The implications of the end of net neutrality

https://techcrunch.com/2017/02/20/the-implications-of-the-end-of-net-neutrality/

by kawera • 9 years ago

110 58 9 years ago

gregmac• 9 years ago

And while the FCC currently supports some regulation, it still allows zero-rating, which many critics believe violates net neutrality.
Eliminating regulations essentially means ISPs can continue charging consumers for access to the internet while simultaneously charging institutions for prioritized access to those customers. This means any organization without deep enough pockets to pay an ISP’s ransom will load much slower than those with ties to ISPs.

Zero-rating may actually lead to a much more dire but subtle future: it's impossible to start a new service because you can't afford to have your content zero-rated (let alone do it at every ISP). If zero-rating increases, data caps can be lowered without a lot of consumer complaint. The lower the caps get, the more necessary it is to be zero-rated if you want consumers to use your service.

The really bad part of this is there isn't any need to have fair pricing. Companies like Netflix, Amazon, and Google can all negotiate lower rates than a new startup because of their volume. Worse, the ISP's own zero-rated services automatically get a pricing advantage because they don't have to pay to be zero-rated.

bdrool• 9 years ago

This is the end of innovation on the internet, and the beginning of a few large, highly-entrenched incumbents with high barriers to entry. Unless your application is unusually low-bandwidth, you won't be able to compete, and that's the way the big players will want it. In less than 30 years, we'll have gone from a completely wild-west open internet to a totally locked-up playing field. It was fun while it lasted, I suppose...

imh• 9 years ago

Innovation could still happen in countries with net neutrality.

ultrahate2• 9 years ago

I think yall are on the wrong side of this. Benefits of the free market vanish once regulations begin. If comcast wants to charge by the hour, let 'em try. How long until some guy creates the same product for 1/100 the price?

Scarcity being the key point here. You don't have a RIGHT to use the internet, that's why it works in the first place as a commodity of sorts.

I want the market to destroy comcast, Google fiber, etc. No more megacorp ISPs.

I'd love to see the FCC dissolved entirely, tbh. We're not helpless, if like a meshnet initiative r we got some real big faces behind it, we'd have a gov-proof Internet in no time.

lukeadams3• 9 years ago

I understand the sentiment, but doesn't it sound much more reasonable to have strictly enforced net neutrality (or consumer protection policy X), than it does to assume the "free market will take care of it someday"? These megacorps have a stranglehold on large swaths of the States – they won't allow challengers without a fight.

ultrahate2• 9 years ago

Well actually I'd say that I just explained exactly why that's a bad idea. No business is too big for consumers to choose to destroy. Yahoo is a good case in point. People chose, Yahoo was killed.

The free market could do it overnight tonight, if people chose to. I get the feeling there's a lot of uninformed people who think the free market is some boogie man voodoo science that someone made up, but it's all black and white in reality. The core forces of markets are very well understood for the past... Oh about 400+ years.

"wouldn't it be better to just let the govt strictly enforce arbitrary rules with zero checks and balances from people who actually have to experience it?"

No.

ktRolster• 9 years ago

"free market will take care of it someday"?

I kind of hope it will be fixed sooner than "someday"

AnthonyMouse5• 9 years ago

How long until some guy creates the same product for 1/100 the price?

A last mile telecommunications network to your house? Comcast is known to immediately increase speeds and slash prices whenever anyone does, but only in the specific region the competitor offers service, thereby ensuring that the new competitor is unprofitable and that all future competitors get the message not to do that.

So presumably indefinitely.

nickthemagicman3• 9 years ago

It has nothing to do with the free market.

Ending net neutrality simply gives control of the internet to companies with currently established hardware monopolies.

Net neutrality is what's keeping the internet a free market currently.

hyperdunc• 9 years ago

Right. The seeming paradox is that a truly free-market needs regulation to maintain its existence.

lend000• 9 years ago

It would be nice if there was more focus on how to make our regulatory landscape more competitive to enable new ISP competition and innovation, instead of worrying about the lack of a particular regulation (which wouldn't be a big deal if there was more competition/consumer choice in telecoms).

