The Washington Post Opposes Net Regulation

by on June 13, 2006 · 12 comments

The Washington Post editorialized yesterday in opposition to regulating the Internet:

The advocates of neutrality suggest, absurdly, that a non-neutral Internet would resemble cable TV: a medium through which only corporate content is delivered. This analogy misses the fact that the market for Internet connections, unlike that for cable television, is competitive: More than 60 percent of Zip codes in the United States are served by four or more broadband providers that compete to give consumers what they want–fast access to the full range of Web sites, including those of their kids’ soccer league, their cousins’ photos, MoveOn.org and the Christian Coalition. If one broadband provider slowed access to fringe bloggers, the blogosphere would rise up in protest–and the provider would lose customers… The serious argument for net neutrality has nothing to do with the cable TV boogeyman. It’s that a non-neutral net will raise barriers to entry just slightly–but enough to be alarming. To use a far better analogy: Competitive supermarkets aim to please customers by offering all kinds of goods, but the inventor of a new snack has to go through the hassle of negotiating for display space and may wind up on the bottom shelf, which dampens his incentives. Equally, if the owners of Internet pipes delivered the services of cyber-upstarts more slowly than those of cyber-incumbents, the incentive to innovate might suffer. Would instant messaging or Internet telephony have taken off if their inventors had had to plead with broadband firms to carry them? This concern should not be exaggerated. Cyber-upstarts already face barriers: The incumbents have brand recognition and invest in tricks to make their sites load faster. The extra barrier created by a lack of net neutrality would probably be small because the pipe owners know that consumers want access to innovators.

Mike Masnick correctly notes that the Post exaggerates the competitiveness of the broadband market a bit–60 percent of zip codes may have four broadband service providers, but that doesn’t mean that 60 percent of consumers do–the vast majority have two or fewer. But I think the broader point of that paragraph–that there’s no danger of the Internet turning into a non-competitive service like cable TV–is exactly right. The value of the Internet stems from the availability of hundreds of thousands of small sites. The telcos would be shooting themselves in the foot if they cut off their customers’ access to those sites. And most broadband customers do have at least one option, so their ability to jerk their customers around is limited.

The editorial’s conclusion gets it right:

The weakest aspect of the neutrality case is that the dangers it alleges are speculative. It seems unlikely that broadband providers will degrade Web services that people want and far more likely that they will use non-neutrality to charge for upgrading services that depend on fast and reliable delivery, such as streaming high-definition video or relaying data from heart monitors. If this proves wrong, the government should step in. But it should not burden the Internet with preemptive regulation.

The pro-regulatory side has worked very hard to create a sense of urgency on this issue, but in fact the urgency is in the other direction: if we regulate the Internet, it will be very difficult to un-regulate it. But if we do nothing this term and it leads to problems, Congress can easily come back and pass new regulations next year. If we’re not sure about the best policy, the prudent thing to do is to wait and see how things develop.

  • http://www.jerrybrito.com Jerry Brito

    It may well be the case that the FCC’s study was flawed and that 60% of consumers don’t have four broadband options. But where is the study that shows that “the vast majority have two or fewer”? The negation of one does not necessarily mean the other. Also, I keep reading that we have an uncompetitive duopoly, but I’ve never seen Mike Masnick or anyone else provide hard data to suggest that most broadband customers couldn’t simply switch to another broadband provider if they didn’t like the service they were getting. The duopoly charge implies that even though there are two choices, they’re not competing with each other, and if one blocks Vonage, the other would, too, which suggests some kind of crazy collusion. I just don’t see it, and I don’t think I can accept the notion that the broadband market is uncompetitive based solely on anecdotal evidence.

  • http://www.techliberation.com/ Tim

    Jerry: I’ve lived half a dozen different places in the last five years, and I’ve always had–at most–two options: DSL from my local Baby Bell and broadband from my cable monopoly. It’s possible there are parts of the country where that’s changing, but I think it’s safe to say that that situation holds for the vast majority of households. Who else is providing broadband service to substantial numbers of Americans? WiMAX and broadband over power lines may be important in the future, but AFAIK, they haven’t been deployed in volume yet.

  • http://jerrybrito.com Jerry Brito

    It may well be the case that the FCC’s study was flawed and that 60% of consumers don’t have four broadband options. But where is the study that shows that “the vast majority have two or fewer”? The negation of one does not necessarily mean the other. Also, I keep reading that we have an uncompetitive duopoly, but I’ve never seen Mike Masnick or anyone else provide hard data to suggest that most broadband customers couldn’t simply switch to another broadband provider if they didn’t like the service they were getting. The duopoly charge implies that even though there are two choices, they’re not competing with each other, and if one blocks Vonage, the other would, too, which suggests some kind of crazy collusion. I just don’t see it, and I don’t think I can accept the notion that the broadband market is uncompetitive based solely on anecdotal evidence.

  • http://www.techliberation.com/ Tim

    Jerry: I’ve lived half a dozen different places in the last five years, and I’ve always had–at most–two options: DSL from my local Baby Bell and broadband from my cable monopoly. It’s possible there are parts of the country where that’s changing, but I think it’s safe to say that that situation holds for the vast majority of households. Who else is providing broadband service to substantial numbers of Americans? WiMAX and broadband over power lines may be important in the future, but AFAIK, they haven’t been deployed in volume yet.

