Internet slow lane

[17D_guy]

Here's where I have the issue: The internet is not like a utility. With power, you don't care which plant your power came from, and the plant generating your power doesn't care that a particular unit went to you. As a result, every kilowatt of power or every glass of water has the same value as every other kilowatt or glass. That's not true with data. With data, both the provider and the consumer care very much that particular packets are delivered to the right person. Additionally, the value of data can increase with rate. The power company doesn't charge me a higher rate if I try to see what the ambient temperature would be if I put my electric space heater into my meat freezer.

The entire infrastructure is built and maintained by commercial entities, but then the FCC wanted to say that they couldn't develop a pricing scheme that treated data (which all has different values) differently. It's as if the FAA were to say "United... you can't have classes on your aircraft. It's all coach. Even if some of your customers want first class and you invested in your own infrastructure...still, coach only." Everyone seems ok with the concept with the cost difference between Next Day Air, Priority, and Third Class mail, but then some get up in arms over the same concept applied to the internet. This is why Net Neutrality 1.0 was shot down... it didn't even make sense when compared to other common carriage markets.

Yes, not all firms will be able to or desire to pay for faster service... and that's ok. Rising barriers to entry is a hallmark of every maturing industry. Not too many people are complaining that market forces would be against any proposed automobile manufacturing or airline start-up. The internet just isn't that different from the old economy in this respect.

Part of this is that companies like Google and Amazon need to grow up. They've been able to print money by creating entire markets. Now, they're facing off against some firms who are better in the legal/regulatory world.

My muni water and power would care very much if the next town north was getting their water/power from them. If there's a lack of competition, and a single provider as most people actually have, then it's very much like a utility. Power was all commercial development until large providers consolidated power and it turned out they were screwing their customers. Then it became heavily regulated. Now electricity is considered a utility, not a "nice to have." The same will happen to the internet, probably in our lifetime once the "old folks" die off.

http://burnanenergyjournal.com/the-electricity-grid-a-history/

From the late 1800s onward, a patchwork of AC and DC grids cropped up across the country, in direct competition with one another. Small systems were consolidated throughout the early 1900s, and local and state governments began cobbling together regulations and regulatory groups. However, even with regulations, some businessmen found ways to create elaborate and powerful monopolies. Public outrage at the subsequent costs came to a head during the Great Depression and sparked Federal regulations, as well as projects to provide electricity to rural areas, through the Tennessee Valley Authority and others.

I'm not sure I understand your statement of data increasing with rate. Perhaps I'll address it below.

There are rates/classes/tiers for ISPs already - I pay more because I want a faster connection. Providers pay more because they want more bandwidth. If they exceed their cap/limit they pay more. Ever seen the reddit/slashdot/digg hug of death even on Amazon AWS hosted sites? So now content providers get to pay more for bandwidth... and priority? Can I pay to make the airplane fly faster or move the destination closer (net example - peering)?

You're going to use auto/airlines as examples of mature markets in comparison to the "rising cost" of developing on the internet? Those take massive capital in the beginning and they take even more capital to start in now. However, it's still being done (Tesla, Ryan Air, etc.) with the power of the internet lowering those barriers.

Again, look at twitter or facebook.. hell pinterest (sp?), should they have the same capital requirements as the auto/airlines? I don't think you are saying that but it's the way it came across. While that's a sign of a mature market, I don't think the same forces will be at play in the online world. Instead of massive capital it's going to be investments over customer time and popularity that'll be barrier to entry. Look at what's happened to facebook as they got mom & dad on with the kids. Look at what's happened to twitter since they decided to go more facebook-y.

For your last bit - so you want the companies to get better at bribing lobbying our politicians? How about Tesla? A great company with a new, exciting, eco-friendly product. Try buying one in TX or NJ (sorry Jarhead?). Guess they didn't "grow up" fast enough while they were busy innovating.

After The New Jersey Ban, Here's Where Tesla Can (And Cannot) Sell Its Cars

Edited May 21, 2014 by 17D_guy

[Vertigo]

Here's where I have the issue: The internet is not like a utility.

Someone needs to tell Chattanooga that. They offer 1000 Mbps internet through their electric company for $70 a month.

[Jughead]

The internet is not like a utility. With power, you don't care which plant your power came from, and the plant generating your power doesn't care that a particular unit went to you. As a result, every kilowatt of power or every glass of water has the same value as every other kilowatt or glass. That's not true with data. With data, both the provider and the consumer care very much that particular packets are delivered to the right person.