Can anyone with expertise on the subject shed some light on the kinds of zoning changes, regulatory changes, and/or 'open infrastructure' policies that established cities could take to make it easier for smaller entities to build their own Internet infrastructure around public land? I'm not convinced it's such a difficult problem to allow Internet providers to compete at close to the same level as other industries.

AnthonyMouse5• 9 years ago

Here's the rundown.

The cost of providing last mile internet service is dominated by fixed costs, meaning costs that are the same regardless of whether you serve 10 or 20 customers on a particular street, and regardless of how much data those customers transfer. These costs are not small; creating the capacity to serve a million households will cost north of a billion dollars.

There are some policies that can knock that cost down some. The best one is to require conduit to be installed in the road anywhere it doesn't exist when road service is done. We should enact this policy. It will save us a lot of money. But it's hard to get passed because the cost is in current-year tax dollars to install conduit and the benefit is in much lower long-term costs for power distribution and telecommunications.

And it "only" lowers costs, it doesn't change the competitive dynamic. The nature of the problem is this. If you have one telecommunications company then you have one piece of fiber in the ground, and when some idiot with a backhoe cuts the fiber, they need to send a truck out to fix it. If you have three competitors then there are three pieces of fiber, all next to each other, owned by different companies, all get cut at once, so you need three trucks. If you have ten competitors you need ten trucks. Most of the costs of operating last mile infrastructure share this horrible scalability.

Meanwhile if you have ten competitors then each competitor has 1/10th as many customers, so the cost per customer is ten times as high. This is why last mile telecommunications is called a natural monopoly -- having a single provider will give you half the cost of having even two.

So that is the source of the problem, how do we fix it? The answer is to isolate the natural monopoly to the fullest extent possible. Let it be a monopoly but let it be nothing else. Some entity (the government, a nonprofit, Comcast) owns the fiber in the ground but they do nothing else. They don't offer retail internet service, they don't offer TV service, their only job is to maintain the physical infrastructure and lease wholesale capacity to third party providers at uniform rates.

Then you have plenty of competition, because anyone can lease capacity and offer service, no one has any undue advantage over the others because the rates are uniform and published, and the monopoly provider can't give any advantage to its own over-the-top offerings because it doesn't have any.

ClassyJacket2• 9 years ago

Let it be a monopoly but let it be nothing else. Some entity (the government, a nonprofit, Comcast) owns the fibre in the ground but they do nothing else. They don't offer retail internet service, they don't offer TV service, their only job is to maintain the physical infrastructure and lease wholesale capacity to third party providers at uniform rates.

This is a good idea and is precisely what Australia is doing. It's called the NBN. The problem is, it was fibre to the home from 2009 - 2013, then a conservative government got in and now they're deliberately running it into the ground, by spending more money to do it with copper phone lines instead. Just for the sake of partisan politics and not keeping Telstra/Foxtel happy. Instead of a gigabit-fibre-to-the-home network, they're going to still be installing new 25Mbit/s connections in 2020 (yes, really), that have no potential for upgrades.

They also changed the "uniform rates" part, so that the big companies get a big discount and small ISPs just straight up get charged more for the same thing.

It was a great plan, 10% of homes got fibre! It just got screwed up by an actively malicious government gaining power.

Luckily if you had Telstra cable before, or in your street, you can keep it. (Not if you had Optus cable though, then you're bumped down to VDSL). And there's those few areas with fibre, and new apartment buildings still get fibre. So as a young person who hasn't settled into a long term house, I have the luxury of making sure I at least get cable. Sucks for the 60% of the population that are stuck with horrible old unreliable copper lines that can't be upgraded tho.

Here is a previous thread on the matter:

https://news.ycombinator.com/item?id=13613308

That being said, I'd still prefer this to the mess the US has, and the concept of having a publicly owned utility own fibre everywhere and providing access to ISPs is a great one. Just do it with fibre, not ancient technology.

Look to New Zealand's UFB for an actually good example, with gigabit fibre just about everywhere.

nickthemagicman3• 9 years ago

Telecom is not a free market and ending net neutrality in no way benefits the free market.

