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e_identity
Premium Member
join:2003-09-10
Silver Spring, MD

1 recommendation

e_identity

Premium Member

problem to be solved?

The theory is that if there is enough competition in the market to provide internet service, then a provider that assigns equal priority to all content will have a competitive advantage. Accepting that proposition as true, the question becomes how do we foster competition? I don’t think any proposed answer should be automatically rejected because it is currently politically unworkable—sometimes a good idea can take root and advocacy can, over time, expand possibilities. I think the discussion has to start with identifying the problem to be solved--why is competition among internet service providers presently limited and how will that change over time. It seems to me that one of the biggest reasons that sufficiently competitive markets don’t exist today is that, even putting aside politics, barriers to entry into the market are high. Specifically, each service provider must build its own network (wired or wireless, national or municipal) connecting to each home or business to be served, and this is very expensive. I understand that some parts of the network use shared infrastructure, but each company must still build out significant parts of its infrastructure (e.g., the last mile). My question is—over the next relatively long period of time (i.e. at least one decade, possibly more) will those barriers remain high? If technical innovation sufficiently reduces the cost of creating networks, then the barriers to entry into the market will be lowered and extensive competition among providers will commence without any need for regulation. In such a circumstance, the pace of change could potentially be accelerated by investing in the development of relevant technology. If, despite technical innovation, the cost of creating networks will still be high enough to discourage sufficient competition, then other alternatives need to be considered. One possibility that I have thought about is a regulated public utility—not unlike an electric utility. In this situation, a regulated public utility (potentially municipal, regional, or national) would build a network to provide internet service, and all companies providing internet content would deliver that content to the consumer over the utility’s system. The utility would be required to prioritize all commercial content equally. Where the pace of technical innovation is relatively slow and the cost of building a network remains high, this might be a viable option. In my mind, the regulated public utility model works particularly well in the provision (to distinguish from the generation) of electrical power because the same wire can be used to carry electricity regardless of who generates it and the technology of power lines has remained relatively stable for many decades (e.g., the 50 year old wires in my neighborhood can still fulfill their function adequately). In its prior life as a regulated public utility, AT&T amply demonstrated that public utilities may not be incubators of innovation, but, especially if building a network remains expensive, they have the advantage in cost efficiency--only one network need be built and the cost of building that network would be shared among all users (i.e. the total cost of building one network is lower than the total cost of building multiple networks and that total cost for one network is spread among a larger pool of users (i.e. all users, not just the subset of users who are customers of the particular service provider)). While politically tenuous in the current atmosphere, municipal broadband is an example of using a public utility to provide internet service. Another possibility would be for the utility to own the “shared” parts of the infrastructure and to limit access to that infrastructure to service providers that guarantee they will assign equal priority to all content (not unlike a national highway system that provides equal access to vehicles from all states and all manufacturers). So, I think identifying the path towards enhanced competition in the market for internet service depends significantly upon what will happen to cost of providing that service—will it drop low enough in the medium to long term that many companies will jump into the market? I confess to not knowing the answer to this question, but it seems important to answer this question at the outset of this discussion.
Millenium
join:2013-10-30

2 edits

Millenium

Member

said by e_identity:

The theory is that if there is enough competition in the market to provide internet service, then a provider that assigns equal priority to all content will have a competitive advantage.

Unfortunately, offering cap-free access to ESPN or Netflix is an advantage too. That's how it is already marketed and how it will successfully be sold: Small expensive caps for access to everything not in the ISP's free lane, but only the free lane getting all the promo time.

With that one small move the ISP controls virtually the entire internet, and people line up for all the "free" offerings.
e_identity
Premium Member
join:2003-09-10
Silver Spring, MD

e_identity

Premium Member

All true, especially in the present. However, if in the future the cost of building a network is low, the premium for providing cap free access to all content will also be low (and the savings for choosing a provider who priortizes preferred content will also be small). If the cost of building a network remains high, different consequences seem to follow. The cost of building a network seems important.
Skippy25
join:2000-09-13
Hazelwood, MO

Skippy25

Member

Cost is not really relevant, revenue per customer is.

The cost of building a network in the current environment could be at $0 and prices would not change nor would their efforts to create a fast lane to increase revenue for the perceived better experience.

Bottom line is that any network, regardless of how big or how small, will only have an issue and need prioritizing if it can't handle the traffic. Wired networks are not at a point that prioritizing is needed and probably never will be for any of the major players.

Prioritizing to bypass caps (that are not needed in the first place) is nothing but a money grab by the ISP's. One that starts with the deliverer of the content paying and ends with the consumers paying.