowed on the yellow brick roads. Even where electricity is deregulated, there is usually a “Service” monopoly that controls the final electrical delivery, you hook them up - then the power that comes down that pipe is provided by free market entities.
We don’t think about a phone company (common carrier) that would for example sell preferential treatment - any calls for flowers would be routed to Joe’s ATT Flowers. (Fun fact - the rotary dial phone was invented by an undertaker who was convinced the phone company operators were directing his customer calls to his competition…) We expect that when we make a call, we will always get the same quality connection to exactly the person we dialed.
“US broadband is scarce, slow and expensive. ‘Great!’ says the FCC”
the problem with special treatment is analogous to the “tip” economy. A tip used to be a gift for good service. It has instead morphed into essentially an obligatory (now up to ) 20% extra on all restaurant bills and assorted other services. Instead of being an incentive for good service it has become a part of the cost. Same with ISP’s - what starts out as - “faster service if you pay extra” is not much different than “crappy service if you don’t pay extra”.
And the other problem is that monopolies (and duopolies) have limited incentive to improve. Improvements cost money, but the rates stay the same. The better money is spent in lobbying to stifle competition. So progress often lags behind areas with real competition.
ATT (seconded by Comcast) went to court to prevent Louisville from implementing rules to expedite competitor use of their poles to install competing services. This is not an uncommon occurrence. Cable and phone ISP’s have also lobbied for state laws to block cities from creating their own ISP or Wifi services. (Which cities would not do if the offered services were good enough).
There is no comparison to your electric utility and your ISP. Poor analogy. In most places in the US people have multiple options for internet.
But, the difference here is that the deregulation only covers generation, not distribution. So, it mirrors net neutrality that way. Your utility is the one running that mile to your house, but it is your alternative electric generator that is creating the “content” that runs on those wires.
You have to pay both of them. This change in net neutrality is the opposite of the deregulation of the electrical industry. If my local electric utility was operating under the same terms of the lack of neutrality, they would not need to provide me with the power that I purchase from a third party at the same priority that they would provide their own electric service, therefore, driving those alternate electric suppliers out of business.
I think it’s important to notice the emotional framing here.
My local grocery store used to carry my favorite brand of pickles, and now they don’t. I don’t know why that happened, but assume for a moment that it was because the pickle producer wanted more money than the grocer was willing to pay. I am annoyed by this outcome. It makes my life worse, since I either have to go elsewhere for it or eat inferior pickles. But I don’t think I’d use the word ransom to describe anything in the process.
Businesses end up not working together all the time over pricing disputes. But usually they aren’t framed with such inflammatory language. It’s not one-sided, of course. Copyright owners call people watching unapproved videos “pirates” for the same emotional appeal.
Netflix is already paying Comcast for faster access and has been for years.
The analogy doesn’t hold simply because the grocery business is not a monopoly. If there at only one or two suppliers, and they both hit up the pickle suppliers for money to carry their pickles… maybe. Typically, if you gotta have Bic’s and the grocery store doesn’t have them, some small delicatessen in the downtown might. Or you go to Piggly Wiggly and the difficult store lost your patronage. Cable TV is even worse, because the cable is a monopoly and failure to deliver basically means you’re SOL. No Rosanne reruns for you!
That’s the key difference. If a business model (ISP) is inherently close to monopolistic, with the steep entry cost of building infrastructure, etc. - then some regulation is necessary. When it’s a monopoly or a duopoly instead of a wide open set of choices, then the business model falls from market place to Hobson’s choice - take it or leave with nothing.
The internet has boomed simply because it treated all comers as equal. The ISP did not discriminate between Bing and Google, Facebook and Myspace, YouTube and Vimeo and whatever. Thus, there was a lot less barrier to entering and building a new business; All sorts of businesses came and went, and the ones that stayed did so on the merits of their service, not because they were the only game in town.
And if the reason that they stopped carrying it is because they have their own brand of pickle that they would rather sell you, and so they raised the cost to your pickle maker to stock it on their shelves to an unacceptable level, would you still feel as sanguine about your market?