There are serious monopolys in telecom all the way down to the actual fiber in the ground...

So ending net neutrality is not making the internet more free market...its just giving control of the internet to the companies with established hardware monopolys.

It's that simple.

Just like other public utilities like electricity and plumbing there's only so much room for infrastructure so the companies with that infrastructure in place have a monopoly.

It's as far from free market as it gets.

Google fiber couldn't compete because of local regulations for laying wire and hardware and the massive barriers of entry involved that established carriers overcame a half century ago before there were so many barriers.

When a company like GOOGLE couldnt make fiber happen you know something seriously stinks in telecom land.

To truly establish free market internet, you need to end any ADDITIONAL regulations keeping the Googles and the Elons from laying their own cables and hardware and break up the major telecom monopolies or regulate internet like a utility..not JUST end net neutrality.

danjoc• 9 years ago

you need to end any ADDITIONAL regulations

Isn't that what the new administration promises? Deregulation and ending net neutrality. I don't like monopolies either, but it's not like Google/Apple/Facebook/Amazon don't have them. They have all the patents in the world to bludgeon telecom operators to death if those operators tried to start their own competing social networks or search engines.

nickthemagicman3• 9 years ago

I disagree. Theres no monopolies on ad revenue or search?

Anyways, 'the free market' is usually just an excuse for politicians to justify favoritsm to certain groups and has nothing to do with actually working to make markets free and healthy.

at-fates-hands2• 9 years ago

> Isn't that what the new administration promises? Deregulation and ending net neutrality.

As far as I know, this is the case.

It would be similar to what happened in telecom when a lot of the regional Bell operators were deregulated in the early aughts. A ton of CLECS were created (competitive local exchange carriers) who then had the opportunity to lease copper from Qwest at cost, and then become re-sellers to their clients. What happened was predictable and would happen again if you did the same with Comcast and other cable/internet operators.

You'd get a gold rush of companies looking to lease their networks, low-ball their clients and appear to be a much lower cost alternative. Customers will flock to them, and within 5-8 years, many will go under (poor management, losing margins on cost, etc) many will merge together and a few will ultimately survive if they're fiscally responsible enough.

In the early 2000's there were something like two dozen CLECS here in Minnesota. Today, there's around 5.

the-dude• 9 years ago

Please read guidelines about capitalisation

coldtea• 9 years ago

Parent has 3 capitalized words among 200 for emphasis.

How is that excessive, or are "guidelines about capitalization" relevant?

rayiner5• 9 years ago

You make it sound like Google gave up because it was unable to fight regulations designed to keep incumbents entrenched. Google got unprecedented concessions from municipalities in terms of franchise requirements, fast-track permitting, etc. For example, the kerfuffle in NYC with Verizon's FIOS buildout (whether it has built out to all housing units?) Google won't even bring fiber to any city that imposes build out requirements.

Your view of the world doesn't explain why Google doesn't build fiber to cities like Baltimore and LA that have been publicly disparaging their incumbent providers and begging someone to come build fiber and compete. Or why Google won't wire up Silicon Valley. Is it at all credible to suggest Comcast or whatever has more pull than Google in Google's own backyard?

I tend to agree with your overall point that regulated monopolies are the way to go for internet service. But that has its own set of challenges. The AT&T monopoly worked pretty damn well to tell the truth. They built what was at the time a gold-plated telephone network. It was also expensive for consumers, and the government was willing to let AT&T be profitable enough to make building worth its while. That's very different than how "utilities" are regulated today, where they deal with crumbling infrastructure because no politician wants to authorize raising water or sewer rates.

gm-conspiracy5• 9 years ago

Does Verizon FIOS still exist, or has it all been "sold" to Frontier?

WorldMaker3• 9 years ago

Google is slowly giving up because even with unprecedented concessions from municipalities it still can't access the infrastructure it needs to do its job.

The biggest municipal concession has been the "One Touch Make Ready" ordinances (in Louisville, Nashville) that theoretically should allow Google's installers access to poles without first waiting for red tape from existing cable, telephone, and power companies...

