Yglesias vs. Google

by on May 25, 2006 · 6 comments

My old roomie Julian Sanchez and my friend Matt Yglesias go at it over neutrality regulation on Bloggignheads.tv. If you haven’t seen it yet, Bloggingheads.tv is (as its name implies) a site featuring popular bloggers debating the issues of the day on camera. My favorite thing about the Sanchez/Yglesias spot was the fact that Julian was smoking. People haven’t smoked on TV in decades–and especially not talking head pundits! It felt deeply subversive to watch politics being debated in between drags of a cigarette.

Anyway, my sympathies are with Julian’s side of the argument, but I thought Matt’s argument, which he dubbed a vulgar Marxist perspective, is interesting: basically, he doesn’t feel qualified to evaluate the technical merits of the issue, but he figures that given that Google’s interests lie in getting more content to consumers cheaper, their interests are more likely to align with those of consumers. And therefore, for those who aren’t competent to analyze the issue on their merits, it’s best to err on the side of supporting Google and other Internet companies.

In evaluating this argument, I think it’s worth distinguishing the short-term and long-term impacts of regulation. Julian covered the short-term argument pretty well: it might be that without the ability price discriminate, telcos will have less incentive to invest in new infrastructure. That’s clearly bad for consumers, but it might be good for Google if it ensures Google free access to whatever new infrastructrue investment the telcos do make. I don’t think it’s crazy to think that Google’s interests might diverge from those of consumers on this front.

But I think the long-term implications are more interesting, and ultimately a lot more important. Because what network neutrality does, for the first time, is to give the FCC (or some federal agency) authority over the administration of the networks that comprise the Internet. The debate so far has focused on cable and telephone companies, but there’s no reason to think the extension of authority contemplated by the pro-reguatory side would be limited to those networks. University networks, WiFi hotspots, hotel connections, and any new broadband technologies that arise in the future would also be covered.


Any time you create new regulatory authority, you create new opportunities for rent-seeking. Network neutrality is a complicated subject, and no one other than telecom lobbyists is likely to be paying much attention after the law is passed. Which means that it will be quite easy for the FCC to gradually expand its authority to subjects that are only tangentially related to the core issue of network discrimination.

This, it seems to me, is bad for everyone, but it’s less bad for larger and more politically well-connected companies. The telcos can afford to hire the lawyers and lobbyists they need to ensure their interests are protected. So can Google and Microsoft. On the other hand, ordinary consumers, and small web sites like the Technology Liberation Front, will be more or less at the mercy of the FCC’s decision-making process.

Here, I think, Yglesias’s interests clearly diverge from those of Google and Microsoft. Google and Microsoft don’t have to worry about these kinds of regulatory capture concerns, because they’ve got as good a shot at anyone of being the ones who do the capturing. If the telcos want to push regulatory changes that benefit them at the expense of Internet users, Google and Microsoft will have the clout to cut a deal that ensures their interests are protected. It’s smaller sites and individual Internet users who are unlikely to have their interests effectively represented in future regulatory battles.

  • http://www.techdirt.com/ Mike Masnick

    I’m still not convinced on either side of this debate, but I think *both* of the arguments given in the video are extremely weak.

    You cover why Yglesias’s arguments don’t necessarily make sense, but neither do Sanchez’s. He fails to distinguish between bandwidth and QoS, mixing up the two quite frequently. He claims VoIP needs a lot of bandwidth — which is flat out wrong. It needs QoS, not very much bandwidth. Voice is not a high bandwidth app.

    He also confuses the issues with his Akamai example. In that case, it’s about the web service provider choosing to improve performance for all visitors, no matter who their service provider is. It’s an extension of what happens now. Right now, they pay their own service provider for the bandwidth used. And they pay Akamai to make that bandwidth more efficient.

    What the telcos are trying to do is on the other side, get the web service provider to pay for speeding up access just for certain customers (so, paying AT&T to improve performance for AT&T customers, for example).

    What it boils down to is the question of what you pay for when you buy internet access and bandwidth. Are you paying for just the connection to the center that the ISP provides, or are you paying for the connection to everyone else on the network? Traditionally, it’s been believed that you pay to connect the ends. After all, the value is in the network effects of connecting all those ends. Without that, the center isn’t that useful. The telcos are now saying that’s not true, that you only pay to connect to the center, and the “free ride” is the other half — getting out to the ends. Now, they want people to start paying for the other half. That’s totally separate from the Akamai situation, and still seems an awful lot like double-billing to me.

  • http://www.techdirt.com/ Mike Masnick

    I’m still not convinced on either side of this debate, but I think *both* of the arguments given in the video are extremely weak.

