What Network Neutrality Is REALLY About → A little dial-up history

The original article is a train wreck. Taking from it,Another way to refer to AOL users is "customers of the phone company." Every one of them were making these calls over the telephone system, sometimes paying a toll when no local phone number existed with the free zone. My first dial-up bills were hundreds of dollars.

When the dial-up networks expanded and bought accounts in nearly every prefix zone, those toll incomes evaporated. People could stay on longer. Suddenly the phone companies started complaining about the disproportionate capacity. Funny, they weren't saying anything when many users were paying tolls!

They also complained because their business model was becoming obsolete: no longer could they expect and build for 30% peak usage at any time. They now had to plan for 40% and were pissed that they had to do that.

Maybe because after the tolls disappeared, people disproportionately consumed more of the limited resource????

So what your saying is that a for profit business is happy when it is receiving revenue for something and not happy when it's giving away something for free.

How does a company pay for it's expenses without revenue?

I think the dial up experience is a great example of the interplay of business interests and regulatory regime acting in the public good..

The Bell's rightfully complained about the long connect times of dialup users and that the FCC forbid them from differentiating between voice and data calls. The PSTN was designed for much shorter average call times.

So what was the effect of this ruling? Once a person invested in a computer and modem there was no incremental cost. This encouraged experimentation. Studies have shown that consumers prefer fixed pricing and even relatively small incremental cost discourages use. Because use was in effect free lots of people got online and lots of businesses were started (and many failed) exploiting this new technology. This resulted in a fortuitous cycle of increased value and demand for faster connection speed.

FCC rules encourage folks to experiment with the Internet. As perceived value increased it drove demand for faster connections. As faster connections became ubiquitous entrepreneurs developed services that were not possible over low speed dialup. This created an entirely new market for communication companies, selling multi-megabit connection to every household. If it had not been for free local calling, people would not have experimented as much, delaying interest in the Internet and demand for high speed Internet access.

Ideally net neutrality will have the same effect. Well crafted regulations will force companies to do what they would not do on their own. Keeping the Internet open will lead to ever greater usage, ultimately benefiting the same companies chafing under Federal regulations.

/tom

You made me smile as you reminded me about something.

Comcast is going through this right now. Their residential HSI has a 250 GB limit that their business HSI, on the same infrastructure, does not.

Apparently the limited resource is less limited based solely on the extra fee for business service.

But it wasn't free -- paying customers were calling numbers within the switch area so there was no ticking clock. There was revenue, and even a bunch of "second line" revenue (people hated using the main house phone line to go online). But the phone companies ALSO wanted per-minute money on top of that.

What a fantastic message, Tom! Great thinking!

And if you're willing to purchase certain POTS tiers now you can have "unlimited" local/long distance calling as well. The premium assists with future infrastructure expansion to handle the traffic growth.

Of course consumers prefer fixed pricing. That doesn't change the resource usage concerns.For the record, I'm not against well crafted net neutrality rules, I just don't believe they're necessary at this time. My concern, as I'm sure many others' would be, is the potential for poorly crafted net neutrality rules that may end up driving providers precisely to the scenario that you're trying to avoid; open networks, but increased consumers costs for usage that prohibit experimentation and new demand.

Hmm, sounds like telephone companies were selling an unlimited product when they shouldn't have. Or maybe the same telephone companies should have charged more to AOL...etc etc.

I say this in all seriousness, I'd like your help.

I want to make sure that these rules are right for users, innovators, and providers alike. They should be maximally flexible technically, while disallowing anti-competitive gatekeeping on the business side.

The ISPs aren't the enemy. But they're the ones with both incredible power and incredible pressure. The rules should reflect that.

We're going to have NN rules, and we're likely to have NN laws. I work for New America Foundation's Open Technology Initiative and we strive for explaining technology to policymakers. They don't understand this stuff and they're bombarded with wrong info from the carrier lobbies. If you see something going the wrong way, I'm likely in a position to help head it off. (That makes me sound more important than I am, I'm just a voice in a coalition, but I'm listened to on technical facts.)

I know we don't agree on whether to have rules, but that's no longer our question to answer. The question is what should they be to make it a win-win-win for everyone in the Internet community.

Such as pushed advertising, gratuitous Flash animation, animated dancing girls selling insurance or home mortgages.