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

    Tim:

    There are a lot more than two options in the Phoenix metropolitan area, using the net neutrality bill definition of broadband (> 200 Kbps Internet service in at least one direction)–Qwest DSL, Cox Cable, Sprint Broadband (point-to-point wireless), Sprint EVDO, Alltel EVDO, Verizon EVDO, Cingular EVDO, HughesNet satellite, City of Tempe municipal WiFi, etc. You sure there are only two options in your area?

  • http://www.techliberation.com/ Tim

    I don’t think that EVDO service really qualifies, because while it might be >200 Kbps, it’s nowhere close to competitive with the 3 Mbps cable service I’ve got, to say nothing of the 15 Mbps fiber service that AT&T wants to roll out in my neighborhood in the next couple of years.

    HughesNet is also underwhelming, with top speads of 700 kbps up and 128 kbps down for $60/month.

    Sprint doesn’t appear to offer its point-to-point wireless service here in St. Louis yet. Do you have any data on how many households they serve?

    Still, these services will doubtless expand and improve over time. I agree with Jerry that actual statistics would be helpful to the debate.

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

    Tim:

    There are a lot more than two options in the Phoenix metropolitan area, using the net neutrality bill definition of broadband (> 200 Kbps Internet service in at least one direction)–Qwest DSL, Cox Cable, Sprint Broadband (point-to-point wireless), Sprint EVDO, Alltel EVDO, Verizon EVDO, Cingular EVDO, HughesNet satellite, City of Tempe municipal WiFi, etc. You sure there are only two options in your area?

  • http://www.techliberation.com/ Tim

    I don’t think that EVDO service really qualifies, because while it might be >200 Kbps, it’s nowhere close to competitive with the 3 Mbps cable service I’ve got, to say nothing of the 15 Mbps fiber service that AT&T; wants to roll out in my neighborhood in the next couple of years.

    HughesNet is also underwhelming, with top speads of 700 kbps up and 128 kbps down for $60/month.

    Sprint doesn’t appear to offer its point-to-point wireless service here in St. Louis yet. Do you have any data on how many households they serve?

    Still, these services will doubtless expand and improve over time. I agree with Jerry that actual statistics would be helpful to the debate.

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

    Sprint Broadband was the acquired People’s Choice TV MMDS service (first used for TV in a venture that was not successful, then transformed into an Internet service that was relatively successful). MCI and Sprint both picked up a bunch of MMDS providers across the country in 1999, but Sprint stopped expanding the service to new markets in 2001. I’m not sure what the current customer base is, but Sprint still sells the service in Phoenix and other markets not clear on the website: http://www.sprintbroadband.com/

    Note that what you mean by “I don’t think EVDO really qualifies” is that you prefer a non-mobile residential broadband service with much higher bandwidth for your Internet usage. EVDO is great for network support techs who are on-call and need to use SSH sessions to provide support, and it’s fine for web browsing (Verizon offers 700 Kbps download). You don’t mean “EVDO isn’t really broadband,” do you? It sure ain’t dialup! If it’s not broadband, then you should argue against the definition of broadband as > 200 Kbps Internet in one direction as a bad definition. At least you aren’t in the inconsistent position of those backing the bills that say this, while simultaneously saying that methods which meet the definition don’t count as broadband. (If it’s not broadband, why regulate it as broadband?)

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

    Sprint Broadband was the acquired People’s Choice TV MMDS service (first used for TV in a venture that was not successful, then transformed into an Internet service that was relatively successful). MCI and Sprint both picked up a bunch of MMDS providers across the country in 1999, but Sprint stopped expanding the service to new markets in 2001. I’m not sure what the current customer base is, but Sprint still sells the service in Phoenix and other markets not clear on the website: http://www.sprintbroadband.com/

    Note that what you mean by “I don’t think EVDO really qualifies” is that you prefer a non-mobile residential broadband service with much higher bandwidth for your Internet usage. EVDO is great for network support techs who are on-call and need to use SSH sessions to provide support, and it’s fine for web browsing (Verizon offers 700 Kbps download). You don’t mean “EVDO isn’t really broadband,” do you? It sure ain’t dialup! If it’s not broadband, then you should argue against the definition of broadband as > 200 Kbps Internet in one direction as a bad definition. At least you aren’t in the inconsistent position of those backing the bills that say this, while simultaneously saying that methods which meet the definition don’t count as broadband. (If it’s not broadband, why regulate it as broadband?)

  • http://www.jerrybrito.com Jerry Brito

    Tim, where I live I have the choice of three boradband options, DSL, Comcast Cable, and RCN cable, which is owned by the power company. My point is just that, that we only have anecdotal evidence to go on, and that’s hardly what should drive public policy decisions. More importantly, and this was my larger point, even if there are just two providers in most of the U.S., where is the evidence that this represents a lack of competition? Calling it a “duopoly” implies collusion, and I don’t think there’s evidence for that. If collusion wasn’t the standard, then we could say we have uncompetitive dupolies in burger joints, colas, or supermarket chains. My point is that the number of dominant providers is not by itself a measure of competition.

  • http://jerrybrito.com Jerry Brito

    Tim, where I live I have the choice of three boradband options, DSL, Comcast Cable, and RCN cable, which is owned by the power company. My point is just that, that we only have anecdotal evidence to go on, and that’s hardly what should drive public policy decisions. More importantly, and this was my larger point, even if there are just two providers in most of the U.S., where is the evidence that this represents a lack of competition? Calling it a “duopoly” implies collusion, and I don’t think there’s evidence for that. If collusion wasn’t the standard, then we could say we have uncompetitive dupolies in burger joints, colas, or supermarket chains. My point is that the number of dominant providers is not by itself a measure of competition.

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