[19guid]

I've posted this comment before in another thread:

I oppose net neutrality regulation. In principle, I don't think there's anything wrong with an ISP prioritizing certain kinds of traffic over others, so long as it does not have an anti-competitive effect.

For example, I don't see how Netflix paying Comcast to zero-rate Netflix traffic is fundamentally different from Amazon contracting with mail carriers to subsidize the cost of shipping for Amazon purchases, or even -- to use an example another commenter made -- an appliance manufacturer contracting with electrical utilities to subsidize the cost of electricity used by their appliances. So long as Comcast makes its zero-rating program available to all content providers -- including their own -- on reasonable and non-discriminatory terms, I don't think there are any competition issues.

I've heard people argue that zero-rating makes it harder for smaller content providers to compete, since they won't have the resources to subsidize their customers' traffic. As I said in another comment, that's just the nature of business. Being big affords you certain advantages, like economies of scale. This makes it easier to compete on price. Smaller companies have to compete in other ways.

In my view, the real problem with the telecom industry in the United States is a lack of competition [0], a problem caused at least in part by municipal [1] and state [2] governments. With more competition, net neutrality would be a non-issue. Consumers would just stop using ISPs that unfairly discriminate between traffic.

[0] http://www.nationalreview.com/article/410353/net-neutrality-...

[1] https://www.wired.com/2013/07/we-need-to-stop-focusing-on-ju...

[2] http://broadbandnow.com/report/municipal-broadband-roadblock...

[linkregister]

The reason why I and some other HN commenters (and L3 Communications) find this argument bizarre is because of the concept of transit traffic charges being applied to the last mile, which previously was not an industry practice.

Comcast's customers are requesting the data; if Comcast were a second tier backbone, or an AS between two others, then it would make sense to charge for traffic, as it doesn't benefit. But the traffic going to Comcast is there to benefit its subscribers, without which, Comcast doesn't make enough money. The most bizarre thing is that if the customers were to upload the same amount of data back to the sites, then they wouldn't be charged, as the data was symmetrical!

Why would an ISP be able to charge other AS's for sending traffic to its own customers? If there were even a single competitor in that region, this dynamic would change completely.

[19guid]

I think it makes sense because retail ISPs operate in a two-sided market. Comcast provides access to Internet services, which customers want and are willing to pay for. Similarly, Comcast provides access to customers, which the Internet companies who provide those services (and associated CDNs and transit providers) want and are willing to pay for.

I don't think there's anything especially wrong with this business model. It's similar to how a newspaper charges both readers and advertisers for access. The disadvantage is that you have to keep both parties happy.

Incidentally, if customers uploaded the same amount of data as the Internet services, Comcast wouldn't get transit fees but it would get additional revenue from the customers, so I think things would balance out.

[neuterlize2]

> I think it makes sense because retail ISPs operate in a two-sided market. Comcast provides access to Internet services, which customers want and are willing to pay for.

Yes, but this is where your analysis breaks down: it's not a free market. The customers are a captive market.

> Similarly, Comcast provides access to customers, which the Internet companies who provide those services (and associated CDNs and transit providers) want and are willing to pay for.

The Internet companies are only willing to pay because they have no other alternatives. They only pay because Comcast has a monopoly and thus acts as a gatekeeper, and then only because Comcast has such a large market share that refusing Comcast would deprive them of a significant part of the market. Calling this "voluntary" participation in a two sided market is absurd. Blackmail is what it is.

When anybody else than Comcast tries this, they are laughed at and told to piss off.

> I don't think there's anything especially wrong with this business model.

There's plenty wrong. The subscribers have already paid full price and now Comcast wants more, this time from the Internet companies, without which Comcast would have nothing to sell.

> It's similar to how a newspaper charges both readers and advertisers for access.

This is just a bad analogy, again. Newspaper readers aren't paying full price for the newspaper, and they are not paying for getting access to the adverts.

> Incidentally, if customers uploaded the same amount of data as the Internet services, Comcast wouldn't get transit fees but it would get additional revenue from the customers, so I think things would balance out.

This just plain incorrect. Comcast wouldn't get a penny more from it's subscribers. Internet access is inherently asymmetrical. Were subscribers to use their upstream more, it would not result in any more revenues.

[kelnos]

> > It's similar to how a newspaper charges both readers and advertisers for access.

> This is just a bad analogy, again.

Not to mention a poor choice of industry to use for comparison: it's not like the newspaper business is doing all that well these days.

[JustSomeNobody]

> I think it makes sense because retail ISPs operate in a two-sided market. Comcast provides access to Internet services, which customers want and are willing to pay for.

