Sunday, August 13, 2006

I am still opposed to Net Neutrality

I keep stumbling across commentary on the annoying issue of "Net Neutrality". I want to make completely clear: I am opposed to so-called Net Neutrality. My primary reason is that I am a strong proponent of economic signals, and the "campaign" for Net Neutrality is essentially a campaign against the free flow of economic signals. Without the free flow of economic signals, investment (money) will not flow to where it will have the best long-term return for society.

Some proponents of Net Neutrality seem to want "The Net" to be run by a benevolent government and to remove the profit motive from the equation. My view is that we want to eliminate investment barriers whereever possible so that sufficient investment can flow into communications infrastructure so that we have both a wealth of supply of bandwidth and a wealth of competition to keep prices down. Adding additional government regulation is not going to drive prices down and instead would be likely to drive investment down and result in a lack of supply of bandwidth.

There is a role that government can legitimately play in this debate: as a major user of communications services. As demand for broadband services increases within government agencies, spurred by issues such as a desire to cut costs and to reduce expensive business travel, government agencies themselves will be demanding more and better service and at a lower price. The goal should be to have sufficient incentives (or lack of disincentives) in place to spur the level of investment and competition that will enable greater bandwidth, greater competition, and lower cost.

As a consumer, I want quality service at a fair price. I have no interest in pricing gimmicks, subsidies, introductory offers, and certainly no interest in any service that may deteriorate over time due to economic disincentives for investment, maintenance, and service. I simply do not want to pay a lower price today if the risk is a higher price tomorrow (next year or 10 or 20 years hence). I am also opposed to having to subsidize frivolus uses of bandwidh such as the infamous and various misguided videoblogging efforts. If any of these bandwidth hogs have commercial value, let them or their users pay full freight for their cost. Do not ask me or any other consumer or taxpayer to subsidize such senseless efforts. There are plenty of completely legitimate uses for broadband banwidth, including business videoconferencing, medical diagnosis, movies on demand, event webcasting, etc., but if the value proposition is really there, let us please assign costs where they are incurred. That's one problem with the disintermediation of the net: nobody is quite sure who has what responsibility for what cost. The obvious answer is that entities making investment in infrastructure do know how much they invested, their marketing costs, their maintenance costs, their incremental investment costs, the projected lifetime of their infrastructure investments, their cost of capital, their overhead, and a "reasonable" level of profit that compensates them for the risks that they have taken. As a consumer, any short-term benefit of artificially-lowered prices due to lack of a free flow of economic signals means that there is a longer-term risk that the supply of such services may be constrained due to lack of sufficient investment.

I would much prefer to see a multi-tiered Internet. I am not now, have never been, nor ever will be a fan of "one size fits all" thinking. Separating the tiers allows economic signals to propogate faster on individual tiers where change is occurring most rapidly without unnecessarily disrupting service on more stable tiers. Then, gradually, over time, economic signals can "leak" between the tiers as it makes economic sense.

I do very much want to see lower prices for communications services, but I want some assurance that these prices are economically viable over the long run.

I am a proponent of subsidizing the "have nots" of society, whether it is by having public access in places like schools and libraries, or income-tested grants for homes and small businesses. And if some charity has a legitimate need for offering broadband-level content from their web site, of course there should be plenty of grant money available to subsidize such legitimate needs. In fact, I would expect that the boradband carriers would offer some amount of subsidy directly, simply as a normal gesture of community-oriented corporate goodwill.

Some discussion of Net Neutrality can be found in the Wikipedia article on "Network Neutrality."

As an opponent of so-called "Net Neutrality", I'm on the other side of the fence from my employer (Microsoft). All views expressed in this blog post are my own.

-- Jack Krupansky


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