Gyroscopic Investing

On the subject of net neutrality, I often feel very alone among tech-savvy members of my generation because I hold a very different position from most, it seems: I think it's a bunch of fearmongering worry about nothing.

For those not in the know, "net neutrality" is the position that ISPs should be regulated like common carriers, which says that they have a legal obligation to transport any lawful content that their users want transported. In some cases, the ISPs don't want to do this, particularly in the cases of really heavy users who download 500GB a month or more (mostly anime and porn, in my experience). ISPs right now degrade these people's performance by reducing their bandwidth or privileging packets that don't resemble the heavy traffic (e.g. giving normal http traffic priority over bittorrent).

People in favor of "net neutrality" make two distinct arguments:
1. This selective reduction in quality of service is outrageous
2. #1 is a slippery slope to a tiered, metered internet where you pay per website and the ISPs ruthlessly control everything like cable TV where you have to pay hundreds a month for the things you really want

My own personal opinion is that #1 isn't really a problem; the ISPs invested their own money and resources to create the network, so they should have the right to do what they want with it. On the other hand, I would have no problem with the government enforcing "net neutrality" on any ISP that used infrastructure that the government owns and leases to them.

Regarding #2, it's a slippery slope argument that I don't find very compelling. The feared outcome has never actually happened, and in the 10+ years I've been hearing about this worry, it's never even come closer. And the existence of market competition ensures that any ISP that tried it would get whacked in the market. The feared outcome is so scary to most that any ISP that tried it would be pilloried, and other ISPs would gleefully advertise their alternative services and get rich as they received a floor of new customers. And in the extremely unlikely event that all ISPs colluded to do this for some stupid reason, not only would anti-trust laws come into play, but there would be a huge gold rush as silicon valley entrepreneurs rushed to start new ISPs that were actually good to their customers.

The entire argument for net neutrality only makes sense to me in a world where there was single monopoly ISP. But I simply don't see how the market couldn't prevent the doomsday outcome that net neutrality advocates constantly argue against.

I think this falls into the typical monopoly regulation stuff that libertarians and "statists" can never seem to agree on.

I fall into a camp that says when you have monopolies develop in areas like this, it usually is as a result of self-fulfilling "monopolistic control" by a $hitty provider (my ISP is hore-crap, mostly).

Your options are extremely limited in this area, for pretty understood reasons... mergers/acuisitions into monopolies were allowed to occur (we used to have two decent IS/cable providers, then they "merged" into one $hitty monopoly).

Doesn't much of Europe have a public internet model, where internet is essentially a public resource?  Not saying this is necessarily better, but unlike Austrians, I see private monopolies as 1) possible (some don't think it's even possible because they're "so inefficient"), and 2) decidedly NOT simply the result of "consistently being the best service/product provider," but instead merger-after-merger.

I am sympathetic to the "monopolies must be regulated" position but become more skeptical the less of a monopoly the market appears to be and the less of a monopoly the nature of the industry can support. It makes much more sense to me that a utility company that runs underground pipes is more of a "natural" monopoly (even though I would still dispute this in other contexts ) than an internet company that runs underground wires, because it can be in competition with internet companies that deliver service over phone lines, over wireless cell towers, over satellites, and over long-distance wi-fi even if the local government didn't let anyone else run underground wires. So I simply don't see how the ISP industry is sufficiently monopolistic to require such regulation.

Even in your case, moda, are you saying you literally only have one ISP, or only one ISP that offers you the service you want at the price you're willing to pay? Those are very different propositions.

I don't think I've lived in any place where there was literally only one ISP. Usually there were 0-3 high-speed cable ISPs, 1-3 ISPs that offered DSL and dial-up, 0-1 ISP that offered Wi-Max, and cellular and satellite service are available almost anywhere.

MangoMan wrote: PS, your experience with multiple ISPs is the exception rather than the rule. Most of the country has only one [if even!] option for broadband internet unless you include satellite, which is both expensive and unreliable.

Why do you think multiple ISPs are so rare in most of the country?

MangoMan wrote: PS, your experience with multiple ISPs is the exception rather than the rule. Most of the country has only one [if even!] option for broadband internet unless you include satellite, which is both expensive and unreliable.

It would be interesting to break this down by political orientation. The "blue state"-type places I've lived in have universally had worse ISP options than the "red state"-type places.

That said, I don't think you're right. DSL is broadband, and it uses the phone lines. Anyplace where there's telephone service (i.e everywhere) should have at least one DSL provider. 3mbps DSL is surprisingly usable for pretty much everything except quickly downloading Linux ISOs. I can tell you from personal experience that you can even have multiple people simultaneously streaming Netflix on a 3 down connection without any trouble.

