Alternately, they can simply demand a ransom from big-traffic providers to keep customers’ connection speeds to their site the same (or increase them), while they lower connection speeds to a snail’s pace for all other sites that don’t have the money to bribe the ISP.
I’m not sure what’s confusing about HMS’ position - it’s fairly clear to me that he is in favor of ISP competition, *but not at the expense of competition between internet content services.
*The latter involves thousands of companies that use the ISPs to deliver their content. The former involves a handful of companies who are the only clear winners when net neutrality is killed.
Which is true for effectively every business entering any existing market. Despite that, companies like Tesla, Snapchat, and Jet spend billions to try and claim their share of the market. Given enough potential profits competitors would be willing to spend the billions necessary to become an ISP.
So, how precisely is removing net neutrality going to make it easier for new companies to emerge and compete? Exactly how is removing net neutrality going to benefit anyone but the currently entrenched ISPs?
I would very much like someone to answer these questions, not nitpick about lawns being dug up.
The contradiction is decrying a lack of competition while talking about increased competition like it’s doomsday. Do you really want your lawn being dug up for every new streaming service? The answer to that, if the problem is competition in ISPs, should be hell yes I do.
The default should always be no regulation. It’s up to the proponents of net neutrality (or any regulation) to show why that regulation is beneficial to the consumer.
That said, my arguments are mostly showing how the pro net neutrality arguments are internally inconsistent. It’s illogical to complain about lack of competition in a market and oppose things that will make that market more profitable. The only way out of that contradiction is if the market is a monopoly. And the ISP market simply isn’t.
As for what repealing net neutrality will do, I’m not quite sure. For all the talk about censorship and throttling, people miss the most important thing, and that is customer data. Netflix, Google, Amazon, Facebook, etc. are valuable because of the data they have about their customers. Netflix, for example, is better as a streaming service than it’s competitors at streaming because it has a vast amount of data about what it’s customers like. They know better what their customers want and therefore can spend less to buy/produce content by only acquiring what they need. ISPs could track that data as well and sell it to Netflix’s competitors, but they can’t because they have been classified as common carriers.
There’s a few possible effects of that. (1) Being an ISP becomes much more profitable driving competition, (2) Internet bills go down as you become the product, similar to how Facebook is free, and (3) we might see more competition in the online services world. Or none of that happens and the internet continues essentially as it is with ISPs making a bit more money shaking down companies like Netflix.
Whatever clarification I offer, you ignore it and come back with “In other words, [the same repeated mischaracterization]”. If I were insulting you, I’d say nobody could accidentally be so obtuse. The generous interpretation is that you just don’t understand what you’re talking about, and don’t know when to quit.
If you want to prove me wrong, show me you understand the difference between an ISP and a content provider. Or if you think that’s wrong, persuade me that there’s no difference. Take your pick, but we can’t have a discussion until you understand the difference between the two businesses.
There aren’t any pluses. In a different world where we had low barriers to entry and an actual competitive free market, this might not be a bad thing. As it stands, though, this is a handout to the local monopolies or oligopolies that control access to the Internet and will be able to charge more for it and serve as a gatekeeper to content. That’s a bad deal whether you’re a random person interested in using the Internet, a start-up tech company, or even an established tech company like Google or Amazon.
Even granting that I’m fine having an ISP sell my personal information to anyone willing to buy it, why would that result in their lowering my Internet bill? I live in a major US city, and I have exactly one choice of Internet provider. (I might be able to scrounge up one alternative if I relocate a reasonable distance from my current house.) As a monopoly in an industry with large artificial and natural barriers to entry, it’s not going to use that extra money to charge me less. Besides, if revoking net neutrality is all about fostering competition, why are Comcast, Verizon, etc. so doggedly in favor of it?
In sum, then, the argument for the repeal of net neutrality is that “regulation bad.”
There is no reason to believe that if a company receives higher profits they will reduce prices, add services, expand infrastructure. Why should they? They often have a monopoly, and where they don’t, there is the factor of defacto collusion*.
Better to buy back stock, increase stockholder’s compensation, and executive compensation as well.
