Internet Charges – May 3, 2006
Posted by Retired Geezer in Politics, Websites.trackback
I started to link a post from Snopes that said politicians were somehow going to screw up the Internet. Sounded like the typical BS email that you get every now and then, but Snopes said it's True.
Then I looked at the address and saw it was linked to moveon.org.
I'll just post the link, click it if you dare.
This might just be the second post to qualify for the Hemorrhoid category.
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Innocent Bystanders 
R.G.–this seems to be the other side of the story
Geezer, I edited the post so that it provides a link you can click on.
This really is a critical, and poorly understood, public policy issue with potentially huge ramifications for the development of really exciting next-generation broadband services.
For those not familiar with the "net neutrality" issue (referred to by Moveon.org as the internet's First Amendment), it is essentially an attempt by content providers to maintain a system where their business model is subsidized by users. As high-bandwidth services become more prevalent, companies like Google want to ensure that they will get a free ride on the billions of dollars of capital that is being invested by telecom companies. This means that the money can only be recovered from the monthly fees paid by end users (you and me), which is economically inefficient (costs are not recovered from the party that causes them) and which will retard the growth of the market.
But it will be great for Google, Moveon.org and so forth if they can talk the government into regulating the market so they get free use of someone else's investment, with no distinctions as to quality of service.
Some ISPs want to put another cost on using the net. Right now, ISPs make money by selling access to users. This includes, the casual user (like me) who is not doing much uploading and the operator of a server who is almost exclusively and constantly uploading information.
Contrary to michael’s comment above, both types of users already pay for their specific type of access. For example, I require a lot of speed so I pay for more than just a basic package of web service: higher upload and download bandwidth. Similarly, the operators of servers (especially servers for popular sites) know that they will need a great deal of bandwidth so they purchase more.
The ISPs want to add another layer of cost. Instead of just paying for bandwidth (speed) at the user-end (you, me, and the servers) they want to charge for actual bandwidth use.
Moreover, it is untrue that the system is inefficient because the “costs are not recovered by the party that causes them.” The high cost of use for Google and Moveon comes solely from the “end user.” My ISP has to expend bandwidth when I connect to video.google.com or youtube.com. Notice: it is my action which leads my ISP to expend bandwidth, not the site owners.
One more thing about ISPs and paying for service. There are three potential sources of money for ISPs:
1: Users (like you and me)
2: Users (like servers, which aren’t really different from you and me)
3: Site owners (like Google and Youtube).
Right now, the users pay to interact with each other at whatever speed they prefer. ISPs, though, are staring at that third group and wondering how they can get money out of them, too.
I should also note that some of the people in the third group also belong in the user groups. For example, Google has its own servers (which it already pays to connect to the net). ISPs would like to charge them again for high-demand content.
TM Lutas had a great take on this issue over at Ed Cone’s blog. His solution of making bandwidth issues transparent is interesting and at first blush it seems rather elegant. What do you think of it, michael?
As Gabriel's comments illustrate, questions of cost causation can quickly become metaphysical. Let's say, for example, that I am a developer and I propose to put up a shopping mall on a two lane road. Obviously, the road has to be improved. Who is "causing" this cost?
Typically, the county road commission will decide that the mall is responsible for the traffic and that the developer (me) should pay for the improvements required by all the new traffic.
The county could, of course, charge a toll to motorists entering the mall, or raise taxes generally. In real life, this doesn't happen. Quite reasonably, the county regards the capital expenditure as a part of my cost of doing business that I should recover from my customers.
ISPs are looking at Google the same way. They're suggesting that Google should either help pay to get the road widened, or settle for a two lane road and put up with some congestion. Their choice.
Great article in CIO on Google’s plans to capture the Enterprise Computing Market. I guarantee they are watching this closely.
michael, your analogy is missing a crucial element: Google (the mall) has already paid for the use of the roads–and continues to do so.
Servers (including Google’s servers) have to pay ISPs for net access just like everyone else. As I have said, the owners/operators of servers typically pay for massive upload bandwidth. The cost of this is set by the market. If ISPs believe they have to “widen the road” they are more than capable of adjusting the price of access.
There are several reasons why they would prefer to toll actual bandwidth use, though. The main one is that third group of people I noted above: site owners who currently pay their fees to servers. ISPs would like to hook into some of that sweet, sweet cash.
ISPs would like to hook into some of that sweet, sweet cash.
I don’t doubt it. I think we agree that this is all just a money issue at the end of the day, whatever economic arguments are thrown around by the antagonists. My sympathies are unambiguously for the parties arguing to let market forces sort it out, and against anyone looking for government interference and protection.
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