Those ordinances are now all currently locked up in court battles that may take years to sort out, with a byzantine individual lawsuit per city.

skywhopper• 9 years ago

Basically if you wish the Internet were more like cable TV, then the end of net neutrality is for you.

CurtMonash2• 9 years ago

People consistently ignore the middle course, which is to allow a market for differentiated quality of service, zero-rating, whatever -- but to regulate that market as to what can be offered in it. The point would be that large companies couldn't get quantity discounts with which they can blow away small ones.

It's legitimate to suggest that remote/waldoed surgery needs superb data delivery guarantees, or that providers of ad-heavy contents should be allowed to pay for the data their users consume. But it's also legitimate to ensure that a small entertainment provider has a chance in bidding against the large ones.

There's been a low-volume discussion of all this on my blogs for many years. http://www.dbms2.com/2014/05/14/solve-the-network-neutrality... is pretty much the latest.

AnthonyMouse5• 9 years ago

The middle course is an illusion. Look at your examples:

remote/waldoed surgery needs superb data delivery guarantees

It isn't a question of bandwidth or latency, the problem is that life-critical systems need hardware-level redundancy that mass market networks just don't have. Some drunk crashes into the pole at the end of your street and your internet goes down in the middle of surgery because there is only one path.

This is why the hospitals that do this sort of thing have redundant dedicated physical connections on both ends. There is no other reliable way to do it. But network neutrality has nothing to do with that sort of dedicated physical point to point connection.

providers of ad-heavy contents should be allowed to pay for the data their users consume

Nobody actually wants to do that. If ad providers actually cared about customer bandwidth charges they would spend more than the obviously-zero-if-not-somehow-negative amount of time they currently spend on optimizing their ads for resource consumption.

The entire thing is a sham. Nobody wants to subsidize data. The ISPs raise data rates but zero-rate their own offerings to push customers away from their competitors, then go back to their competitors with their hand out and demand money to reestablish the level playing field. Or worse, charge a toll to get on the high side of the unleveled playing field.

If this wasn't the case then there would be no need to involve the ISP in the transaction. If advertisers wanted to give away their profits to users then they could just pay the users directly. Some have tried this and given up, because it's ridiculous. Users would much rather have more/better journalism or services or whatever thing the ads are supporting than some tiny subsidy which is nothing more than a pittance at the level of an individual user.

The only reason ISPs are involved is that they can charge $PROHIBITIVE_PRICE for data to end customers but $MONOPOLY_PRICE to content producers and it's only by getting this "discount" that it makes any sense for the content producer to engage in the transaction. The only result compared to the situation where this is prohibited is a harmful transfer of resources from high-competition content producers to low-competition ISPs.

Chinjut• 9 years ago

"waldoed"?

CurtMonash2• 9 years ago

A "waldo" is a remote manipulator. I think the term comes from 1940s Robert Heinlein SF.

harshreality• 9 years ago

Vi Hart recap of Net Neutrality: https://www.youtube.com/watch?v=NAxMyTwmu_M

The first 5 minutes are conceptual background and explanation, while the last 6 minutes move on to the 2014-era politics of net neutrality. It's my favorite net neutrality summary for (IMO) naïve people who think net-neutrality stifles innovation.

mncharity• 9 years ago

I remember in the early 1990's, IETF leadership burning lots of time flying to Washington, to explain the importance of common carriage and network neutrality for the infant Internet. It wasn't clear it would be allowed to survive. The telcos wanted it dead. Monopoly ITT crippled it throughout the Caribbean. But it flourished. And even when neutrality wasn't law, it hovered as a threat - don't get too sociopathic, or there will be crackdown. And here we are, a human generation later. Still fighting the telcos, and still struggling to educate an ignorant Washington. Let me make a prediction for the next quarter century, and for 2040... we continue.

sergioocon• 9 years ago

There are alternatives to that would allow Telcos to profit without compromising net neutrality, but are more complicated because they imply cultural changes.

For instance, deploying content systems inside the network would reduce bottlenecks and improve latency, and you don't need to mess with the rest of the traffic to do so. Net neutrality is there because we don't want telcos to differentiate traffic based on their value, but based on value for the customer, and that changes faster than commercial agreements.