So, I put up a small SaaS that I want people to use. In your world, I now have to go knock on the door of all the ISPs out there to pay them for access to their customers?

[mikeash]

I think your mail analogy falls apart because mail carriers are end-to-end, while ISPs are part of a much larger heterogeneous network. If Amazon can get a special deal from FedUps to deliver a package from their warehouse to my door, that's reasonable since it's just a standard business deal exchanging services for money.

The international postal network is a bit more analogous. Let's say you order something from Widget Industrie in France. They pay La Poste to send it to your door in the US. La Poste transfers it to USPS, and pays USPS part of the postage to handle their end of it. Now imagine that USPS leaves your package on the warehouse floor for three weeks because Widget Industrie didn't sign up for their "expedited service" plan. Widget Industrie has never even talked to USPS, maybe doesn't even know that USPS exists.

Of course, international mail is regulated and has had "mail neutrality" since the 19th century, so you don't have to worry about that.

If some company wants to provide specialized data services so that Netflix can send data through their service to customers, that's fine with me. But that's not "the internet." These companies should decide whether they want to provide "internet access" or just specialized paid data access. Back to the mail analogy, FedEx and UPS have much more flexibility in terms of how they operate than USPS does, but as a consequence they don't get to participate in the international mail system.

And indeed, this already happens. Many ISPs provide phone and TV services separate from "internet" services. Nobody is complaining that Netflix can't get into your cable TV package, even though it's all just digital bits on the wire these days. But they don't call it "internet service." When they call a service that, there are certain expectations.

I agree that a lack of competition is the major problem here. If any given ISP customer had a dozen services to choose from, this would all go away. But that's a vastly more difficult problem. Saying we shouldn't worry about net neutrality because the real solution is competition is like saying we shouldn't worry about social security because the real problem is aging. Yes, if we solved aging we wouldn't need social security, but that's not a realistic approach.

[neuterlize2]

> In principle, I don't think there's anything wrong with an ISP prioritizing certain kinds of traffic over others, so long as it does not have an anti-competitive effect.

Can't have that if there is no competitive ISP you can change to, if you don't like this NN violating ISP.

> For example, I don't see how Netflix paying Comcast to zero-rate Netflix traffic is fundamentally different from Amazon contracting with mail carriers to subsidize the cost of shipping for Amazon purchases

This analogy breaks down immediately, because Comcast is already getting Netflix traffic for free. There is no toll that needs to be subsidized, no charge that needs to be zero rated. Comcast is just blackmailing Netflix for protection money.

> or even -- to use an example another commenter made -- an appliance manufacturer contracting with electrical utilities to subsidize the cost of electricity used by their appliances.

Another bad analogy. There is no "cost of electricity" equivalent incurred by Comcast. The Netflix bits are free to Comcast.

> So long as Comcast makes its zero-rating program available to all content providers -- including their own -- on reasonable and non-discriminatory terms, I don't think there are any competition issues.

You do realize that this effectively sets up Comcast as the gatekeeper to the Internet? Do you really want Comcast to be able to decide what's on your Interwebz?

That's even before we get into the fact that requiring to contract with Comcast before you can offer any online service is a barrier to entry and a competitive barrier.

The whole idea is absurd. This way lies the Balkanization of the Internet and Internet fiefdoms.

We already tried something similar and it was a shitshow. Remember how insane and difficult it was to offer premium and value add SMS services back in the days, when you had to cut deals with every single cell phone company before you could offer your service?

> I've heard people argue that zero-rating makes it harder for smaller content providers to compete, since they won't have the resources to subsidize their customers' traffic. As I said in another comment, that's just the nature of business. Being big affords you certain advantages, like economies of scale. This makes it easier to compete on price. Smaller companies have to compete in other ways.

So that's your solution? Screw the small guys?

Lets institutionalize a protection racket, so that only big players can offer service because they can afford to grease the right palms.

> In my view, the real problem with the telecom industry in the United States is a lack of competition [0], a problem caused at least in part by municipal [1] and state [2] governments. With more competition, net neutrality would be a non-issue. Consumers would just stop using ISPs that unfairly discriminate between traffic.

Now you are on the right track. However none of this helps with the immediate problems. Most people have a monopoly provider. You can't change providers if there are no options. Even if we start now, there won't be another option for years.

Meanwhile monopoly providers will use their monopoly to extract monopoly rents, both from customers and online services, best they can. We should not give them permission to gouge more by repealing NN.

As to your list of problems, you forgot to add the FCC killing line sharing due to the Brand X case. If we had that, then we could theoretically have had competition even over a monopoly last mile infrastructure.

