You should feel very lucky to live in a place where the broadband internet market is highly competitive.

Where I live, I cannot get DSL or powerline internet. My only choices are one cable company, wireless phone and satellite. Wireless phone and satellite are not competing in the same market as cable, however, so even if I could use these (and I can’t, really–I barely get cellular reception at all and as a renter I wouldn’t be able to install my own satellite dish with a view in the appropriate direction) they would cost over twice as much for the cheapest offerings. Therefore I am at the mercy of a cable company with a service agreement which is frankly abusive as written, and which they do not even feel constrained to follow their end of, if I want any kind of broadband service at all.

My parents were in an even worse situation until recently–there was no provider available to them in the basic broadband tier (cable, DSL, powerline). Now they finally have at least cable available.

When I say wireless phone and satellite are in a different market, I really mean that. Satellite providers are the providers of last resort, they have a unique form of infrasructure which is high-priced but allows them to have a very broad reach. However, it doesn’t give them remotely the capacity to compete as a major player in all of the areas they can reach. Therefore, they have to either raise prices out of the reach of most interested consumers, artificially restrict their service area, or introduce rationing or lotteries. Which would you do?

As for cellular internet, its selling point is more-or-less ubiquitous portability, and the markup for that is immense. It’s really a different service just as broadband internet is a different service from dialup internet.

Net neutrality is this:

If I pay to connect to the Net with a certain quality of service, and you pay to connect with that or greater quality of service, then we can communicate at that level.

That’s all. Its up to the ISPs to make sure they interoperate so that that happens.

Net Neutrality is NOT asking for the internet for free.

Net Neutrality is NOT saying that one shouldn’t pay more money for high quality of service. We always have, and we always will.Which is so simple one has to wonder why pundits keep on trying to frame it as something far different from what they are actually saying.

Net neutrality is this:

If I pay to connect to the Net with a certain quality of service, and you pay to connect with that or greater quality of service, then we can communicate at that level.

That’s all. Its up to the ISPs to make sure they interoperate so that that happens. Net Neutrality is NOT asking for the internet for free. Net Neutrality is NOT saying that one shouldn’t pay more money for high quality of service. We always have, and we always will.

Which is so simple one has to wonder why pundits keep on trying to frame it as something far different from what they are actually saying.

As Ed Felten writes, if SBC wants to charge Google, rather than vice versa, this is ipso facto evidence that SBC has greater market power than Google. No network neutrality critic has ever rebutted Felten’s analysis on this point; they find it much more convenient to repeat that broadband markets are Smithian. Perhaps if you repeat it enough times, it will become true.

Of course, as the others point out, the telcos could be stupid. Very possible. But then why all the worry? Stupid companies tend to be very easy to beat in the marketplace. That’s a basic contradiction that pops up in regulation arguments. How can the same firm be too stupid to look out for its own interests, but at the same time be a cunning predator who will escape normal market constraints? Possible I suppose, but I’d guess very rare.

Last year I read a delightful anecdote in a book. Two men had discovered a more efficient method of storing frozen vegetables. As a result, they were able to lower the packaging costs significantly … which magically resulted in a lower retail price for frozen vegetables that used the new technology.

How did their competitors react?

How do you think?

They immediately lowered their prices. A price war followed. This continued for a while until a board member at the start up asked one of the technical wizards how much the competition was willing to lower its prices.

What do you think the technical wizard said in response? He said, “They can’t lower them much more because it’s not rational.”

Businesses, which are run by people, are not always rational. I think my mother taught me a valuable lesson, when she said that I would live a happier life as soon as I lost the foolish expectation that humans had a penchant for the rational. I’ve certainly made my share of mistakes. I started a business at a young age, when I had absolutely no business acumen. Rational? Nope. Did I have the common sense to seek out advice from learned professionals? Don’t bet on it. Did I fail? Of course.

There’s another great anecdote I should relate. AT&T; spent a few hundred million dollars trying to get into the computer business. So did XEROX. Did these companies have the money to get into the computer business? Yes. Did they have a brand name that meant “computers” to the market?No. Did they waste something like a combined $1 billion? Yes.

I suppose if you had asked anyone at AT&T; or XEROX if wasting a billion dollars was their stated intent, they might have said no. It’s not common sense to waste a billion dollars.

Of course this little argument in fantasy doesn’t matter. The billion was spent and both intiatives failed.

Last year I read a delightful anecdote in a book. Two men had discovered a more efficient method of storing frozen vegetables. As a result, they were able to lower the packaging costs significantly … which magically resulted in a lower retail price for frozen vegetables that used the new technology.

How did their competitors react?

How do you think?

They immediately lowered their prices. A price war followed. This continued for a while until a board member at the start up asked one of the technical wizards how much the competition was willing to lower its prices.

What do you think the technical wizard said in response? He said, “They can’t lower them much more because it’s not rational.”

Businesses, which are run by people, are not always rational. I think my mother taught me a valuable lesson, when she said that I would live a happier life as soon as I lost the foolish expectation that humans had a penchant for the rational. I’ve certainly made my share of mistakes. I started a business at a young age, when I had absolutely no business acumen. Rational? Nope. Did I have the common sense to seek out advice from learned professionals? Don’t bet on it. Did I fail? Of course.

There’s another great anecdote I should relate. AT&T spent a few hundred million dollars trying to get into the computer business. So did XEROX. Did these companies have the money to get into the computer business? Yes. Did they have a brand name that meant “computers” to the market?No. Did they waste something like a combined $1 billion? Yes.

I suppose if you had asked anyone at AT&T or XEROX if wasting a billion dollars was their stated intent, they might have said no. It’s not common sense to waste a billion dollars.

Of course this little argument in fantasy doesn’t matter. The billion was spent and both intiatives failed.

That’s a nice theory, but I’m afraid history suggests that the large telcos have often acted “stupid”.

Just for example, consider ISDN.

That’s a nice theory, but I’m afraid history suggests that the large telcos have often acted “stupid”.

Just for example, consider ISDN.