MangoMan wrote:

Pointedstick wrote:

MangoMan wrote: PS, your experience with multiple ISPs is the exception rather than the rule. Most of the country has only one [if even!] option for broadband internet unless you include satellite, which is both expensive and unreliable.

It would be interesting to break this down by political orientation. The "blue state"-type places I've lived in have universally had worse ISP options than the "red state"-type places.

That said, I don't think you're right. DSL is broadband, and it uses the phone lines. Anyplace where there's telephone service (i.e everywhere) should have at least one DSL provider. 3mbps DSL is surprisingly usable for pretty much everything except quickly downloading Linux ISOs. I can tell you from personal experience that you can even have multiple people simultaneously streaming Netflix on a 3 down connection without any trouble.

Yes, that doesn't mean there will necessarily also be a cable provider. Rural areas in particular make laying cable cost prohibitive. If there is no competition, the phone co can charge whatever outrageous fees they want. A buddy of mine who lives in rural IL told me there was no DSL, only satellite. And it sucks. Maybe he is wrong?

At my house in rural Texas there is no DSL availability. There is only satellite, which has terrible ping times, and marginally usable Sprint wireless service, which relies to some extent on my wireless amplifier. The Sprint service seems to have gotten better recently but I'm not certain this is a lasting improvement because there have been prior improvements that didn't last.

I could get T-1 for only $270/month for a three-year contract. 

MangoMan wrote:

Kshartle wrote:

MangoMan wrote: PS, your experience with multiple ISPs is the exception rather than the rule. Most of the country has only one [if even!] option for broadband internet unless you include satellite, which is both expensive and unreliable.

Why do you think multiple ISPs are so rare in most of the country?

Cost barrier to entry would be my guess. I know that in the town I live in [we luckily have 3 choices] the potential ISP must obtain a franchise from the town government and then lay miles of fiber optic cable at an enormous expense. This only makes sense financially in densely populated areas where the payback is likely to be worth the effort.

So it's the inability to make a profit that prevents multiple ISPs everywhere. This means that the value the public would get (expressed by revenue) is less than the value of inputs (costs incurred by the provider). If more providers were required by law we would be poorer for it because the output would be less than the input.

I might not understand the concept though, this is a completely unknown field to me.

Rural internet is indeed a problem. But it's orthogonal to the "net neutrality" discussion. Rural internet is a tough nut to crack because running wires to people's houses is incredibly expensive, and no act of government could end that; only socialize the cost and prevent technological innovation by removing the incentive to find a cheaper way. In the end, the rural internet problem will be solved by technology, as we're already seeing. In the past, satellite wasn't an option... then it was. And then cellular internet wasn't an option... then it was. I have a high degree of confidence that the natural progression of technology in an at least reasonably free market will deliver higher speeds and greater bandwidth to rural people in the future is it already has in the past and present.

Sometimes I worry about (2), the slope, but not because anyone made a compelling argument. Rather, because it's there. :-) I'm a worrier, and the possibility is there.

As for (1), we use Clear WiMax internet and are subject to throttling* even though we don't download that much these days. I don't really have a problem with the throttling of heavy users, but I'm anxious to switch providers to increase speed.

*throttling: Whether or not I"m using the term right, I mean this:

ISPs right now degrade these people's performance by reducing their bandwidth or privileging packets that don't resemble the heavy traffic (e.g. giving normal http traffic priority over bittorrent).

MangoMan wrote: Now that I think about it PS, the reason there is no DSL in rural areas is because the signal degrades significantly with increasing distance from the source.

Oh duh, yeah. DSL will probably be available fur rural town dwellers, but I guess if you're truly out in the sticks, then dial-up, cellular data, or satellite really are your only options.

Is there any such thing, really, as a true "monopoly?"  Do Xcel energy really have monopoly on power (in MN), if I can use a wood-burning stove, solar panels, wind-mill etc?

Pointedstick wrote:

MangoMan wrote: Now that I think about it PS, the reason there is no DSL in rural areas is because the signal degrades significantly with increasing distance from the source.

Oh duh, yeah. DSL will probably be available fur rural town dwellers, but I guess if you're truly out in the sticks, then dial-up, cellular data, or satellite really are your only options.

We can't even use dial-up, because the phone lines are so crappy that the modem can't connect. Or at least that's how it was 10 years ago when I last tried that.

