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Not just “theoretical”

Doug Tygar

I wish to take issue with my colleague Steve Weber’s assertion that “there have [only] been a couple of very small incidents” in which Internet access was blocked.   The record indicates otherwise.

Perhaps the most celebrated case (because it lead to direct FCC action) was Comcast’s blocking BitTorrent traffic.  This was not quickly reversed (reports indicated that the blocking occurred for over one year); it was not dealt with in a straightforward way (Comcast reportedly initially denied to the FCC that it was blocking BitTorrent); and it was not reversed by market forces (the FCC finally made a decision over Comcast’s objections.)

Further: large providers have given conflicting statements on whether or not they intend to apply discriminatory treatment.  For example, one Verizon executive strongly implied that Verizon planned to require payment in the future for access to its subscribers.

Finally, it is a false analogy to compare the monopoly situation of search providers and network providers.  Most municipalities only license a single cable provider; similarly in most cases it is impossible to string up a local loop, only a single ILEC is licensed.  While other large-scale broadband technologies to end consumers have been proposed (e.g., wimax, broadband over power line, etc.) these are still unavailable for the vast majority of American residences.  There is no analogous regulatory barrier to entry into the search market — the economic realities of the search market may or may not raise traditional antitrust issues.  In contrast, not only are there regulatory barriers to entering the cable broadband or local loop markets, providers have been granted monopolies by government entities.  It hardly seems extraordinary to regulate them.

While I do not argue in this post for or against net neutrality legislation or regulation, I hope it is clear that the issue is not simply a “theoretical” matter.

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Comments to "Not just “theoretical”":
    • Thanks Doug! let’s argue in person about the bittorrent case. on the other issue of regulatory barriers to entry in the access market, surely the most obvious and direct remedy is to relieve those regulatory burdens and permit more entry, no?

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    • Michael Sinatra

      It’s pretty hard to have this discussion of free markets when the market we’re dealing with revolves around one giant government project (i.e. the Internet). We’ve basically grafted market forces onto the Internet, and more importantly onto its greatest public good–the Internet Protocol. Steve knows my philosophy on this (“markets work mostly well most of the time”), and I don’t think I would stray too far from the work of John Zysman if I were to say that we wouldn’t have an Internet and an open suite of protocols that surround IP (Internet Protocol, not Intellectual Property) if it had been left to the market all along. There needed to be a government program to create the innovation (!) that led to today’s internet. Government policies led to an emerging market.

      To give a more direct answer to Steve’s question, I think that it takes a bit more than to simply remove regulatory barriers to entry in the ISP market. The current market concentration of “big telco” creates its own barriers to entry, and many of those companies have been more than willing to use their market power to raise barriers. In many cases they have engaged government to restrict others from entering the market, but in other cases, they have worked on their own. The distortions in this still-fairly-nascent market are exploited by certain interests to reduce competition.

      If we had a better philosophy than “government can do no right”–one such as “government should regulate it ways that reduce, not increase, market distortions”–I think we’d have a more competitive ISP market. In this framework, net neutrality could be a carefully-crafted principle–not a rule–that helps identify anti-competitive practices and abuses and creates more competition and innovation. While nobody in this forum takes on such an extreme tone, the often prevailing rhetoric that “government can do no right; it should be all markets” loses sight of the fact that in many countries and many markets, government can improve market competition.

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