Why would Google support net neutrality when it doesn't even affect them.
It's the stuff like this that gives me trust issues.
If you want to advocate for or against something that's going to affect lives of other people,
at least know what you are talking about.
Steven, you don't even know how the Internet works and you advocate for one of the greatest
consolidation of economic power in history.
Let me break this down for you – edge providers directly benefit from net neutrality.
They can potentially get a direct access to the ISPs' networks without paying for it.
They wouldn't have to beg like dogs for access to their customers, as ISPs are most
of the time time having the final word.
But I guess terms like settlement-free peering, transit provider, or Internet exchange point
don't say much to you.
My point is repealing net neutrality might not be the worst thing ever to propose, but
I can only respect it as longs opponents of the rules suggest an alternative.
Simply saying "the government regulation is always bad because that's what my tribal
ideology tells me" won't do the trick.
So here I am doing the job for them.
How can we fix the Internet after net neutrality gets repealed?
Competition is the answer, but two-thirds of the country don't have such luxury.
So how do we restore competition?
By finally doing justice to what the 1996 Telecommunications Act was truly intended
for – break up big infrastructure monopolies from the ISP market.
Net neutrality isn't perfect and it has its problems.
Luckily, there is a better solution that addresses them without creating other problems.
So let's start from the begging.
This is the premise.
Net neutrality as a public policy will always lose.
And there are two main reasons for this.
First, the FCC has by design an exclusive authority to choose how it wants to classify
services and regulate them accordingly.
In 2010 the Commission adopted coherent set of net neutrality rules in the Open Internet
Order but chose to classify Internet Service Providers as information services nonetheless.
As a result some ISPs chose to honor these rules, but the likes of Comcast and Verizon
took the FCC to court arguing the agency lacked the authority to apply Title II regulations
to services classified as Title I.
The court ruled in favor of the corporations, and rightfully so.
But the judge also invited Tom Wheeler, then chairman of the FCC, to reconsider classifying
Internet Service Providers as telecommunications services and thus make them abide by the net
neutrality order as common carriers.
The Commission is bound to follow the exact rules laid out in the Act and it cannot take
regulations from one Title and apply them to another.
Which means that if FCC wants to enforce net neutrality as a public policy, it can only
apply them to telecommunications services and no other service classifications.
So as long as they aren't challenged in courts, by states, or by the Congress, whatever
the FCC says goes.
All commission members are unelected US citizens, so they have no electorate to respond to either.
Every time a new elected administration appoints a chair the Commission is free to rewrite
its rules completely.
Which is exactly what we've been witnessing over the past years.
Second, the Internet was never neutral.
And it will never be.
In reality, Internet Service Providers are nothing more than just huge networks of consumer
and business computers that connect to other networks in the world that connect them with
other computers running websites, services, applications, or content.
There is no single global magical Internet.
Internet is really just a network of networks that interconnect among each other.
Each time you want to connect to a website or do some instant messaging, your ISP has
to exchange your traffic with someone (some other network) to fulfill your request.
If you want to watch this Youtube video, your ISP has to exchange your traffic with someone
who has that Youtube video on their network.
If Youtube wants to reach its audience, it has to exchange their traffic with someone
who has access to that audience.
These exchanges don't happen automatically.
Real people need to meet often times in real life and make arrangements.
But they're mutually beneficial because by exchanging the traffic, customer demands
of both networks are satisfied.
A traffic exchange can be arranged either directly with another network, or they can
pay someone else to do it on their behalf.
These exchanges of traffic can range anywhere from handshakes or simple email communication,
to paid contracts to ensure the fulfillment of their promises.
When two networks can connect to each other directly, it's called peering.
Usually it's done for free, because both networks benefit from exchanging their traffic
to their respective customers.
In which case it's called settlement-free peering.
But sometimes one network might need to pay for peering to another network to increase
their invectives to give them open access to their network.
Or some network might not want to dedicate their own equipment and staff to get direct
access to another network, so they can choose to pay a transit provider to exchange their
bits for them.