[19guid]

> Can't have that if there is no competitive ISP you can change to, if you don't like this NN violating ISP.

Sure, but that indicates a need for competition, not net neutrality. As I said in another comment, even if it prevents some of the worst abuses by incumbents, net neutrality regulation isn't going to create more competition.

> This analogy breaks down immediately, because Comcast is already getting Netflix traffic for free. There is no toll that needs to be subsidized, no charge that needs to be zero rated. Comcast is just blackmailing Netflix for protection money.

I don't think you understand the example. Mail carriers also get packages from Amazon for "free" in that sense. They don't pay Amazon for the right to deliver Amazon's mail.

It occurs to me that there is a difference in that the recipients of packages do not need to pay to receive them, whereas Internet users pay for access. There's no reason why mail services couldn't work that way in theory, though.

> You do realize that this effectively sets up Comcast as the gatekeeper to the Internet? Do you really want Comcast to be able to decide what's on your Interwebz?

If the market was sufficiently competitive, then Comcast wouldn't be the gatekeeper. If Comcast behaved badly, people would switch to a different provider.

Not every instance of possible bad behaviour needs to be regulated.

> That's even before we get into the fact that requiring to contract with Comcast before you can offer any online service is a barrier to entry and a competitive barrier.

We're talking about zero-rating, not "requiring to contract with Comcast before you can offer any online service". Those are completely different things.

> So that's your solution? Screw the small guys?

My solution is to increase competition, actually. My point is that we don't penalize big companies for being successful by taking away the benefits of being big, such as economies of scale. The "small guys" have to compete as well and shouldn't rely on the state to reduce consumer benefit in order to make it easier for them to increase their market share.

> Even if we start now, there won't be another option for years.

That's not necessarily true. For example, the FCC could do what Canada does and require ISPs to sell Internet access at fixed wholesale rates to resellers. Competition will spring up overnight.

There are many other approaches as well, such as blocking municipalities from entering into monopoly franchise agreements with ISPs, ensuring equal access to rights of way, and supporting municipal broadband.

[kelnos]

> Sure, but that indicates a need for competition, not net neutrality.

> If the market was sufficiently competitive, then Comcast wouldn't be the gatekeeper.

> My solution is to increase competition, actually.

> Competition will spring up overnight.

You keep saying this, but I don't think you understand:

1) That businesses like this do not spring up overnight, even in the figurative sense.

2) The incumbent ISPs lobby to reduce competition (often getting laws on the books to make it illegal for municipalities to offer internet access), and are largely very successful at it.

3) Rural areas basically get fucked, because there won't be enough money in new competition.

4) In the meantime, we have nothing to protect customers. Let's say you're right, and we can somehow increase competition. No, it's not going to happen overnight. What's going to protect customers in the meantime, after current net neutrality regulation is rolled back? Nothing. Removing regulation that has been obsoleted by other measures is fine and the right thing to do, but there's nothing to replace it right now that will have the same effect.

> For example, the FCC could do what Canada does and require ISPs to sell Internet access at fixed wholesale rates to resellers.

So why is this kind of "anti-free-market" regulation ok, while net neutrality rules aren't? (Also, we tried this. Most smaller players that took advantage of it failed because, while the Comcasts of the US were required to _provide_ access, there wasn't really a way to require that they provide it easily, or provide good service and reliability with it. And I believe this ended up getting repealed due to... you guessed it, lobbying efforts from the incumbents.)

I'm just really getting tired of all this "increase competition" rhetoric coming from people who seem to think they live in a fantasy world where it's easy, or even possible, to get these sorts of things done, especially in the current political climate.

[fladrif]

I agree, we need competition, but that's not something we will get in a reasonable time scale. We're insisting on NetNeutrality for the sole purpose of protecting consumers. By just saying 'the free market will solve all our problems' won't help us get there or solve any real issues that will plague people from now til some future where that may or may not be realized.

Per your second point regarding the imminency of a free market, is that not also a regulation being imposed upon ISP's? You're proposing regulation on the physical infrastructure whilst NN argues for regulation (or non-regulation as it were) of data. What is the difference in your opinion?

[Avernar]

> what Canada does and require ISPs to sell Internet access at fixed wholesale rates

Actually, it's access to the last mile that's sold a fixed rates. The ISPs lease aggregated links to the last mile network depending on how much capacity they need. These ISPs have their own internet uplinks. There are ISPs that are just pure resellers but I'm not sure if this is regulated.

