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| Net Neutrality's Eloquent Opponent |
| Tuesday, 23 September 2008 22:55 |
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Christopher Yoo has just written an exceptional paper arguing against net neutrality. The Penn law professor outlines a half dozen possible scenarios in which net neutrality proves harmful, several of which I hadn't even considered. By doing so, he brings much of the debate to a higher level, where evidence can show whether concern is a real issue or highly unlikely.
He gets the technology right as well, including that the primary wireline problem is the upstream local loop on cable. DSL networks are designed not to have similar problems, and several are telling the world they don't need throttling. Yoo's arguments are clearly influenced by Richard Posner, who turned U.S. antitrust law upside down by finding counter-examples to some deeply held beliefs. The best way to answer Yoo is with evidence his theoretical harms aren't likely. For example, Yoo take the elegant model of "two-sided markets" to suggest charging Disney to deliver their movies would allow the carrier to charge consumers less. We have some evidence it doesn't work out that way. In all the cases I know of carriers collecting more money from one service, they haven't in practice lowered the charge to others. The examples are relatively few, and aren't exact parallels. Evidence that carriers generally decrease their rates if they collect more from others would confirm Yoo's thought. Nice theory, but it presumes effective competition to work and that doesn't exist in most broadband markets. (The Telco 2.0 folks use "two-sided makets" in a different way than economists. Don't get confused.) Yoo brings back the argument that violations to date of Net Neutrality haven't caused severe harm, and he's right. Comcast's throttling was a symbol of what could go wrong, but had only a minor effect in practice. It was an important fight with many heroes because the precedent could be disastrous, and I don't regret what I put into it. But I can't accept Yoo's inference that we shouldn't be worried, because nothing terrible has happened so far. Randall Stephenson, now CEO of AT&T and the most powerful ICT executive in the west, said he intended to collect from all the web video. He was answering my question in front of several hundred wall street people. Since then, I believe the enormous effort has persuaded Randall to hold back, considering instead an unnecessary cap as a way to raise prices and keep out competition. Deutsche Telekom CTO says they spent hundreds of millions to monitor "every packet of every session all the time." Guess what they intend to use that for. Comcast has set a model of what's fair with a 250 gigabyte cap link . DSL networks have significantly fewer congestion issues than cable, so if AT&T caps it should be significantly higher than 250 gig. Anything lower is a disguised price increase and way to keep out competitive video. Time Warner's proposed 40 gig cap is an obvious ploy to prevent my watching what I want from the Internet; it works out to a total of 5-10 HD movies a month, so many people will still pay for HBO. The antitrust people should have stopped this already. Ironically, Comcast's own statements suggest their is no practical need for that cap. So few people use more than 250 gig that the savings may be as low as 2%. Presumably, this is to set a precedent for thigns they will do later. If AT&T provided cost numbers, I'm sure we'd discover the cost savings are similarly miniscule. Verizon and Sky have it right. Both have foresworn caps and throttling, and customers love them for that. |