Disagree. ISP (Comcast et al) ≠ Content Provider (Amazon et al). The content providers are most certainly not utilities, and fit the description you give of the data being "delivered to the right person." The ISP is responsible for creating the path to get me that data and the speed of that path--and are quite like a utility. 17D_guy is spot-on: even if not widely regarded as a utility today, that's only a matter of time. I currently do regard my broadband connection as a utility--I wouldn't give up electricity or water in favor of the net, but I'd drop my cable TV before I'd drop broadband....

[EDIT: I managed to cut this paragraph out when first posted]

A better comparison may be to cable TV. (CATV is a utility, yes?) The local cable company (which is probably a branch of a huge nationwide company) is the utility, analogous to the ISP (and, in many cases, also serves as the ISP). The various television networks, from ABC/NBC/CBS to local access to Skinemax, are the content providers. And, to continue the analogy, there are fequently pissing matches between a network and a cable company over rates....

The power company doesn't charge me a higher rate if I try to see what the ambient temperature would be if I put my electric space heater into my meat freezer.

I suppose every area is different, but every place I've ever lived this is false. Your electricity and water are probably ("definitely," in my personal experience) charged on a tiered basis. The first XX kilowatts cost however many cents each, then you pay a premium for the next YY kilowatts, then the top rate for anything above that (three tiers seems to be typical). Same scenario for water.

Not to say I don't like the idea of your heater-in-the-freezer experiment...!!

Edited May 21, 2014 by Jughead

[JS]

I suppose every area is different, but every place I've ever lived this is false. Your electricity and water are probably ("definitely," in my personal experience) charged on a tiered basis. The first XX kilowatts cost however many cents each, then you pay a premium for the next YY kilowatts, then the top rate for anything above that (three tiers seems to be typical). Same scenario for water.

Yeah, I was going to comment on the same thing. I have friends in the power company, and I know that power companies, when they trade power with each other, charge different rates depending on which part of the country is hotter or sucking up more electricity for whatever reason. I never saw it on my bill, but I thought I remember hearing that power in the hotter summer months in the South, during the day, was indeed more expensive than during periods of less demand such as at night or in the winter.

I know the pricing is different with our water. The first X number of cubic meters costs so much, then going over that costs more per cubic meter - especially in the summer or during periods of drought.

I would also say that the quality of the power you get varies, just like the speed of your internet does. Some areas are more prone to outages due to outdated infrastructure, etc. While other areas would do the rolling brownout thing like they did a few years back.

So I would say that internet is indeed a utility, with similar traits to water and electricity in terms of varying quality and cost. And I don't think it should be monopolized by a few big providers across the country, lest we see spikes in the price and decreases in the quality, just like with everything else that the government tries to "fix."

[schokie]

The analogy is of a power company is a bit off. Its more like a toll road. The builder of the toll road who used private funds to build should certainly expect to charge for use of that road. Most toll roads charge commercial traffic more than they do small car traffic. But this is like charging UPS more to use the toll road than FedEx.

10 years ago that might have been a reasonable COA for an ISP. But with today's technology dependence the internet connection has taken the place of a road. If not already a de facto utility it will be in the near future. We need need to think 10 years from now.

Posted from the NEW Baseops.net App!

[Seriously]

The analogy is of a power company is a bit off. Its more like a toll road. The builder of the toll road who used private funds to build should certainly expect to charge for use of that road. Most toll roads charge commercial traffic more than they do small car traffic. But this is like charging UPS more to use the toll road than FedEx.

10 years ago that might have been a reasonable COA for an ISP. But with today's technology dependence the internet connection has taken the place of a road. If not already a de facto utility it will be in the near future. We need need to think 10 years from now.

Posted from the NEW Baseops.net App!

The ISPs are the roads, the bridges, UPS, FedEx, Swift, JB Hunt, Old Dominion, every truck, every car, and for that matter, every vehicle. Not only do they get to decide how fast you get to your destination, but they also get to decide what route you're taking to get there.

The fast/slow lanes would be like allowing your car to go to Walmart and Target at 70 mph, but God help anyone trying to build a new business. You would only be able to drive to the new store at 15 mph because the new store doesn't have enough capital to pay the fee.

Killing net neutrality will make starting a new online business extremely difficult and stifles competition because it favors the behemoth corporations that already have your business.

Edit: It also looks like the sarcasm was missed in my earlier post.

Edited May 23, 2014 by Seriously

[10percenttruth]

Well, your feedback to the FCC is "encouraged" & "definitely not logged for future punitive action, we swear!"

http://www.fcc.gov/comments

Edited June 3, 2014 by 10percenttruth

[billy pilgrim]

This THIS is what it's like in North Dakota:

[17D_guy]

Soo. yeah.

https://www.youtube.com/watch?v=gxXIIMYXFoM