Everybody has to work this way – If a website wants to go online, it has to exchange its
traffic with someone who'll forward their traffic.
If you want to connect to the Internet, you pay your ISP to make that exchange of your
data for you.
If someone wants be an ISP, they have to make deals to exchange their customers' traffic
with someone else's customers' traffic.
In economics terms the Internet is an incredible amount of mutually beneficial deals made between
network operators.
None of these deals happen automatically.
They all have to be done manually with every single network operator.
It requires staff and equipment to settle them, and a little bit of staff to maintain
them.
Which is why sometimes it's necessary for one party to pay another.
Therefore, the limit of any net neutrality policy is that it cannot adapt to the very
nature of this globally interconnected network of networks.
All an ISP needs to do to throttle someone's traffic is to do nothing at all.
No deals, no settlements, no upgrades of infrastructure.
If we tell ISPs they can't block a certain traffic, they can say they didn't manage
to make a deal with that network and rightfully so.
If we tell them they can't throttle certain traffic, they can say they just didn't manage
to upgrade their network and rightfully so.
If we want to enforce net neutrality rules from an ISP's network to its customers,
they will violate net neutrality rules when making deals with edge providers.
Unless we want to regulate how people can make deals amongst one another, we should
start thinking about how to promote the right incentive structures that will give consumers
back their power.
We need to solve this problem by going straight for its root.
And that root is that Internet Service Providers, which hold local monopolies on the backbone
infrastructure are on top of the market food chain.
Every deal about Internet traffic exchange has to have a final confirmation from these
ISPs.
Without their approval, no Internet traffic is going to reach consumers and therefore
– no Internet is happening.
Consumers have absolutely no say in this.
If they can't chose another Internet Access Service, they can't vote with their wallet.
Corporations don't fear cosmetic regulation because they can always afford to dump enough
money into lobbying and bribing officials to make sure no laws endanger their dominant
position.
No net neutrality regulation will ever be able to encompass the entire nature of the
Internet unless you want to turn it into a totalitarian monstrosity.
A cable TV provider can use the same infrastructure to offer Internet access service to its customers.
It has both incentives and opportunities to discriminate Internet traffic to favor their
cable TV products.
A telephone network operator can use the same copper wires that transfer your calls to transfer
bits of Internet traffic.
A DSL broadband Internet provider has both incentives and opportunities to throttle competitive
Internet traffic to favor their telephone products.
The problem isn't innovation or the amount of bandwidth available.
It's the lack of companies with the ability to bring broadband to American households.
The reason for this is that all cable and telephone infrastructure is owned by private
corporations and now no one else can use their pipes or lay their own backbone infrastructure
next to them.
So the root of the problem we need to address has everything to do with the abuse of something
called DMP – Dominant Market Position.
In the real world, some things are going to be done by a single entity.
Some work that needs to be done simply isn't open to the competitive market.
There only needs to be one road, one electrical wire, one gas pipeline, one sewage system,
and one water pipe going into your house.
Empirically, governments around the world, and even in the US, chose to deal with these
infrastructure needs by either regulating a natural monopoly, or building its infrastructure
by a dedicated state-run organization.
Either of these options try to resolve the same problem – any entity that holds a dominant
market position in any uncompetitive infrastructure market, shouldn't be allowed to dictate
terms of every other competitive market built on top of it.
This was already captured in the 1934 Communications Act that created the Federal Communications
Commission.
Dominant infrastructure monopolies were regulated as common carriers so that new markets could
be developed on top of them.
This was to minimize the amount of regulation to an absolute necessity – regulate monopolies
so that you can let free market regulate itself through competition.
Road builders shouldn't dictate what cars people can and can't drive and for how long.
A gas provider can't mandate its customers to only use certain devices.
An electricity provider shouldn't be allowed to select which appliances can and can't
run in the house.
In other words, what's in the network is decided on by the provider.
But how it is being used should be completely up to the end users.
Only then can other markets flourish on top of the backbone infrastructure.
Without this principle, laying down infrastructure only builds a prison of opportunities operated
by the monopoly provider.
