Next-Generation Internet Not Guaranteed

by on June 23, 2006 · 4 comments

As Congress draws closer to passing significant telecommunications reforms, it’s clear that a larger issue serves as a backdrop to the hot topics of net neutrality, cable franchise reform, and municipal WiFi. That is, will the Internet be treated like telecommunications, or the other way around?

New technologies have caused a convergence in the communications sector so that the phone company can also be the cable company and vice versa. Indeed, an Internet company can also provide cable and phone services. EBay bought Skype, an Internet phone company that offers free calling, Microsoft is moving into the IPTV space, and Google offers voice services integrated with features like instant messaging.


All this activity is great news for consumers, as it increases choice and pushes down prices. There used to be a time when a long-distance call was something one had to be careful about because it was so expensive, but now most of us don’t give it a second thought. Cable is undergoing a similar change and, if things go right, prices will continue to drop for broadband even as speeds continue to increase.

Consider that prices for DSL service have lowered from an average of about US$30 to $40 just a couple of years ago to $17.95 today. But progress is not guaranteed and the hottest issues today–such as net neutrality, cable franchise reform, and muni WiFi–all come down to a key question: What is the proper role of government?

In the telecommunications space, the government traditionally assumed an enormous role–not only in arbitrating disputes, but also in setting prices, determining market entrants, and governing internal business procedures such as how many minutes are acceptable for a consumer to be on hold waiting for service. That type of micromanagement was a disaster. Yes, the telecoms still made money for a period under that regime, but the loss of flexibility impaired future investment, harming consumers and stifling innovation. The Internet is a different story.

The government did have a role in initially creating the Internet, but after its creation, regulators took a “hands off” approach. This freedom has created gigantic benefits not only for Americans, but also for individuals all over the globe. Anyone who questions this reality should consider what products from a company like Microsoft or Google would have looked like if the government had tried to micromanage the marketplace as it did in the telecom space. Instead of the desktop computer, Americans could have been saddled with Minitel-type terminals like those the French government concocted.

Read more here.

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

    I’m getting sick of this crap.

    It’s fine to argue against net neutrality rules (I’m not for them, as written, either), but why can’t anyone on this site seem to argue honestly about it.

    This article is just flat out awful. I like how you slip in that muni-WiFi will destroy the internet. Have you looked at any of the muni-WiFi deals? Almost none of them are (as you claim) taxpayer supported. In fact, almost all of them are THE SAME types of deals that the telcos got: they get to put in private equipment thanks to gov’t granted rights of way, and then they can build a for-profit business.

    Also, your claims about dropping DSL prices is misleading as well. First off, the drop is *promotional* pricing — not permanent. After the promotional period it jumps up. Way up. Also, all of the DSL lines require unnecessary bundles. Show me the bill of someone only paying $18 to their telco and getting DSL. You can’t because it doesn’t exist.

    Finally, the claim that “The Internet, as we know it, will be over” is just flat out silly. It would be just as easy to claim that the second the telcos implement tiers “the internet, as we know it, will be over.” Both statements are false. Both make you look like you’re purposely trying to mislead.

    Purposely misleading people doesn’t make your argument stronger. It makes it look like you have no real argument.

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

    I’m getting sick of this crap.

    It’s fine to argue against net neutrality rules (I’m not for them, as written, either), but why can’t anyone on this site seem to argue honestly about it.

    This article is just flat out awful. I like how you slip in that muni-WiFi will destroy the internet. Have you looked at any of the muni-WiFi deals? Almost none of them are (as you claim) taxpayer supported. In fact, almost all of them are THE SAME types of deals that the telcos got: they get to put in private equipment thanks to gov’t granted rights of way, and then they can build a for-profit business.

    Also, your claims about dropping DSL prices is misleading as well. First off, the drop is *promotional* pricing — not permanent. After the promotional period it jumps up. Way up. Also, all of the DSL lines require unnecessary bundles. Show me the bill of someone only paying $18 to their telco and getting DSL. You can’t because it doesn’t exist.

    Finally, the claim that “The Internet, as we know it, will be over” is just flat out silly. It would be just as easy to claim that the second the telcos implement tiers “the internet, as we know it, will be over.” Both statements are false. Both make you look like you’re purposely trying to mislead.

    Purposely misleading people doesn’t make your argument stronger. It makes it look like you have no real argument.

  • Steve R.

    The Washington Post Today (7/7/2006) has an article titled “Cingular Accused of Deceiving Customers” by Gene Johnson of the Associated Press. This article, I believe, has significant implications for how the telecom industry could “manage” the internet.

    In introductory paragraph to the article states: “Cingular Wireless Corp. promised to provide uninterrupted service to AT&T Wireless customers when it acquired that company in 2004, but instead it nickel-and-dimed them and degraded their reception in an effort to persuade them to sign new contracts, a federal lawsuit said Thursday.”

    While Cingular may be only one company and the Post is only reporting an allegation, businesses have been know to use deceptive techniques to manipulate the market place. (Enron and the California so-called energy crisis.) The simple fact that this allegation has surfaced is something to consider.

    The telecom industry, despite the potential for a public relations fiasco, may attempt to manipulate the internet to create a bogus crises to obtain favorable legislation to eliminate net neutrality as a means of furthering their profits.

  • http://www2.blogger.com/profile/14380731108416527657 Steve R.

    The Washington Post Today (7/7/2006) has an article titled “Cingular Accused of Deceiving Customers” by Gene Johnson of the Associated Press. This article, I believe, has significant implications for how the telecom industry could “manage” the internet.

    In introductory paragraph to the article states: “Cingular Wireless Corp. promised to provide uninterrupted service to AT&T; Wireless customers when it acquired that company in 2004, but instead it nickel-and-dimed them and degraded their reception in an effort to persuade them to sign new contracts, a federal lawsuit said Thursday.”

    While Cingular may be only one company and the Post is only reporting an allegation, businesses have been know to use deceptive techniques to manipulate the market place. (Enron and the California so-called energy crisis.) The simple fact that this allegation has surfaced is something to consider.

    The telecom industry, despite the potential for a public relations fiasco, may attempt to manipulate the internet to create a bogus crises to obtain favorable legislation to eliminate net neutrality as a means of furthering their profits.

Previous post:

Next post: