Study: Net Neutrality Bad for Innovation, Investment and Consumers
by Capitol ConfidentialA study released Tuesday by the American Consumer Institute contains some bad news for proponents of net neutrality. Whereas advocates of “open internet” rules often argue that the institution of the policy is necessary to preserve innovation and would benefit consumers, the study finds that “new Internet regulations, including those now under consideration by the FCC, would restrict technology advances, innovation and job growth.”
The study further notes that “broadband network providers are a leading source of both innovation and new investment in Internet infrastructures.” Innovation and investment are often seen by tech policy observers as integral efforts that will help ensure that a broader base of consumers benefits from high-quality broadband service.
Study co-author Larry F. Darby explicitly tied proposed net neutrality regulations to a likely diminution in “motive” that would, under present circumstances, propel Internet companies to innovate and invest. Said Darby, “All indications are that these well intended regulations would dampen both incentives and opportunities for firms in the Internet ecosystem to continue to invest and to embed new technologies in core networks on which downstream applications and content providers depend.”
A recent study by Entropy Economics also indicated that contrary to assertions by “open internet” advocates, net neutrality would not increase jobs. Analysis of the effect of proposed net neutrality regulation comes as Federal Communications Commission Chairman Julius Genachowski continues to pursue its implementation.
Email this to a friend | Print |
Share on Facebook
| Tweet this
| 
Follow Us on Twitter
Subscribe via RSS
Got a Tip?
69 Comments
Good old 'net neutering'….
Private internet: "celebrate freedom!"
Government internet: "We're not 'censoring' your email, we are 'reorganizing the words' to prevent any misunderstandings…"
Excuse me but I dont want my ISP to be slowing my connection down when I access different websites/ content/technologies.
"……..new Internet regulations, including those now under consideration by the FCC, would restrict technology advances, innovation and job growth………."
Why do they always need studies to point out the obvious and what most of us have been saying all along?
Oh yeah, studies are needed to enlighten Liberals. Whereas a quick analysis and summation of the facts is sufficient for most conservatives (leading to deepened analysis), Liberals must rely on the analysis of others as their own capacity for truth is inhibited by Political Correctness and every other tenet of Leftism.
Then switch providers. Once the market determines that ISPs who try to pull that kind of crap are punished by consumers, they will stop. On the other hand, the government has no motivation to alter its practices.
" Federal Communications Commission Chairman Julius Genachowski continues to pursue its implementation." The control of our thoughts and minds by the progressives continues unabated.
Can someone please give the elevator story explanation of net neutrality? I've read tons of these articles, hell, I work in frickin IT, and I still have no idea what it is.
elevator story: a summary of a topic that can be explained in an easy-to-understand manner in the time it takes to ride an elevator.
I'm on the telecom side of IT and it makes no sense to me either!
The only likely purpose is to limit debate and control who says what…
Good one. Good points, as well. I can't understand why these proponents of Not Neutrality refuse to see the far reaching implications of relinquishing all authority to the government, especially with this congress and under Hussein's FCC.
http://biggovernment.com/ngillespie/2010/02/22/re...
Flashback: http://biggovernment.com/ngillespie/2010/02/22/re...
Everything man can invent man can circumvent. Most people have figures our that if you bundle your content in to an HTTPS stream the ISP's hard ware can not determine the content of the stream so they can not throttle it. I am not worried about being throttled as most of what is being throttles is illegal content sharing.
As a side note if you can not throttle what happens when someone gets a virus which is slamming the internet. Throttling is a very effective counter measure for denial of service attacks. This legislation basically would take away a significant security tool and leave the internet vulnerable.
At a high level what NN is supposed to do is limit the ability of providers to throttle content. Basically people bitched that Person to Person i.e. bit torrent traffic was being throttled. Some are claiming that ISP's have over sold the bandwidth and should be able to give every user 100% bandwidth 100% of the day. However many ISP are fighting this because the infrastructure was never sold or built out using this model. Hence the reason for prioritization and throttling in network equipment.
I think NN has gone beyond it initial intent now to looking at what content should be on the web at least that is what many are attempting to claim.
Here's something to consider: Not Neutrality is just a small part of this government's intent to shove its camel's nose under as many tents as possible. If the whole camel gets into this one it will turn out ten times worse than we thought.
[...] BigGovernment.Com has an activite blog underway that discusses the finding of ACI’s studies on Jobs, consumer welfare, and (most recently) IT innovation. To read the piece and contribute their blog, click here. [...]
Net Neutrality issues existed long before the Obama administration. To characterize Net Neutrality as a liberal ploy is inaccurate, and polarizes what should be thoughtful debate that is technical and business-related.
Proponents of Net Neutrality have these objectives, as stated by the FCC in the Feb 2010 NANOG meeting:
Proposed Rules for Net Neutrality: 6 Principles
1. Access to Content
2. Access to Applications and Services
3. Connect Devices to the Internet
4. Access to Competition
5. Nondiscrimination
6. Transparency
1-4 have been around since the start of the internet. Companies that provide copper/fiber plants are trying to change 5&6.
Brief history:
The issue that started discussions about net neutrality began with peering wars between content providers and the major facility owners (telco's and cable companies), the most memorable (i.e. outage-causing) incidents have been with Sprint and Cogent. Historically, telcos/cablecos have been laggards in the internet game, as their business models are completely different. Now that they have realized that the internet threatens their profit margins, they want a bigger piece of the pie.
To do this, the telcos/cablecos want to either charge more for certain types of usage, or throttle usage (requiring higher user fees for more bandwidth), as they don't make as much as the content providers (google, yahoo, facebook, biggovernment, web-hosting providers, etc). To monitor usage for either option, they will continue (not "start') deep packet inspection in order to determine if internet traffic should be charged a higher rate, either to the end user or to the content provider. Proponents of net neutrality feel that this will balkanize the internet, lead to higher user costs, and make the internet less open than it is today, while opponents of net neutrality want to make more money from their part of the internet infrastructure.
Good thing I have an option… Like many Americans I have a choice between Comcast or… Comcast.
Yeah, lots of choice there to "punish" my provider. What motivation does private industry have to alter ITS practices when they're the only game in town? (Or if the only other game in town, the phone company, does the same crap?) Seems like it's no better than government to me… Except that Comcast can charge what it likes and you just have to take it or leave it.
This will not lead anywhere except for a dead economy and in the end a dead country but both of those can only lead to dead people as a result of the fall into desperation and despotism…
[...] » Study: Net Neutrality Bad for Innovation, Investment and … [...]
[...] » Study: Net Neutrality Bad for Innovation, Investment and … [...]
I would debate on the make more money statement. The backbone and most networks even in private hands are not designed with the expectation that they will receive 100% utilization 100% of the time. ISP's currently charge you based on a calculation of what your projected usage will be. IF everyone who purchased a 6 mb connection used 100% of that connection every hour of the day ISPs would have to have a much higher investment in their infrastructure. From ISP standpoint you have to throttle to manage infrastructure cost. I do not work for an ISP but do manage a private network. I say this because I have been frustrated by filtering in the past but I understand.
Of course the other solution is just to analyze the content you are sharing on you P2P connection and shut off your internet access when you break the terms of service.
[...] » Study: Net Neutrality Bad for Innovation, Investment and … [...]
If ISPs incorrectly gauge projected usage, that isn't a problem for the legislature to solve – the company will either raise rates, go out of business, or label their products appropriately.
Net Neutrality is a big deal to me, but government involvement is not the way to go about it. Competition on the ISP level is the solution – if you want an unthrottled connection, then there will be someone willing to sell you one, at a price.
I've never considered content to be part of NN. That's highly troubling. Control the language, control the debate :\\
I've never considered content to be part of NN. That's highly troubling. Control the language, control the debate :\\
[...] here to see the original: » Study: Net Neutrality Bad for Innovation, Investment and … Posted in Investment | Tags: [...]
I'm not sure what you want to debate about, as it is always about money (as you infer in your post). We probably both agree that the internet doesn't exist as an exercise in kum-ba-ya.
My concern with many of the posts is that people are mis-characterizing or mis-understanding what net neutrality is about. It didn't start as an evil scheme hatched in the fetid corners of the liberal mind (although no-one should be surprised if it did). This is simply a business power-play: now that the telcos have driven most of the small ISPs out of business, they have more clout to increase their margin and demand more revenue from either content providers or from users.
From my perspective as an owner of a fairly large ISP from 1994 to 2003, I want the debate to be about what is really happening, not just an attempt to bash Obama; as good as that feels, there are plenty of other really valid stupidities that we can attribute to the POTUS — but net neutrality is not one of them.
Net Neutrality does not mean that the net will be neutral! It is just the opposite! SPREAD THE WORD!!! This will kill the net, freedom of speech, etc!!!
WE DO NOT WANT THIS, JUST LIKE WE DO NOT WANT GOVERNMENT HEALTH CARE and a MANDATORY FINE / PAYMENT!
Unfortunately, competition is disappearing. If your only options to getting internet access are via cable or the phone line, then those monopolies will dictate your fees without regulation. While I'm no fan of big government either, I recognize that independent (i.e. non-telco) ISPs are disappearing, as they can't compete with the company that owns the physical access. And remember, even wireless has to connect to fiber/copper somewhere.
The free internet has helped so many poor people with low cost businesses.
This is one place where I have to agree with the Dems. Net neutrality needs to exist for sake of promoting capitalism on the internet.
Here's a car example of why net neutrality is needed. "Road neutrality" means that the government owns the roads, and everyone has to follow the same rules in regards to their class of vehicles (ie. cars, trucks, motorcycles). There are exceptions for emergency vehicles, naturally. Ford and GM are classic opponents. With "road neutrality", they have to compete with their vehicles, or at least with their marketing and promotions. Without road neutrality, Ford could purchase a bunch of interstates and then say that only Ford vehicles were allowed on the Interstates. You could still get to where you wanted to go in a GM car, but it'd be a lot slower. This would increase Ford's market share tremendously, while at the same time decrease any incentive for maintaining quality (after all, if yours is the only vehicle allowed to go 70mph, why bother investing in your product any more?). Taken a step further, Ford could then say that they will only allow emergency vehicles headed toward your house on their roads if you pay them some amount each month, called a 911 fee. Once they've killed the competition, they then can jack up the prices on their vehicles.
In terms of net neutrality, this works out to the Daily Kos saying "I don't like biggovernment.com" and then paying an ISP to make page loads to your site take 10 seconds each. The result? Your traffic dries up entirely, for reasons entirely out of your control.
Comcast is probably the worst in the country. There are a lot of reasons for the lack of competition in the smaller field of ISP's in various markets but, as the article points out, government interference (as it always does) will have a negative effect on investment (among other things) creating a new, costly bureaucratic nightmare which will likely lead to an even smaller playing field instead of a larger one with more competitors.
Good point. Yeah, most of the gripes about throttling are meaningless speculation. People get their 'News' from SSL NNTP servers and BT clients can punch through alternate ports (last time I checked).
Nobody is getting their bandwidth throttled for simply watching videos on You-Tube, ABC, NBC, what have you…..
Telco's are already revenue regulated, so I'm not sure this is problematic. What we have is an answer searching for a problem, and net neutrality is designed to stop that from happening. The contortions amaze me, as it is the telcos that want to filter the internet, not net neutrality.
The internet infrastructure works now, which is why you don't have a 28.8 modem anymore. In 1995, a T1 (1.544mb/s) was $3000/month. Now, you can get 10mb/s transit for $10/month. The reason? Lots of dark fiber, already installed. Lighting up dark fiber is insignificant, cost-wise. However, filtering is *very* costly, and the consumer will pay those costs.
(At least) one apology: I did not mean to infer that you were attacking Obama; that was a concern with many/most of the posts on this website. I find your posts to be cogent and thoughtful.
[...] link: » Study: Net Neutrality Bad for Innovation, Investment and … Categories: Investment Tags: both-innovation, broadband-network, innovation, integral-efforts, [...]
I tried to bring up this point several weeks ago. There will be an infrastructure hit right off the bat and the remaining 'little guys' won't be able to compete. The 'bigs' will swallow their customers, passing on more than the necessary infrastructure costs to consumers.
[...] by Capitol Confidential – as posted on BigGovernment.com [...]
anonymous- We have started observing this behaviour as well, it started two days ago. It appears that the rate limiting is on the interconnect between Sprint and Verizon. We used our back channel communications with one of these two providers, and the explanation was that the rate-limiting was required in order to meet traffic ratio requirements for the peering agreement. This is at the expense of Verizon FiOS users.
This is one example why Net-neutrality rules need to pass.
[...] Read more: » Study: Net Neutrality Bad for Innovation, Investment and … [...]
I would rather fight with ATT, Comcast or whoever else wants to sell internet access than the federal government.
And, at the end of the day, this is the choice.
I've been a Telecommunications professional for 25 plus years, I & R, Engineering, and Operations.
Net Neutrality is a vile plan the Obama administration is supporting to fundamentally transform the FCC into the White House Propaganda Ministry.
Anyone who is a regular on this site with a few minor exceptions that is or becomes aware of the ideologies of these people are not going along with Net Neutrality.
Chairman Julius Genachowski, Commissioner Michael Copps, Diversity Czar Mark Lloyd, former Internet Czar Susan Crawford, Science and Technology Czar John Holdren, are all admitted progressives, card carrying members of the 'freepress.org'
I don't don't want the fox in my first amendment henhouse.
Some say this is about commerce….bullshit…these are progressives, this all about command and control.