And thus we will never have a competition of telecommunications infrastructure operators
which the Internet has been built upon.
But we still can have a fully competitive market of Internet Service Providers, where
users will once again be the ones enforcing net neutrality with their market power.
The only difference is that we shouldn't enforce net neutrality as a public policy,
but rather a principle called "maximum separation".
Maximum separation was coined by the FCC in the 1970s.
This is when first computer networks saw an exponential innovation.
They were built on top of the telephone networks, which were then operated by AT&T as a nation-wide
monopoly.
The FCC realized that AT&T served as both a provider and a competitor for other computer
networks.
Their incentives and opportunities were colliding with the existence of this new innovative
and competitive market of computer networks.
The economic potential of what the computer networks could enable simply couldn't be
ignored by the US government in the era of deadly Cold-War competition with the Soviet
Union.
They needed to speed up competition but realized that all the efforts won't mean anything
if telephone monopolies aren't put in check.
So they came with a simple principle: if a business operates in a market with Dominant
Market Position, and it has both incentives and opportunities to harm competition in other
markets, it needs to be broken up before it can enter unregulated markets.
The maximum separation rule required that all telecommunications carriers give undiscriminated
and open access to any information service provider.
This would give any computer network business an equal chance to just connect to the whole
telephone network at the "last mile", without having to build their own pipes.
A telecommunications carrier could also enter an unregulated market as a computer network
provider, but only through an entirely independent entity, with completely separate accounting,
staff, facilities, and offices.
To require telecommunications carriers to open up their infrastructure to competition
in computer networks had been developing for two decades and over three different administrations.
It is what enabled the Internet to take over the world in the 1990s as virtually anyone
could become an Internet Service Provider.
In 1998 North American households could choose from 7,000 independent ISPs.
The maximum separation rule then translated more technically into a process known as "local
loop unblundling" in the 1996 Telecommunications Act.
To understand local loop unbundling the easy way, picture this: imagine AT&T provides a
direct telephone line to your house as a voice service.
Right now, AT&T is the only company that use that wire to transfer Internet bits over Digital
Subscriber Line (DSL).
The final part of the telephone line that loops connection from AT&T local telephone
exchange directly into your house can only be used by AT&T.
The owner of the local loop, which is also referred to as "last mile".
However, if the company was made to open up access to its telephone exchange at a neutral
rate, they would still provide you with that DSL broadband, but any competing business
could hook up to that local exchange, connect to the AT&T's telephone pipes, and provide
you with their fully independent ISP service.
The telephone exchange operator would become an "incumbent local exchange carrier".
The only thing that would be regulated is the open and equal access to the exchange
to make sure no parties are favored over the others.
The local telephone exchange carrier would be regulated as a common carrier under Title
II of the Communications Act.
They would be barred from any unreasonable discrimination or preferential treatment in
their telephone network traffic.
And what happens after that would be completely up to the market.
With local loop unbundling in place, broadband Internet Access Service would be regulated
as an information service, outside of the tight Title II regulations of common carriers.
If AT&T wanted to, they could still violate net neutrality, just like any other broadband
provider, but they would be challenged by a competition of an unrestrained number of
competing Internet Service Providers that would suddenly appear at your doorstep.
The local loop unbundling is the necessary limited government.
It enables competition where it otherwise would never be possible.
And while incumbent local exchange carrier would argue that this would stifle infrastructure-based
competition, the ones behind most of the damaging anti-competitive behavior, are the very monopolistic
infrastructure operators.
They do everything that's within their power to prevent any new competitors from laying
down their own infrastructure.
A common practice for established monopolies is to make as many lawsuits as possible so
that their competitors would incur unbearable losses and just give up.
Most of the local governments are also reluctant to grant new businesses permission to interfere
with the infrastructure and cause some disturbance for any amount of time.
The financial, operational and legal costs are simply too high for new competitors to
enter the infrastructure market.
If you want to become an independent ISP in a certain area and even have means to lay
down your own wires, you would most likely have to wait until that area makes some major
road repairs to let you in.
