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Comment by sshumaker | Hacker News Reader

There is one critical flaw with the reasoning of all these opponents of Net Neutrality. They claim the ISPs should have the right to regulate traffic to remain 'competitive', and that users who aren't happy with the regulation can simply choose another ISP. That's how the free market works.

Except this isn't really a free market. In most locations, consumers only have a single choice for broadband access (or two at most). Most ISPs have a regional monopoly. So if your local cable provider decides to charge you extra to access wikipedia, you're SOL.

You can't appeal to the 'free market' when there really isn't one. Your only choice is to create one, which is exactly what net neutrality aims to do.

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Since the lack of broadband competition may be caused by government regulation, the author would prefer total deregulation rather than Net Neutrality or the status quo: "The key to competition in the Internet is less regulation, not the added regulation entailed by net neutrality. ... We must undo the relatively few controls already placed on the Internet..."

Except that it's not created by government regulation, tt just doesn't make economic sense. Broadband is very much a natural monopoly, like electricity or water. In a free market, the first few incumbents (usually the phone provider and the cable provider) who have already built out their infrastructure for old services (phone and cable TV) have a huge advantage over any other company, which would have to spend billions to lay their own wires. Thus market forces prevent any other company from entering the market.

Furthermore, it's not really clear that the socially desirable outcome is to promote competition at the line level. Because each producer has to spend billions on infrastructure to serve fewer people (because the more providers there are, the fewer customers for each), costs will be higher and profits lower the more companies enter the market.

The best solution is in fact government regulation. Instead of promoting competition at the line-level, governments should (and most OECD countries do, with the exception of Mexico, the Slovak Republic and...the US) require local-loop unbundling, whereby the incumbent telco is given a monopoly on laying lines to houses but is required to lease their lines to competitors at a set price.

For more information, read the Berkman Center's Broadband report, which was commissioned by the FCC and is presently the more thorough empirical look at these topics. It's available here: http://cyber.law.harvard.edu/pubrelease/broadband/.

Broadband is very much a natural monopoly, like electricity or water.

ATT used to say that the phone network was "a natural monopoly". Today we'd laugh at that. Really, this example is so glaring that I'm surprised you'd offer this argument. And in fact you acknowledge that the local loop is separate from the actual network. But the difference in the US is that this is a free market -- I can choose to use Embarq (the traditional copper-wire circuit-switched carrier), or I can (and do) use Vonage, or scads of other IP-based carriers, or I could do like many people do and just use cellular. We the consumers are getting to choose just how this unbundling happens.

If, for some reason, you think that there's something sacred about telephone, while data is different (or vice versa), there are other counterexamples as well.

In New York, while electrical transmission remains a monopoly, generation has many choices. It works just like the phones: where the infrastructure demands a single source, that's what we get, but that doesn't mean that the people that provide the wires can be the only one involved in the business. (I pay more for electricity that's generated in part by windmills)

And most obviously, it seems to me that most people have access to two broadband carriers, albeit their capacity varies widely (but that's what markets are all about, right?). Virtually everyone I know has a choice of a DSL provider or a Cable provider.

You're missing the point, but not for the reason given below. The pipe is the natural monopoly, not the services provided over it. This is so obvious that it hardly bears repeating, but again: it makes no more economic sense for multiple companies to run fiber to each house than it does for multiple companies to run electric wires to each house.

Sure you can use Vonage for phone instead of AT&T (or whatever), but you can only do that because you have a pipe to the internet. VoIP services are means of getting phone over a different pipe, but you still need a pipe.

You also seem to miss the point of my comment: governments should have policies like mandatory local-loop unbundling (also called line-sharing) which produce competition where it makes sense (providing backbone) instead of where it makes little sense (providing the "last-mile" connection).

Finally, a duopoly is better than a monopoly, but not by much. It still gives the players far too much control of the market.

I can (and do) use Vonage, or scads of other IP-based carrier

You're missing the point, services like voip could end up priced arbitrarily in the interest of the carrier. What if non-AT&T voip services were priced out of the market? This is not beneficial to the consumer. It's easy to claim wireless or some new technology will always provide innovation and options, now, when the market is new and less consolidated. 10 years from now, there's no reason to think a single company won't own cell networks as well as cable networks, or any other medium for that matter. The status quo sucks! I don't know about your area, but around here ISPs rarely, if ever invest in infrastructure, and upgrades are unheard of. My parents in a rural area have been waiting for years for any land based broadband options, 3g doesn't even work there!

A government commission studying [subject] recommends more governmental control over [subject]? I don't find that impressive.

The study was merely commissioned by the FCC, but it was actually conducted by Harvard's Berkman Center for Public Policy. And your curt comment neatly avoids actually evaluating this very well-done study. I've done my own analyses of the data (which is mostly all publicly available from the OECD) and found similar conclusions (for example: about 68% of the variance in price of "fast" connection (12-36Mb/s) in the OECD is attributable to the presence of various government regulations, including LLU, as is about 30% of the variance in price per mbit). If you doubt their methodology or results, I invite you to look at the data and make your own conclusions.

How can you possibly isolate something to a percentage point that involves things as nebulous as "various government regulations" operating on vast industries spanning multiple countries? My skepticism meter is off the charts here.

It's not actually that nebulous (I was simplifying because it seemed more appropriate for the setting than to give a thorough discussion of the relevant analysis). The technique, though, is regression analysis, which is widely used in econometrics (amongst other fields) to gauge the marginal effect of various variables. Obviously the exact percentage should be taken with a grain of salt, but those numbers (which are significant at 5% confidence) clearly demonstrate the point.

Again, the Berkman Center's study is very well-done, and if your skepticism remains I encourage you to at least skim it. Otherwise, you're arguing from a position of ignorance and are contributing little to this discussion.

Here in Ontario, we have the illusion of choice. Bell owns the DSL system, and allows other companies to resell access. Bell still controls the network, however. Back in 2008, Bell implemented bit torrent throttling and forced the change on all resellers. So now we have a choice of throttled DSL, throttled DSL, or throttled DSL.

This is why I think it's dangerous to describe open access as a competition-based solution. In open access there's competition only for the part of the network that doesn't matter and thus such competition doesn't solve very much. The real benefit of open access comes when the last mile has to be neutral, in which case the benefit comes from neutrality regulation, not open access.

He never claims that the ISPs have a right to regulate traffic because they have to remain competitive (whatever that means). He makes it very clear that ISPs have a right to regulate traffic because they own the infrastructure.

The alternative is "government control of the privately owned infrastructure that makes the Internet possible."

How many choices you have doesn't determine whether something is or is not a free market. That's like saying that there is no free market in tablet computers because you can only buy iPads or JooJoos. Men are free to create and sell their own tablets, just as men are free to create their own ISPs. That is what makes it a free market.

Of course, the ISP market isn't totally free, but the solution is to remove regulations that violate the property rights of the ISPs. Net neutrality only makes the market less free.

The premise of net neutrality is that the internet is a limited resource. The physical space required for building infrastructure is limited, effectively making the internet a limited resource as well. Most cities have already leased out the space for building networks, or let companies own the poles and conduits outright.

This is why i took issue with his car showroom example. Its a big difference when there are plenty of places to build a showroom. There's only one easement behind my house. The poles are owned by comcast, the ground has sewers.

So the only way to get an internet signal into your house is through the wires owned by Comcast? Do they also own the power lines? The phone lines? The space on your roof for a satellite dish?

Even if there was no other way to get an internet signal into your house, that still wouldn't justify violating Comcast's property rights.

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