What is Net Neutrality?

Folks interested in the operation of the inter-wobble are probably aware of the concept of NET NEUTRALITY.

For the rest of us, here is the gist: Internet Service Providers (ISPs) have the capacity to restrict their subscribers’ access to specific content and websites. For example http://www.CNN.com might load at the normal speed, but http://www.socialistdaily.com is made as slow as a wet week.

Advocates of Net Neutrality want such activities to be illegal.

In the USA, this issue has been quietly simmering for a number of years. But this week it returned to the headlines because the Federal Communications Commission (FCC) lost a court case where it tried to prevent Comcast (ISP) from restricting its subscribers’ access to the BitTorrent file sharing website.

Comcast claim that subscribers using BitTorrent to download large files such as movies, hog bandwidth and reduce download speeds for other subscribers. Cynics believe that Comcast is restricting access to BitTorrent in order to force subscribers onto its pay-per-view movie service.

TTTE believes this is an disturbing development because it may open the door for ISPs to solicit payment from websites to go to the front of the queue. This would be a coup for the existing media conglomerates like CNN and TTTE Corp, but has considerable implications for the small fish. Imagine a new search engine (like google) trying to eke out an existence in 1999 when its media conglomerate-owned competitor loaded 20 times faster because the Comcast was in their pocket.

But what interests me most about this issue is how the government regulation fear campaign goes into overdrive to protect monopolies and enshrine anti-competitive behaviour. Introducing John McCain’s Internet Freedom Act.

According to McCain, net neutrality is for sissies. The Internet Freedom Act “will keep the internet free from government control and regulation… (and) will allow for continued innovation”. Priceless. And the vast inter-wobble is full of people who agree with him (for example here and here), where I found this phrase:

(under net neutrality legislation) the Internet would then either remain crippled or be “rescued” with taxpayer subsidies, which would inevitably bring government control and politicization along with government ownership.

I think everybody can agree that we don’t want government to control the internet, or for the internet to require rescue with taxpayer subsidies. But is that at risk here?

I think that a law to ensure net neutrality would require fewer legislative words than this post contains, cost almost nothing to enforce and allow the internet to continue doing what it does – albeit with slightly lower profits for the oligopoly of ISPs. For the record, the big three have carved up the Bay Area market nicely, your correspondent has a choice of one.

Many Americans seem to lack an understanding of how monopolies and oligopolies increase prices and decrease service. One of the best things government can do is level the playing field – including by legislating against anti-competitive behaviour. Competition lowers prices and improves service.

I was shocked when I arrived in the USA, to find that an iPhone can only be purchased through AT&T. Whereas in Australia, you can get an iPhone with Optus, Telstra, 3Mobile, Vodaphone and probably others. Here are the price comparisons:

AT&T iPhone 3G 8G – 24 month plan (the cheapest plan they have)

$99 upfront for the device, plus a $36 activation fee

$30/month unlimited data

$40/month – 450 minutes of calls

$5/month 200 text messages

+ tax (about 10%)  $148.5 upfront, $82/month

Optus iPhone 3G 8G – 24 month plan (not the cheapest plan they have)

$0 upfront

$59/month includes calls, text messages and 700mb of data

Zero upfront, more calls, less data, shirtloads cheaper.

Why do you think that is?