*Everyone knows how much everyone else charges, what service levels, they offer, so what incentive does a company have to charge anything greatly different from their competitors? Better to be all about the same. I’m not saying they’re gathering in smoky rooms to set prices - all they have to do is look them up on the internetl
Getting a smaller piece of a pie of a huge pie is better than getting a bigger piece of a small pie.
The other problem with the ISPs = monopoly line is that their revenue numbers don’t look like it. The biggest ISPs net income are Charter (10%), Comcast (18.5%), Verizon (10%), and ATT (15%). Compare that with Apple (26%), Google (22%), Microsoft (24%), or Facebook (37%). The ISPs net income and return on capital don’t look like monopolistic companies. They look like numbers from a competivie, but capital intensive and mature industry.
ISPs don’t act like companies that collude or monopolies. Perhaps my experience is different, but I get a constant stream of mailers trying to get me to switch. When I call up and threaten to switch to a competitor, they give me discounts. So yeah, if suddenly they can sell user data or shakedown Netflix for $X a month, I’m pretty some of that X will make it back to consumers.
Perhaps, but if they shake down Netflix for $X, we can expect the cost of Netflix to go up by $X+.
And from what people are saying, your experience is indeed unusual. Many regions have two or one providers - not much need for them to exert themselves in those areas, is there?
And again, what assurances do consumers have that increased profits for the ISPs will result in lower prices and/or better service? Experience does not suggest that that will happen.
Which is good because it associates the cost of providing Netflix with only those that use it. Today, that cost is borne partially by people that don’t use it.
I only have two providers if we ignore the 10 or so wireless and satellite providers. ISPs have high fixed costs and low marginal costs. There’s a huge incentive for them to attract new customers and keep the ones they have.
ISPs have never really sold user data or extracted payments from upstream providers. There’s no experience to go by.
You can understand my confusion… when most people complain about monopoly, it’s in regards to the lack of consumer choice, not to the % of market share or net profit of the companies in that industry. The two are mostly unrelated.
Why would the percentage of money kept as profit rather than reinvested (assuming that’s what those numbers are) be relevant? (Also, conspicuously missing from the list above is Amazon, which has a very different pattern from the other four tech companies listed.) Monopolies are simply a matter of how much choice a customer has. For one thing, ISPs are in a completely different business than the others; Google and Facebook make most of their money off ads, for example, which don’t require the physical infrastucture that Comcast and their ilk are presumably investing in. Besides, people actually like Google, Facebook, and Apple. (Microsoft, well…) People don’t use Comcast, for example, because they want to; they use it because their choices are severely limited.
It’s not the money kept as a profit. It’s the difference between their revenue and expenditures for a year. It includes the amount spent as investment during the year.
The point is that ISPs are generally not exceptional profitable by any measure. If it was a monopolistic market, you would expect them to make lots of money. The fact that they don’t means that it isn’t.
ISPs allow you to access Netflix rather than provide Netflix.
The costs associated with providing access correspond to what’s necessary to provide a certain level of access—the more high-speed streamers, the greater the resources required.
People who use less internet buy less internet.
Well, duh. They operate in an environment heavily regulated to enforce competition, and surprise surprise, their profits look fairly competitive. What a crazy coincidence! It’s like the laws are doing their jobs. And the companies want to get rid of these laws? The world is just full of crazy coincidences, isn’t it?
Anyhow, regulation isn’t the only reason for this. Let’s try again to tease apart what you’re calling an ISP:
All of these are in multiple lines of business other than ISP. That includes pay-TV, VOIP, telecom carrier, local phone services, wireless phone service, news media networks, motion picture production, and even venture capital. Some of these verticals are highly regulated public utilities. So that’s one factor that keeps profits at competitive-looking levels.
The other factor is that companies that try to do so many things seldom end up doing any of them well. They persuade the public that they’re doing this for some vague “internal efficiencies”, but they usually end up trying to step on other companies access to the market, or by reducing the number of participants in the market. Such anti-competitive efforts often run afoul of regulators, so these huge merged companies are seldom as profitable as advertised.
So as you can see, the “low profit ISP” argument is false and dead-on-arrival. Try again.