But even this had a net neutrality issue. The ISPs leasing out the last mile access started to throttle certain traffic (bittorrent and VPNs) for their customers AND the customers of the ISPs that leased the last mile.

Recently the fight was over access to the new FTTH connections.

[nnneuter]

>> Can't have that if there is no competitive ISP you can change to, if you don't like this NN violating ISP. >Sure, but that indicates a need for competition, not net neutrality.

True. I'm fine with not requiring NN in markets where there are at least four more equivalent or better options to chose from, one of which has to be following NN.

> As I said in another comment, even if it prevents some of the worst abuses by incumbents, net neutrality regulation isn't going to create more competition.

Again true, but that does not mean we should allow NN abuse in the absence of competition.

>> This analogy breaks down immediately, because Comcast is already getting Netflix traffic for free. There is no toll that needs to be subsidized, no charge that needs to be zero rated. Comcast is just blackmailing Netflix for protection money. > I don't think you understand the example. Mail carriers also get packages from Amazon for "free" in that sense. They don't pay Amazon for the right to deliver Amazon's mail.

I understand the example just fine, it's you that's got the wrong end of the stick.

Your first error is equating the mail carriers with Comcast. Comcast is not the mail carrier. The mail carriers are not the recipients of each piece of mail. Comcast, on the other hand, is the recipient of the bits.

A more apt analogy is that Comcast is the building owner with a mail room. The mail carrier drops off letters to the mail room, for free to Comcast. Comcast then distributes the letters to each tenant, who all pay Comcast for this letter delivery service.

Not a single building owner would get their mail delivered by the mail carriers, if they had a guard standing at the mail room door and if that guard demanded payment before letting anybody pass. In fact that would be a really quick way of ending up in court.

Your second error is thinking that the delivery of mail is the same as the delivery of bits. Each piece of mail requires incremental energy and manhours to deliver, whereas Comcast does not incur any marginal cost for taking delivery of and passing along the bits that their customers have requested.

>> You do realize that this effectively sets up Comcast as the gatekeeper to the Internet? Do you really want Comcast to be able to decide what's on your Interwebz? >If the market was sufficiently competitive, then Comcast wouldn't be the gatekeeper. If Comcast behaved badly, people would switch to a different provider.

Yes, that's how it works in theory. Too bad Comcast doesn't have any competition in most areas. What's your non-theoretical solution?

> Not every instance of possible bad behaviour needs to be regulated.

So, allow bad behavior until somebody comes along with billions of dollars and builds out a (hopefully) better behaved competitor?

>> That's even before we get into the fact that requiring to contract with Comcast before you can offer any online service is a barrier to entry and a competitive barrier. > We're talking about zero-rating, not "requiring to contract with Comcast before you can offer any online service". Those are completely different things.

Please explain how those are different things. How will I be able to stream HD cat videos to my users with Comcast without contracting with Comcast for zero rating?

>> So that's your solution? Screw the small guys? > My solution is to increase competition, actually. My point is that we don't penalize big companies for being successful by taking away the benefits of being big, such as economies of scale.

How is being able to afford to pay protection money an economy of scale?

> The "small guys" have to compete as well and shouldn't rely on the state to reduce consumer benefit in order to make it easier for them to increase their market share.

Wait, what?! How is consumer benefit reduced by abolishing NN? How is consumer benefit reduced by increased availability of online services?

>> Even if we start now, there won't be another option for years. > That's not necessarily true. For example, the FCC could do what Canada does and require ISPs to sell Internet access at fixed wholesale rates to resellers. Competition will spring up overnight.

You know, that's what we had with the Telecom Act of '96. The FCC decided we shouldn't have that after they lost the Brand X case.

Any other suggestions? Preferably some which can be practically implemented in a reasonably short time frame, such as years instead of decades.

> There are many other approaches as well, such as blocking municipalities from entering into monopoly franchise agreements with ISPs, ensuring equal access to rights of way, and supporting municipal broadband.

I'm all aboard with these suggestions, but even with all of these any improvement will take years, if not decades, and presupposes billions of capital and totally ignores the winner takes all of natural monopolies.

[kelnos]

> ... so long as it does not have an anti-competitive effect.

Soooo... you're in favor of net neutrality regulation, then.

[arca_vorago]

Everything you talk about is contrary to the current reality, and it boggles the mind the mental gymnastics you are putting yourself through to get there.

ISPs should be dumb pipes, the end.

[kirRoyale]

so you think the government should be allowed to regulate it?

[codezero]

I think the obvious answer is yes. With conditions that are agreed apon by voters. Voters are not a factor in this legislation outside the fact that it is being executed on party lines.