The fundamental issue of the net neutrality debate

Andy Kessler writes an interesting take on the debate in The Weekly Standard:

Telcos and cable companies have no choice but to lobby for legislation that bars neutrality. Because without the ability to extract money from the webbies for the use of their not-so-fast Alexander Graham Bell-era wires (forget that you and I already overpay for this), AT&T or Verizon might not have any business model going forward. With no real competition, they’d rather keep U.S. telecommunications in the Flintstone era and overcharge for calls to Grandma than upgrade their networks. Since 1998, telecommunications companies have outspent computer and Internet firms on politicians $231 million to $71 million, just to keep the status quo.

Hate to break the news, but your “fast” DSL Internet access is no longer considered high speed. In parts of the world, cell phones are faster. Have you wondered why Internet video doesn’t fill your computer monitor and look like a DVD, but instead is pixelated dreck in a tiny one or two inch square? Well, Comcast is dragging its heels, too. With better video over the Internet, who would want E!, let alone the Style Network? Because of this Fred and Wilma thinking, the United States is 16th in the world in broadband use (behind Liechtenstein!) with East Timor catching up fast. The French may burn Citroëns, but they get 10 megabits for 10 euros–50 times your “fast” Internet access for half the price. That’s just not right.

We’ll never get 10 megabits to our homes, let alone the multiples of that speed that are possible and affordable today if these telco Goliaths keep covering up their crown jewels. As Dean Wormer might put it: Fat, drunk (on profits), and stupid is no way to go through life, son.

Really you can distill it down to the phrase I highlighted in red. The telcos have monopolies, quasi monopolies or duopolies in most markets. Monopolies only act to preserve their monopoly, which usually means leveraging their marketshare against competitors and freezing innovation (and anti-trust laws are a joke here). If real competition existed, the free market would probably fix this problem without it ever rising to the level of an issue – not only would consumers get better speeds at lower prices, any telco that suggested a non-neutral net would be committing suicide by doing so. Sadly, that’s not what we have.

The author has an interesting solution to this though, and it’s not net neutrality legislation:

So how do we fix this? Are we stuck in telco hell? Silicon Valley can ignite a political arms race and spend more on lobbyists, but why play an old man’s game? Instead, these webbies should get creative, change the rules. Bam-Bam, not Barney Rubble is the future. Take the telcos and cable companies out at the knees.

Here’s an idea: Start screaming like a madman and using four letter words–like K-E-L-O. And fancier words like “eminent domain.” I know, I know. This sounds wrong. These are privately owned wires hanging on poles. But so what? The government-mandated owners have been neglecting them for years–we are left with slums in need of redevelopment. Horse-drawn trolleys ruled cities, too, but had to be destroyed to make way for progress. How do we rip the telco’s trolley tracks out and enable something modern and real competition?

Forget the argument that telcos need to be guaranteed a return on investment or they won’t upgrade our bandwidth. No one guarantees Intel a return before they spend billions in R&D on their next Pentium chip to beat their competitors at AMD. No one guarantees Cisco a return on their investment before they deploy their next router to beat Juniper. In real, competitive markets, the market provides access to capital.

Without even being paid by the hour, I read through the Supreme Court’s Kelo v. City of New London eminent domain rulings. Surely there exists some clever Silicon Valley counsel to twist the wording of the precedent. The telcos may want to treat the Internet like a shopping mall that they own, but the premises are looking awfully sketchy. So start with this line: “Economic underdevelopment and stagnation are also threats to the public sufficient to make their removal cognizable as a public purpose.”

Loosely translated for you non-techies: “Fuck the telcos”. I like it. The internet is a public resource and would be better managed by the public; if the telcos want to keep ownership of those wires, they have to do what we want with them. Which means a neutral internet.

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