Sunday, February 12, 2006

Saving the Internets As We Know Them

by Tom Bozzo

Construction of Madison's municipal wireless network kicked off last week, and where it's available, the network will be open while the build-out and testing are underway.

A while back, I'd agreed with Ben of Badger Blues that free universal data access is a justifiable use of tax dollars. (The Madison project, it should be noted, is a public-private venture that is planned to be supported entirely by subscriber fees.) This led to a brief exchange with my conservative friend Joe Malchow, who strongly opposes 'Uncle Sam as ISP,' on whether I trusted government not to "Solomonize" Net access, or to provide better than the sort of service typical of DMVs. (Joe wisely left the U.S. Postal Service, about which I know infinitely more than I can blog, out of it.)

It's a fair question, but my reply, as the large telecommunication service providers are trying to wiggle their way out of their obligations as common carriers, is whether anyone should trust business not to divide the 'nets into a collection of feudal businesses, with their CEOs trying to play the Olsonian 'stationary bandits.'

Frank Paynter has already written a good chunk of the rest of the post for me over at Sandhill Trek:
A battle of Star Wars proportions rages around us and we, the people, the consumers of Internet services at the edges of the net don't even know it. I'm not sure who plays Yoda, but the four panelists on yesterday's call are certainly among a ragtag band of Jedi knights who have our best interests in mind. The forces of "the empire" have several faces and a monolithic interest in controlling content. They include both cable and telephone companies, companies like Comcast, Time Warner, AT&T, Bell South, Charter, Verizon, and Qwest. While the giant cable companies and telcos battle each other for the broadband market, we - the consumers - are likely to get trampled.
Yes, you should read the rest.

As Frank notes, letting carriers discriminate among internet content by charging for bandwidth usage is part of a quid pro quo where users ostensibly would get improved quality for certain types of broadband services. Our existing mediocre data services, however, can already be viewed in part as the failure of another quid pro quo that should have delivered us broadband of the sort that French or South Korean users take for granted. And establishing toll roads for content clearly has an enormous risk of unintended adverse consequences for content providers and consumers alike.

Frank also quotes a libertarian counterpoint from Martin Geddes, which is that government imposition of common carrier obligations, often termed "network neutrality" in this context:
...messes up freedom of contract, freedom of association, and property rights.
Over at Marginal Revolution last month, Tyler Cowen noted that it wasn't objectionable in (economic) theory to charge bandwidth hogs. Commenters there and at EconLog, where Arnold Kling concluded that (and I'd like to agree in a perfect world) setting up preferred content fiefdoms would be an unintentional suicide move, quickly noted that the bandwidth hogs are already paid-for in various ways. The most important way, arguably, is that the very bandwidth hogs from which the telcos wish to extract more revenue are the services that motivate consumers to pay for premium-priced higher-bandwith data services in the first place.

Geddes, moreover, takes an overly narrow view of "freedom of contract," "freedom of association," and "property rights."

That is, the more important "freedom of association" is not that of the telcos and their preferred content providers, but of individuals and the information services they wish to access. We shouldn't forget that users of commerical ISPs pay for the capability to access those services, so it's not exactly like we're being done a favor.

If telcos exercise their purported "freedom of association" to limit access to non-preferred contract, they're unilaterally altering the (possibly implicit) terms of the (possibly implicit) contracts with their subscribers, who can be expected to value the new arrangment much less than the traditional one — clearly, this is a big part of Kling's unintentional suicide story. (Consider how much you'd be willing to pay for a telephone service that couldn't access, or charged a premium for access to, some large fraction of phone numbers.) That alternative providers such as municipal wireless networks would become much more attractive alternatives to commercially crippled wireline services, of course, helps explain why big telcos have been working vigorously to foreclose public competition through political channels.

Last, the claim that common carrier obligations infringe telcos' property rights would be much stronger in my view were the telcos first to repay their accumulated monopoly profits to the public.

The danger, given the current political climate, is that "network neutrality" has a constituency that's virtually every end user of the internet, but that doesn't matter because the key moneyed interests are on the other side (another h/t to Frank):
There were strong Network Neutrality words in draft telecom legislation before the U.S. House Commerce Committee, but these were removed in a second draft, because, according to Chairman [Joe] Barton [R-TX], “Nobody I talked to liked the first draft.”
You can just imagine to whom Rep. Barton talked.
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