I think that often gets lost in the debate.

ISP's need to be profitable or they go out of business.

On the other hand as the owner's of the Internet on ramp they have tremendous power to shape the Internet.

The Internet is a dumb bit-delivery network. This is is major strength. Anyone can set up shop to provide a service without the permission or cooperation of network owners.

Public policy needs to strike a balance between public and private good. ISPs need to be profitable and the incredible communication revolution unleashed by the Internet needs to be nourished and protected.

/tom

True - it also made this discussion possible.

I often tell this story.

To my father the world was a big place. Took him weeks on the troop transport to get from the US to China during WWII.

To me the world is much smaller, by jet I can be anywhere I want in a day.

To my kids there is no notion of distance. Have a question about a far away place. Ask a person who lives there. In minutes you have a first hand report.

Certainly there are downsides to increased connectivity but on balance creation of the Internet is at least as revolutionary as the telegraph in reducing time and cost of moving information around the planet.

/tom

Will do. Given our opposite ends of this debate, if we can find a common ground, I'd begin to feel more comfortable.You sound awfully sure about that. It'll be interesting to watch what happens over the next few months.

They were...ironically even more so than they are now. That used to be the beauty of statistical analysis and the extremely limited scope of what the POTS was originally designed to accomplish.

To defend Ma Bell that was the right decision at the time. Switching and transmission were orders of magnitude more expensive then they are today. The telephone network would have been unaffordable if they had not use statistical methods to predict usage and engineer acceptable blocking rates.

One of the major distinctions between "Bell heads" and net heads is Bell heads still see capacity as an expensive resource - to be husbanded at all costs vs the net heads that see it as a cheap commodity.

The problem is these engineering/economic trade-offs get codified in regulations and company thinking. When new technology undermines the old rules it takes a long time for organizations to adjust. Most do not successfully navigate the transition.

/tom

Not necessary? Not this time? I guess that you are dwelling on the same assumptions that you are trying to dispel. Let us assume that consumer costs do increase when you have a more open network. The primary reason would likely be for lack of competition as we largely have today. Who are you to tell that this won't force creative minds to develop new algorithms/protocols, whatever, that would circumvent or render these barrier restrictions moot? This should be left to the proviso of the wider brain power of the world population, not the narrow grey matter of the ISP's.

Scan the forums a bit more, Business users can still hit levels of usage that can warrant a call from a local sales rep about getting dedicated access. It's not capped at 250GB like residential, but it's certainly not unlimited.

You mean like alternative ISPs building out their own infrastructure to induce competition (which I favor)? Or perhaps the government stepping on the incumbents and forcing wholesale line sharing (which I don't favor)? Or perhaps the government builds out a common infrastructure similar to the roadway system, and then leases the authority to utilize the infrastructure to whomever would like to provide service (I stand in the middle on this and would need to see the business case before leaning either way)?

"Funny, they weren't saying anything when many users were paying tolls!" Do you really not understand that networks are engineered based on educated assumptions about how much each user will be online making demands on the network. The more consumers online and the longer they stay online, the more capacity that has to be built by the supplier and the more cost recovery required to pay for that capacity. When AOL users were paying toll rates, they were paying for the extra use (albeit for toll versus capacity) and they were discouraged from using more than they needed. When all AOL calls became flat rate local, no more extra money to pay for the extra capacity being consumed. Naturally suppliers began to look for a way to re-engineer and pay for extra capacity.

I'll go out on a limb and state that funchords probably understands the economic decisions that were used.

Now that people and companies have discovered innovative ways to use the Internet, inconsistent with the model used by early ISPs, what is the proper public policy?

1) Give ISPs power to prevent or limit these new uses in order to protect their business assumptions.

-- OR --

2) Create regulations that encourage creative use of the Internet. If that drives up cost ISPs will either have to figure out ways to reduce cost or pass it on to customers.

Backbone speed is pretty cheap. Note I did not say free just pretty cheap. Most of the cost of first-mile access is wiring and customer support. That cost is fairly immune to changes in usage.

Grumbling by ISPs about excessive use has less to do with heavy customer use then concern high speed connectivity will undercut legacy business for the Cable companies. That is why you see cable industry being much more aggressive in this fight then Telcos.

/tom

fixed typos