> 1. Bandwidth is limited
> 2. Real-time streaming services, such as video, consume much more bandwidth (by sending more packets through the pipeline) than non-streaming services
> 3. Net neutrality guarantees that each packet is delivered with the same priority
Say Netflix takes up 20% of the bandwidth through its streaming services - each packet must have the same priority as any Netflix or non-Netflix packet. That leaves 80% for everyone else.
People begin streaming more Netflix and it now takes up 40% of the bandwidth. This means 60% for everyone else - fewer of their non-Netflix packets are making it into the pipeline. This means their download speeds slow down.
ISPs can either (1) increase bandwidth in order to increase the amount of non-Netflix packets get through, (2) throttle Netflix or (3) neither increase bandwidth nor throttle Netflix, resulting in non-Netflix content slowing down.
Is my analysis incorrect here? Perhaps I am missing something obvious?
To me, it looks like Net Neutrality is (3). In this case, streaming services (and those consuming them) get a free ride to due to the rule mandating that packets must be delivered at the same time (so you benefit if you simply stuff the channel with a ton of your packets, a la Netflix). It would also make sense why Big Tech would support this (they receive the benefit), while Big Telecom would oppose this (they incur the costs). In an economic sense this would seem to be an inefficient market (as regulation tends to do).
However there are always noble reasons behind regulation (even if they are not implemented properly). I don't see (2) as particularly bad in an economic sense, but because these telecoms are notoriously anti-competitive, perhaps the ideal of a competitive market goes out the door?
Would greatly appreciate if anyone could clarify.