However, that means changing business models and creating value for users and content creators, unless today, not only providing the network, but a real service on top.

With the end of net neutrality, small companies (that can start without that close to the home content distribution up to a certain traffic), would not be able to compete with the established ones, so innovation will be hindered (unless we all want faster horses)

jcadam• 9 years ago

Hey man, the internet is not something you just dump something on. It's not a big truck. It's a series of tubes...

But on a more serious note, given this new environment if one were say, developing/bootstrapping a B2B SaaS would it make sense to prioritize developing/selling a self-hosted(e.g., "enterprise") version of the product over a "cloud-based" offering?

Or, perhaps the major cloud-based IaaS/PaaS providers like AWS might negotiate with all of the bridge trolls themselves (on behalf of their customers), and just pass down the costs via higher rates to all of their subscribers?

jackmott• 9 years ago

The series of tubes analogy was pretty sound. Hell, it is even literally true now.

gm-conspiracy5• 9 years ago

Am I correct in assuming this is only a US problem?

I am curious what the landscape will look like in the next decade, as "data" prices increase, while local storage continues to plummet.

It reminds me of "Exit Strategy" by Douglas Rushkoff, where it discusses vertical brand integration.

dragonwriter• 9 years ago

Am I correct in assuming this is only a US problem?

Yes and no. The direct effect is on US consumers, but because of how much of the money made from internet content and online services is from US consumers, it likely has a very significant indirect effect on global competition.

woah• 9 years ago

Can someone explain to me why edge servers do not have all of the terrible effects of non-net-neutrality? ISPs install edge servers that result in faster service for content from some providers. Maybe they charge for them. Maybe they also charge for a leased line from the content provider's data center. They can of course do this for their own content as a way of utilizing their monopoly power. Why hasn't the sky fallen already?

forgottenpass• 9 years ago

Because, generally speaking, the end users currently have an internet connection with the capacity and (relative lack of) traffic discrimination to pull that content over the internet.

If the boxes collocated at an ISP broke today, the data would flow to users from distant data centers. All that would happen is the ISP and the content provider might end up paying a little more in network costs.

The edge servers in the ISP network would only have the same non-network-neutrality effects if the ISP offered a string-and-soup-can connection to the internet that could not support the service.

The fear is - as it's always been - the ISP's ability to make a remote service effectively unavailable to their customers.

JumpCrisscross• 9 years ago

I, like much of Silicon Valley, make more money with strongly-enforced net neutrality. I try to remove those blinders from time to time and think from the other side.

Could an oscillation between hard and soft net neutrality b better than NN "always on"? Let me explain. Strongly-enforced NN earns those using the pipes (including those not yet founded) more. Weakly-enforced NN earns those owning the pipes (including those not yet laid) more.

When returns to content creators are low, you get incumbency--no Netflix or Spotify. When returns to pipe owners are low, you also get incumbency. No Google Fiber or SpaceX satellite Internet [1]. (Another solution is weak-form NN on new (and utilized) capacity. After some time, that incentive would phase out to strong-form NN. Like patent protection.)

Corollary: is a pro-NN ISP something consumers would pay more for?

[1] https://en.wikipedia.org/wiki/SpaceX_satellite_constellation

gm-conspiracy5• 9 years ago

I do not welcome the new Compuserve, AOL, and Prodigy oligopoly.

Also, how will this affect mobile app-developers that rely on a server backend? Will this drastically curtail mobile app development?

at-fates-hands2• 9 years ago

Basically this whole argument comes down to two viewpoints:

1) If you believe in Net Neutrality, then you believe the government will be a good and objective manager of the internet.

2) If you believe nearly everything the government touches it fucks up and cannot be trusted to manage anything, let alone something as open and free as the internet, then you're against Net Neutrality.

TheCoelacanth• 9 years ago

I can use a strawman argument too:

1) If you are against Net Neutrality, then you believe Comcast will be a good and objective manager of the internet.

2) If you believe nearly everything Comcast touches it fucks up and cannot be trusted to manage anything, let alone something as open and free as the internet, then you are for Net Neutrality.

The implications of the end of net neutrality

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