The internet
Tom Wheeler and the FCC have changed their position on net neutrality, drafting new rules that would allow internet service providers to charge companies for faster delivery of their content. Finally, Comcast and Netflix will get a chance to make some money. Wheeler strenuously denies that his agency is “gutting the open internet rule,” but it’s hard to see this decision making the internet a more equitable place. Perhaps it will be exactly as free and egalitarian as before. Or maybe we are not totally crazy to worry that letting Comcast—which owns NBC and Hulu—buy TimeWarner Cable, owned by AOL and what used to be Warner Bros., will result in some kind of collusion.
It’s hard to argue that what American media needs at this moment is more cooperation among corporate partners. From the standpoint of the internet we have now, it’s also hard to see how the collapse of net neutrality could possibly be an improvement for consumers. Letting Hulu pay fees to Comcast in exchange for more bandwidth is not going to make one service faster. It’s going to make everything else slower.
Internet service providers have limited bandwidth, as anyone who has tried to check email at my house around 5:30pm will tell you. In press statements, ISPs have been careful to describe their plans as allowing content providers pay fees for faster data transfer—the ubiquitous, reader-lowballing “fast lane” analogy—but what they are actually talking about is charging fees for a larger portion of their bandwidth. Unless we experience some dramatic improvement in ISPs’ carrying capacity, the end of net neutrality means slower service for anyone who doesn’t pay those fees.
The Times article inadvertently emphasized this gap between how ISPs present pay-for-play deals and how they will actually affect consumers when it deviated slightly from the fast-lane analogy. Quote:
The rules are also likely to eventually raise prices as the likes of Disney and Netflix pass on to customers whatever they pay for the speedier lanes, which are the digital equivalent of an uncongested car pool lane on a busy freeway.
Instead of building a fast lane on your local freeway, how about we designate the far left lane as only for certain people? By “certain people,” I mean “certain media conglomerates.” Don’t worry—from a certain standpoint, the freeway will be faster.
I’m sure that some people who do not own internet service providers or multiple film and television studios support this change, but I’m not sure who they are. The only people clamoring to allow ISPs to provide varying levels of service based on content appear to be the ISPs themselves and Republican FCC commissioners.
The latter group seems to oppose net neutrality because it constitutes regulation. Here I would like to advance a theme we’ve been talking about a lot lately: government doing something and the market doing the same thing is a distinction without difference.
Only a very narrow viewpoint could see the end of net neutrality as a less regulated internet. Under present conditions, the government ensures that all content is treated equally. Without net neutrality, ISPs will discriminate among contents according to a pay-for-play system. Stuff produced by companies that can pay the fees will be easier to get, and stuff produced by those who don’t pay the fees—this blog, for example, or circa-2005 Facebook, or your website disparaging Universal Pictures—will be harder to get.
If the federal government proposed to do that, representatives from both parties would go insane. The internet is a medium of communication, and a historically egalitarian and open one at that. Letting the government prioritize certain content would be unthinkable, but letting ISPs do the same thing in exchange for money is freedom. It’s just freedom from the standpoint of very large and wealthy corporations.
I don’t mean to be a negative Nancy, but this is exactly the kind of shit that America is into right now. Behind the stalking-horse argument that government should not interfere with discourse or the economy, we’re letting corporations interfere with discourse and the economy. The telecom lobby is among the largest in the nation. If they pressure the FCC to let them sell established media companies priority internet, is that materially different from the FCC prioritizing established media companies?
Whether the federal government or a network of impossibly rich media conglomerates controls what I see on the internet does not matter to me from a consumer standpoint. I can comfort myself with the knowledge that ISPs are making more money, though. Thank god the government isn’t controlling our lives.
I’m going to post links in my next post and just want the world to know in case I get spam blocked.
“Letting the government prioritize certain content would be unthinkable, but letting ISPs do the same thing in exchange for money is freedom.”
You’re using “freedom” here the same way it is used in this Dodge Charger ad featuring George Washington; carelessly to serve your message.
Applying prices to things which were previously free tends to be a good thing. This is impossible to see if your primary concern is who gets the proceeds from the price, but obvious when your primary concern is a transparent allocation of the good. Consider ecosystems services. Traditionally, the oxygen provided by a forest is not part of our economic valuation. When a decision is made about the future of the forest its value was solely its stumpage value; the timber in it. Was this because no one enjoyed the benefits of oxygen before 2005 (when ecosystem valuation started penetrating the policy veil)? Of course not, its because the only hard numbers we had was from turning that forest into timber which could be sold at market. As a result, transactions which turned a forest into timber could be conducted transparently and to the appropriate scale as desired by two parties. The crucial part to note is that the people who benefit from oxygen, and lose out when the forest is logged, are not party to that transaction, because the value of oxygen has no price.