However, we might still be able to get ISDN, for a big, big 128 kb both ways. Whoop-de-do!

(2) hasn't happened yet because the legality is contested.  ISPs have publicly stated an intention to separately charge, say, Netflix.

In theory, contract law should solve this problem.  Netflix signs a contract with their ISP X, which might charge them some dollars per MB or whatever.  The customer signs a contract with their ISP Y, which gives them "unlimited" downloads or whatever.  ISP X and ISP Y both benefit from two-way traffic flow (network effect of the Internet in general).  They sign a peering agreement to freely exchange information.  To prevent undue burden, the peering agreement typically includes a separate agreement for additional payment if the traffic is very lopsided.

Nobody has yet explained to me how Comcast can refuse Netflix's data under their current peering agreements.  Maybe they can't yet, and they intend to modify their peering agreements.  In which case, we worry about bargaining power and government-granted monopolies.

In other words, it seems to me that, as usual, the role of the government is to make sure contracts happen freely.  It's one thing to say that, if Comcast starts blocking Netflix, then customers will simply go to a different provider.  But as discussed above, there isn't always another option.  When there is another option, they are few in number (e.g. Comcast and AT&T... a duopoly).  Moreover, these companies provide public goods -- they were granted (sometimes exclusive) use of public rights of way under the understanding that they would be regulated.

The above is off-the-cuff and I admit I haven't analyzed everything in extreme depth.  I do not think we should allow ISPs to extort additional payments from the end-providers.  One alternative is that Netflix, Google, Microsoft, etc. all get together and agree not to make these payments.  Not sure if they can do that legally (probably not).

And here's where it gets into philosophy. I'm hearing a lot of "we need more laws to prevent the adverse and unexpected consequences of previous laws" (e.g. government-granted monopolies, public rights-of-way, barriers to entry in the form of fees and permits, anti-trust law preventing 'defensive' agreements). My first impression is that it would be better to get rid of the laws that caused the adverse consequences in the first place, because otherwise we will go down an endless rabbit hole of passing more laws to repair the flaws of previous laws, and my belief is that in general, each law creates more problems than it solves rather than the reverse, so going down this path will result in an ever-increasing number of unanticipated additional problems.

Pointedstick wrote: And here's where it gets into philosophy. I'm hearing a lot of "we need more laws to prevent the adverse and unexpected consequences of previous laws" (e.g. government-granted monopolies, public rights-of-way, barriers to entry in the form of fees and permits, anti-trust law preventing 'defensive' agreements). My first impression is that it would be better to get rid of the laws that caused the adverse consequences in the first place, because otherwise we will go down an endless rabbit hole of passing more laws to repair the flaws of previous laws, and my belief is that in general, each law creates more problems than it solves rather than the reverse, so going down this path will result in an ever-increasing number of unanticipated additional problems.

Or opportunities, if you have the authority to decide which laws take precedence in any given case.
(Note to the sarcasm-impaired: ).

Pointedstick wrote: And here's where it gets into philosophy. I'm hearing a lot of "we need more laws to prevent the adverse and unexpected consequences of previous laws" (e.g. government-granted monopolies, public rights-of-way, barriers to entry in the form of fees and permits, anti-trust law preventing 'defensive' agreements). My first impression is that it would be better to get rid of the laws that caused the adverse consequences in the first place, because otherwise we will go down an endless rabbit hole of passing more laws to repair the flaws of previous laws, and my belief is that in general, each law creates more problems than it solves rather than the reverse, so going down this path will result in an ever-increasing number of unanticipated additional problems.

Which is orthogonal to the "net neutrality" discussion

This is the problem of having a forum full of highly intelligent people able to discuss issues like rational adults: we often get to the core of an issue far before the discussion devolves into insults and penis size comparisons. And once we reach the philosophical basis for a disagreement of opinion, the discussion naturally shifts to that and away from the original subject.

Of all the problems your forum can have, I think it's one of the less-bad ones.

Pointedstick wrote: ...
we often get to the core of an issue far before the discussion devolves into insults and penis size comparisons.

I have huge bandwidth.

Pointedstick wrote: This is the problem of having a forum full of highly intelligent people able to discuss issues like rational adults: we often get to the core of an issue far before the discussion devolves into insults and penis size comparisons. And once we reach the philosophical basis for a disagreement of opinion, the discussion naturally shifts to that and away from the original subject.

Of all the problems your forum can have, I think it's one of the less-bad ones.

Well when the "basis for disagreement of opinion" lies in whether we truly exist or not, it's hard to argue penis-size.