A city doesn't need dozens of telephone line providers.
It's actually way more convenient for the infrastructure to have just a single operator.
It only has to lay copper wires once and then build the roads on top of them.
Copper has extreme endurance and resistance so it requires next to zero maintenance for
decades to come.
With the current technology there simply isn't enough room for infrastructure-based competition.
So the easiest and the least harmful thing to do is to turn telephone operators with
Dominant Market Position into "incumbent local exchange carriers".
This means that you as an end user could receive a telephone line as a voice service straight
into your house from an incumbent carrier, like AT&T.
But now you would be able to choose from a handful of broadband providers acquiring bandwidth
from the telephone exchange of the same carrier you receive your voice service from.
But wait a minute.
If this was written in the 1996 Telecommunications Act, how come there is still no competition
of broadband providers in the US?
Good question.
It's because the local loop unbundling was never implemented.
The FCC decided cable broadband and fiber optic were not telecommunications services
and thus never followed common carrier regulations.
Only DSL broadband was because it was using telephone lines.
But even that was abandoned as early as 2005.
The impacts of this are visible.
The United States no longer leads the world in broadband deployment.
It's been replaced by countries that strongly implement local loop unbundling.
The number one country with the highest average broadband speeds, South Korea, implements
local loop unbundling since 2002.
The same goes for most European countries that on top of easily accessible competition
with reliable high speed broadband also get it at a lower price than in the US.
But what's most important is that consumers finally get access to a proper broadband competition.
Internet Service Providers don't have to follow government regulations on how to manage
their networks.
And incumbent carriers can still offer Internet Access Service to their customers, only now
they have to face competition.
There is plenty of room for various implementations of local loop unbundling.
Most countries with this regulation only apply it to DSL, because that's their dominant
way of consumer broadband.
Digital Subscriber Line, is one of the most widespread in the world but not in the US.
But it would still be good enough even for the US were cable broadband is dominant even
if it didn't have to follow the same DSL unbundling rules.
Competition to cable enabled by the abundance of DSL providers would include cable broadband
providers just as equally, because DSL forms a perfect substitute for consumer Internet
access.
But even if that turns out to be false, local loop unbundling could be just as feasibly
applied to cable incumbents as well.
And on top of that, regulating older technology and deregulating new ones have proven to incentivize
innovation.
Seeking escape from unbundling requirements of the DSL, incumbent companies will have
more incentives to upgrade their network to fiber optic or develop new technologies that
don't need to abide by this regulation.
Local loop unbundling isn't a permanent solution.
It's possible that future technological progress will bring new ways for open Internet
access were further government regulation won't be necessary.
But it is a far better regulation than net neutrality because net neutrality recognizes
Internet Service Providers as natural monopolies where they shouldn't be.
While local loop unbundling only recognizes companies as monopolies at infrastructure-based
market where there is objectively no room for competition.
It enables competition where net neutrality would mandate its doomsday.
It's also a far better solution than doing nothing which is what has been proposed by
the architects of the repeal of net neutrality.
It's not an ideal solution but a necessary one.
Telephone network providers have been natural monopolies pretty much everywhere in the world
for the past century or so.
Virtually all of the modern economy has moved to the Internet.
If you can't be reached on the Internet, you don't exist.
Sometimes, a simple Google Search algorithm change can make small businesses go dark over
night.
To give Internet Service Providers the same power Google enjoys with their search engine
monopoly, would be to surrender the entire economy to a handful of telecommunications
monopolies.
It's easy to switch a search engine or a social network.
But for many people it's almost impossible to switch an Internet Service Provider.
20 years of cable TV consolidation has led to the creation of multi-billion dollar conglomerates
that control our media, economic establishment, and political discourse.
A simple change of words from "telecommunications" to "information" can completely rewrite
all net neutrality rules made by the previous administration.
So we either break up broadband providers and create free market, or we settle AT&T,
Comcast, or Verizon as monopolies and hope they won't try to take over the government
and the rest of the economy again like they did multiple times in the past.
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