Saturday, July 29, 2006

On the "Bandwidth Hog" Argument Against Net Neutrality

by Tom Bozzo

A centerpiece of arguments against "network neutrality" is the claim that telcos deserve to be able to charge so-called "bandwidth hogs" — or as Ted Stevens famously put it:
They want to deliver vast amounts of information over the Internet. And again, the Internet is not something you just dump something on. It's not a truck. It's a series of tubes.

And if you don't understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and it's going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material.
OK, so yes we would like to see a Ted Stevens-Jon Stewart deathmatch. But that is the argument, basically.

As it turns out, though, in the part of the ongoing cat-and-mouse duopoly game between the telcos and the cable companies — the part that isn't being played in the regulatory arena, at least — the telcos are offering some of their lucky custmers... wait for it... lots more bandwidth. And I mean lots. From the Wall Street Journal, earlier this past week:

[A]s companies such as AT&T Inc. and Verizon Communications Inc. have upgraded their networks, they’ve made speeds available to consumers that they previously sold mainly to business customers. Cable companies have had to pick up their own speeds to stay ahead...

AT&T, whose fastest speed was 1.5 megabits per second three years ago, raised it to three megabits in 2004 and six megabits in April. Comcast, the country’s largest cable operator with more than 21 million subscribers, has increased speeds four times in the past three years and now offers most customers six megabits.

Broadband speeds are picking up especially in regions with fierce competition. In parts of the New York area, where Verizon and Cablevision Systems Corp. are in a head-to-head battle, Verizon last week cranked up its fastest connections to 50 megabits per second. The move came just weeks after Cablevision gave its customers in the region a free bump to 15 megabits from 10 megabits and also came out with a 30-megabit offer. [Emphasis added.]

Thirty megabits per second is ten times what I hog in my hoggiest 3Mbps DSL dreams. Heck, when it suits 'em, they're giving away more bandwidth than I have.

Moreover, the most egregious bandwidth-hogging applications are mere drops in these bandwidth buckets:
A two-hour movie that would take almost two hours to download on a 1.5 megabit connection, for example, would take a little more than three minutes to download on a 50-megabit service, according to Verizon.
If Jack Valenti weren't undead, he'd be rolling over in his grave.
Making phone calls over the Internet, for example, requires only 90 kilobits per second, according to AT&T. Watching streaming video with standard-definition TV quality off the Internet needs only two to three megabits, according to AT&T.
Now, 50 megabits isn't exactly cheap at $100-200/month according to the W$J, though charges for lesser but, by U.S. standards, still-fat tubes are much more reasonable. And the pricing strongly suggests that an increment of a dozen or two megabits per second over mainstream single-digit broadband speeds doesn't cost very much to provide.

Maybe Big Telco will end up paying content providers to fill up the bandwidth they throw at their customers.
I know this is heterodox to say, but I think Ted Stevens has gotten entirely too much ridicule about the tubes thing. The tubes metaphor goes pretty far, I think, even if there are, well, no actual, um, tubes.
I think Stevens has, in part, been ridiculed for the wrong reason -- in a way, he's the classic empty suit 'expert' witness, unable to keep the metaphors he's been briefed on straight (pipes? tubes? whatever).

As it goes, the tubes metaphor suffers from the flaw that the capacity of the tubes is not, pace Stevens, fixed in the way the tube that supposedly removes stormwater from my street is.

Since we economists love revealed preference, and to return to the point of the post, it does undermine the gravity of the telcos' 'we must be paid for our precious bandwidth' argument to be seen giving away as much bandwidth as typical broadband customers have for free when it suits them.
To Jeremy:

Ha he said suits as noun then as a verb. hehe I like puns.

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