But I digress.  I believe we were discussing the nature of rights, or MR vs Austrianism... let's get back to that.

The only way #2 would still work in a world where Net Neutrality is illegal is if all the Internet Service Providers got together in a cartel (a la OPEC) and strictly enforced access controls to various websites and domains all across the board.  Otherwise, free markets will triumph.

Pointedstick wrote: This is the problem of having a forum full of highly intelligent people able to discuss issues like rational adults: we often get to the core of an issue far before the discussion devolves into insults and penis size comparisons. And once we reach the philosophical basis for a disagreement of opinion, the discussion naturally shifts to that and away from the original subject.

This is one (just one) of the gripes of my participation in threads....that it always gets away from the original subject and into philosophical ones. It's not that I'm hell bent on discussing the philosophy of rights, truth, non-violence etc. It's just that these are the fundamental principles at the core of all the issues. Cutting through quickly gets back to the same stuff......regardless of the original intent of the subject.

I try to stay on topic but dog gone it's just so obvious when the entire problem is the result of some humans using force against others rather than negotiation and win-win. That's all a consequence of ignoring the rights of self-ownership and all that it entails.

The solutions to the problems are obvious, put down the guns. It's more entertaining though to imagine different laws you can create to solve problems even though that doesn't work.

Kshartle wrote:

Pointedstick wrote: This is the problem of having a forum full of highly intelligent people able to discuss issues like rational adults: we often get to the core of an issue far before the discussion devolves into insults and penis size comparisons. And once we reach the philosophical basis for a disagreement of opinion, the discussion naturally shifts to that and away from the original subject.

This is one (just one) of the gripes of my participation in threads....that it always gets away from the original subject and into philosophical ones. It's not that I'm hell bent on discussing the philosophy of rights, truth, non-violence etc. It's just that these are the fundamental principles at the core of all the issues. Cutting through quickly gets back to the same stuff......regardless of the original intent of the subject.

I try to stay on topic but dog gone it's just so obvious when the entire problem is the result of some humans using force against others rather than negotiation and win-win. That's all a consequence of ignoring the rights of self-ownership and all that it entails.

The solutions to the problems are obvious, put down the guns. It's more entertaining though to imagine different laws you can create to solve problems even though that doesn't work.

Kumbaya... Laws don't "work."  Just cooperate.

moda0306 wrote:

Kshartle wrote:

Pointedstick wrote: This is the problem of having a forum full of highly intelligent people able to discuss issues like rational adults: we often get to the core of an issue far before the discussion devolves into insults and penis size comparisons. And once we reach the philosophical basis for a disagreement of opinion, the discussion naturally shifts to that and away from the original subject.

This is one (just one) of the gripes of my participation in threads....that it always gets away from the original subject and into philosophical ones. It's not that I'm hell bent on discussing the philosophy of rights, truth, non-violence etc. It's just that these are the fundamental principles at the core of all the issues. Cutting through quickly gets back to the same stuff......regardless of the original intent of the subject.

I try to stay on topic but dog gone it's just so obvious when the entire problem is the result of some humans using force against others rather than negotiation and win-win. That's all a consequence of ignoring the rights of self-ownership and all that it entails.

The solutions to the problems are obvious, put down the guns. It's more entertaining though to imagine different laws you can create to solve problems even though that doesn't work.

Kumbaya... Laws don't "work."  Just cooperate.

Now we are getting somewhere!

Moda....you might want to get your eyes checked......they appear to be stuck in the "up" position.

Just came across an article that may be relevant here: http://arstechnica.com/business/2014/01 ... -data-cap/.

The East Buchanan Telephone Cooperative (EBTC) offers DSL Internet at sub-broadband download speeds for up to $300 a month, and it imposes data caps with overages of $5 per gigabyte. As detailed on the company's website, service starts at $24.95 for 5GB per month and moves up to $44.95 per month for 10GB, $179.95 for 50GB, and $299.95 for 100GB. Regardless of which plan you choose, going over your cap brings a charge of $5 more per gigabyte.

...

Rorabaugh wishes large content providers had to pay to send data over his network. "Netflix can come in and use the network that exists here and not have to pay a penny for it," he said. "You would think they would be obligated or should feel obligated to help support the network that generates their revenue."

Satellite and cellular data are pretty competitive for those kind of ridiculous prices. In a way, the presence of satellite and cellular data kind of act as a damper on the worse abuses of earth-bound wire-based ISPs. If you only have one and it sucks, at least you can still get your internet over the air somehow. And I don't know about satellite, but cellular data has been getting better and better over the years.