When Malaysia decided their forests were being logged by industry an unsustainable rate they banned logging. Great right? Now EvilCorp will go looking elsewhere! However, overnight the monetary value of forest land became 0. Now left with something monetarily worthless, land owners logged their historical forest lands completely and converted them to plantations so they could raise crops which _did_ have monetary value. Counter intuitive if you care who is getting money in transactions, but an obvious outcome if you care about how many trees are in Malaysia. In some liberal/childish notion of economics a monetary value for logging trees means EvilCorp can come along and pay to flatten everything, so banning logging that means forests will flourish. Instead, allowing the value of forests to be arbitrated by markets means that some forests will always remain standing because their landowners have a reason to keep them around. When something has a price you tend to get more people producing it.
Ecosystem services is an emerging field of natural resource economics which is trying to put a price on things traditional markets cannot or have not valued them; things that have wide and non-diminishing benefits. For a forest this means aesthetic value, oxygen production, shading, wildlife habitat, water purification, and so on. Ecoysystem services sounds scary to a 5 year old (“you’re going to weigh the value of my tree house against the market rate for board feet?), but it is a step forward because of one crucial thing: in a market, anything without a price is valued at $0. So if you want more oxygen, shade, beauty, healthy ecosystems, and clean water, you allow their price to be greater than $0.
What does this mean for net neutrality? Allowing big market players to transact data traffic is not automatically a bad thing. If it allows them to settle disputes which are currently being resolved through backchannels and forces those transactions into light, it is good. I haven’t a clue about how sanctioned transactions in this area will affect startups and Joe the Plumber, but I note the difference between assumptions based on anti-corporate attitudes and empirical evidence.
The efficient provision of data transfers is not my focus here, I also note the significance of freedom. We might say its value is infinite. Transparency could very well increase the equitable provision of internet access because it makes big incumbents play by the same rules as small players. Banning a market for those transactions allows big incumbents to use their other advantages to keep small people from playing on an equal footing. In this way free access can be buttressed rather than jeopardized.*
I’ll end just by adding that, in a competitive marketplace, if free access (which does not mean unlimited access) gets abridged, it’s a problem with or with the relative size of market players, not a problem with arbitrating value differences through economic valuation.
*Assuming you feel free access is the current norm on the internet and in the larger media landscape, which I’m not sure you do.
Am I right in thinking it’s like a highway where we all used to have free access to three lanes, but now we’ll only have access to two lanes, unless we want to pay to get into the third lane?
Hmmm. I wonder where the traffic will be backing up.
I have to call into question a couple of your arguments.
First, “Letting Hulu pay fees to Comcast in exchange for more bandwidth is not going to make one service faster. It’s going to make everything else slower.” is just untrue. Hulu will be faster. It may not be worth the cost of net neutrality, but it will be faster.
Also, there is a difference between the government doing something and a corporation doing something. Most importantly, you have to opt into abiding by a corporation’s rules; you aren’t affected by the ISP’s decisions unless you patronize them. We are all opted into the government’s decisions just by living here. It’s also not a company’s job to represent everyone, only themselves.
On a practical matter, how big a deal is this going to be? I assume, with no research, that web services that deal in large files (video and cloud storage) will be affected, but that most websites won’t feel the difference. Am I going to notice the .3 extra seconds it takes me to load Combat! or even ESPN for that matter? And services that deal with large files, require high startup costs anyway. Adding an extra one doesn’t seem troubling; the barrier to entry is so high that having to pay an ISP really isn’t that much more of a cost. More than anything, it just seems like a sleazy move on the ISPs part, but I’m not sure it will have any noteworthy effect. This also may be shortsighted. Maybe in the future everyone will deal with huge files.
Attempt, Netflix was never getting anything free from Comcast.
Here’s the breakdown: Netflix’s ISP is Level 3 and they pay Level 3 based on the expense level 3 incurs by moving the video feeds to end customers. Netflix wants to reach end customers who have Comcast for an ISP. Therefore Level 3 and Comcast must come to an arrangement for how much level 3 will pay comcast to move the video data (along with whatever other data level 3 happens to need to move through comcast) to its end customers. Level 3 then passes that cost on to Netflix for the video specific data. This was a fair arrangement.
Actually here’s an analogy. Comcast asking money from netflix to deliver the data faster would be like UPS asking Amazon to pay them a fee because of all the package delivery work Amazon creates for them. That would be fucked up. The customer receiving the package should pay extra if they want their shit sooner. The comcast customer should pay comcast more if they want faster internet movies.
Unfortunately comcast has it’s own online movie service that it would prefer its customers to use instead of netflix. It was previously illegal for them to interfere with the delivery of netflix movies to their customers, but now Comcast can either just charge netflix for the money they feel they lost because customers would rather have Netflix than the Comcast movie service, or they can make netflix so slow on their network that no comcast customer can effectively use Netflix.