    You cover why Yglesias’s arguments don’t necessarily make sense, but neither do Sanchez’s. He fails to distinguish between bandwidth and QoS, mixing up the two quite frequently. He claims VoIP needs a lot of bandwidth — which is flat out wrong. It needs QoS, not very much bandwidth. Voice is not a high bandwidth app.

    He also confuses the issues with his Akamai example. In that case, it’s about the web service provider choosing to improve performance for all visitors, no matter who their service provider is. It’s an extension of what happens now. Right now, they pay their own service provider for the bandwidth used. And they pay Akamai to make that bandwidth more efficient.

    What the telcos are trying to do is on the other side, get the web service provider to pay for speeding up access just for certain customers (so, paying AT&T; to improve performance for AT&T; customers, for example).

    What it boils down to is the question of what you pay for when you buy internet access and bandwidth. Are you paying for just the connection to the center that the ISP provides, or are you paying for the connection to everyone else on the network? Traditionally, it’s been believed that you pay to connect the ends. After all, the value is in the network effects of connecting all those ends. Without that, the center isn’t that useful. The telcos are now saying that’s not true, that you only pay to connect to the center, and the “free ride” is the other half — getting out to the ends. Now, they want people to start paying for the other half. That’s totally separate from the Akamai situation, and still seems an awful lot like double-billing to me.

  • Julian Sanchez

    Well, two responses to Mike.

    First, I don’t recall exactly what I said, but I was trying to avoid getting too technical, so I wouldn’t be surprised if I did conflate QoS and bandwidth at some point. But I’m actually pretty sure I *did* explicitly make the distinction between speed and reliability or quality, precisely with respect to voice. In fact, unless I’m misremembering, the only time I really focused on VoIP was to make just that distinction. If I got sloppy somewhere, mea culpa. But I don’t think it’s fair or accurate to say I entirely neglected it.

    Second, the relevance of Akamai is that the way at least some neutrality advocates are presenting their case is in terms of this idea that companies with a lot of money to throw around shouldn’t have any advantage vis a vis some small startup in terms of getting their content to users faster. And insofar as that’s not actually the case under the status quo, I think it was germane to *that* point, whatever other distinctions one might draw on other grounds. I wasn’t invoking Akamai as some kind of all-purpose answer to every issue people have with non-neutrality, only as a small counterexample to this idea that the net in its current form is some kind of utterly level playing field where money doesn’t play any important role in determining how fast your content gets to users.

  • Julian Sanchez

    Well, two responses to Mike.

    First, I don’t recall exactly what I said, but I was trying to avoid getting too technical, so I wouldn’t be surprised if I did conflate QoS and bandwidth at some point. But I’m actually pretty sure I *did* explicitly make the distinction between speed and reliability or quality, precisely with respect to voice. In fact, unless I’m misremembering, the only time I really focused on VoIP was to make just that distinction. If I got sloppy somewhere, mea culpa. But I don’t think it’s fair or accurate to say I entirely neglected it.

    Second, the relevance of Akamai is that the way at least some neutrality advocates are presenting their case is in terms of this idea that companies with a lot of money to throw around shouldn’t have any advantage vis a vis some small startup in terms of getting their content to users faster. And insofar as that’s not actually the case under the status quo, I think it was germane to *that* point, whatever other distinctions one might draw on other grounds. I wasn’t invoking Akamai as some kind of all-purpose answer to every issue people have with non-neutrality, only as a small counterexample to this idea that the net in its current form is some kind of utterly level playing field where money doesn’t play any important role in determining how fast your content gets to users.

  • http://lippard.blogspot.com/ Jim Lippard

    “He also confuses the issues with his Akamai example. In that case, it’s about the web service provider choosing to improve performance for all visitors, no matter who their service provider is. It’s an extension of what happens now. Right now, they pay their own service provider for the bandwidth used. And they pay Akamai to make that bandwidth more efficient.”

    And Akamai pays the big eyeball customer providers like the telcos, to put servers directly on their networks to get them close to the customers. The Akamai model *does* lead to the content providers paying the telcos, indirectly through Akamai.

    Should that arrangement be prohibited? If not, then why should a direct arrangement between content providers and eyeball customer providers be prohibited?

  • http://lippard.blogspot.com/ Jim Lippard

    “He also confuses the issues with his Akamai example. In that case, it’s about the web service provider choosing to improve performance for all visitors, no matter who their service provider is. It’s an extension of what happens now. Right now, they pay their own service provider for the bandwidth used. And they pay Akamai to make that bandwidth more efficient.”

    And Akamai pays the big eyeball customer providers like the telcos, to put servers directly on their networks to get them close to the customers. The Akamai model *does* lead to the content providers paying the telcos, indirectly through Akamai.

    Should that arrangement be prohibited? If not, then why should a direct arrangement between content providers and eyeball customer providers be prohibited?

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