Well, here’s how I’ve long felt about this situation.
In much of the United States broadband internet access is available from either one or two competing companies. Even in the largest metropolitan areas in the country, the big telephone and cable companies have areas of exclusive operation.
In Seoul, South Korea, there are something like over 25 major ISPs (with overlapping service areas), each one offering consistent 100 Mbps downstream connections. I’m a die hard capitalist, and the way broadband internet is being delivered in this country isn’t the result of free market capitalism but the result of local governments giving favored status to a hand full of service providers.
At one point in time, telephone companies were I believe required to offer “line sharing.” Meaning that DSL providers could offer you service through the same lines that your local phone company did and in direct competition with the local phone companies. I believe the Federally mandated line sharing agreements have expired and this is no longer mandated on the telephone companies (although I believe some still participate in it?)
ISPs have increasingly been attempting to make it palatable to the public that we should pay for our internet usage and move away from flat fee internet service. At the same time, the ISPs want to be their own content providers and be free to prioritize their content over their competitor’s content. Essentially companies like Comcast want to prioritize Hulu on their network, since they own NBC and NBC owns Hulu. At the same time, they want to do everything they can to hurt Netflix and its streaming business, by treating packets to and from the Netflix streaming service as second class citizens.
On the issue of prioritizing traffic, I see two paths:
ISPs are permitted to prioritize traffic based on their business desires. If allowed to do so, they must forfeit all local exclusivity, and must allow competitors to share their lines. Basically, an ISP that prioritizes traffic should only be permitted to do so if they do not have exclusive operating rights in a region, because such behavior should be subjected to the free market. The free market would mostly condemn such shenanigans and the companies that didn’t engage in prioritization would bankrupt those foolish enough to do so in the face of real competitors.
ISPs may keep their local monopolies and duopolies, but may not prioritize network traffic, it must all be treated the same.
On the issue of usage fees, I see four paths:
Charge a flat rate, with some regulation by local PSCs in the case of companies that operate exclusively.
Charge a flat rate, with no regulation, but forfeit the monopoly rights (meaning their high prices would be subject to competitors undercutting them.)
Charge a usage based rate. However, just like water, electric, and natural gas, I only view this as acceptable if local PSCs have high regulatory power over this.
Public Service Commissions have to approve raises in the electric rates in their area. They actually have agreements with the companies they cover that says the company is entitled to a certain profit margin, however the PSC’s regulatory authority means they actually get to go in and look at the costs of the utility. So the rate charged by the utilities as regulated by the PSCs is essentially the cost to provide the service + the agreed upon profit margin.
The dirty secret about internet usage, is the expense that operators talk about is insanely lower than what they suggest. For almost every single customer of Comcast, under a usage based fee in which the fee was regulated by a Public Service Commission and tied to their actual operating costs, would see a major decrease in their bill. A small handful of Comcast customers would have their bill remain about the same and a few would see their bills go up.
So yes, if ISPs wanted to go this route I say let them. They would end up becoming just like other utilities, meaning they would have small profit margins but have fairly stable business models.
- Charge some usage base rate that is unregulated. Again, unregulated means you lose your monopoly rights and your rate has to survive in a competitive market.
As a free market advocate I basically fucking hate government issued monopolies, I think most of them are horrible for the consumer and I have little to no sympathy for the companies that hold them.
Especially internet service providers, who essentially up to now have avoided most regulatory oversight that to which traditionally utilities have been subjected. They want to charge usage based fees based not on their operating costs but just to boost profit margins (fine if you’re in the free market, not fine if you’re operating with a local monopoly), and they want to prioritize their own profit-driving traffic. Well, if you have a local monopoly you need to be held to the same standards as the electric and water companies.