As you can quickly google, telcos are the biggest opponents of net neutrality…but do it quick, before they decide to charge you more for using google.
Telco's are already revenue regulated
With all due respect I'm reading your posts, as someone who says he has a business background in this business and a 'pro net neutrality I'm a little confused as to your point….contradiction points here.
You're absolutely right – let's forget that Comcast was found to be throttling bit-torrent protocol and FTP access. I'm sure that's meaningless and the court evidence is worthless based on your finding of "simple meaningless speculation".
On the real side your assertion that people get their 'News' from SSL NNTP is belied by your presence here on an http site. We could, of course require that this site join the nutcases that want to delegate all internet port to a port other than the default http port of 80 so it can be filtered while delegating all news sites to a dictated port, etc – we all know that http can be 'punched' through alternate ports – the fact that the servers that serve that traffic are not listening on those alternate ports is meaningless – right ?
I guess one nutcase deserves another.
Keep it up – keep drinking the ISP kool-aid. Like Obama, once they kill net neutrality, the internet will be routed around the US because the US ISPs will have closed all the on/off ramps to US citizens. That will leave us with MSM as our news source and we all know how unbiased and fair *they* are !
I'm going to go get sick now…. <walks away in disgust>
Exactly ! NN is not about content – it's about control of the access pipes and the ISP's wanting to charge tiered pricing based not on usage amount, but on where you go and whether you access sites that are competing with the ISP and / or the ISP's business partners.
Here ! Here ! Well put !
Thank you.
colacguy you are correct about the bandwidth comments, most ISPs use an ethernet based technology which has a finite capacity. So if evrry one down the block is runnig a bit torrent or other high bandwidth operation which taxes the capacity of the network, things slow down. the ISP network engineers then need to increase the backbones capacity to prevent degridation of service…
Here is another hit the money spent the build out the backbone would be taking away from the outer edges of the net. FIOS service has not even hit my area yet. This would certainly slow down that investment.
I don't mind my ISP telling me (via notice in the mail) that they are charging a short-term price increase for infrastructure upgrade (although they should gain this short-term capital via stock offering rather than raising customer rates), then – as the increased bandwith results in more sails, re-purchase the stock with the profits.
What I object to is finding out after the fact that the reason I can't get good service from my ISP is because they are unwilling to make good on the SLA that I already purchased and that is in my contract when I signed up to use them as my ISP. The reason they are unwilling to make good
I also object to my ISP refusing to allow me to put a home network in on a single line or refusing to allow me to run Linux on my computer because their entire offering is built around WIndows-based software, they only support Windows, and without my consent that they can periodically audit my PC, (Windows required because of their software choice), they claim the right to degrade or cancel my service. The tell me this only AFTER I've signed up, they've shipped me my 'installation kit', I've tried to install it and called support because I can't get their Windows CD-based software to install on my Linux box, and then – to top it off – they want to charge me a 25% 'restocking' fee to have me ship their internet modem/software/kit back to them.
The first case is raising revenue to increase bandwidth and service for all.
The second example is an abuse of the effective monopoly position the ISPs have and that NN is intended to stop. No amount of 'competition' can help because of the ownership of the physical cables by the ISPs. They are currently claiming that all their restrictions are 'reasonable' applications of network management, that they are simply managing their networks, etc – while ignoring the fact that they are not complying with their contractual SLAs to their customers, dictating to customers (via 'take it or leave it') what kind and how many computers in a home can have internet access without having to pay for multiple internet accounts (at multiples of the price). They also try to dictate whether people running home businesses can run servers from their homes – the answer is uniformly "'no' – you need to upgrade to our SOHO account at 3-5 times the home user monthly rate".
I see no contradiction.
Telcos are revenue regulated because of their origins with Ma Bell and the Baby Bells. They are regulated because they also control the phone lines to your house and your telephone service.
With the introduction of the internet and the need for physical wires to get it into the home, the Telcos saw an option to bill preferentially based on *DATA* access because they cannot do differential billing for *VOICE* access (due to regulations). It is for the same reason that NN wants to 'regulate' that the Telcos must keep hands *OFF* the internet data pipes and *not* interfere with transparancy or unbiased access.
Imagine if there were no regulation on VOICE services and if the telcos were allowed (due to no regulation) to listen in on your voice conversations – that you no longer have an expectation of privacy in your voice calls, that you cannot make a voice call without going through one of their operators first, then they charge you an extra $30/month for an 'operator assistance fee'. The regulation of VOICE service provides the same types of guarantees that NN wants for DATA.
BZZZT ! Wrong ! Nice try though – please attempt to understand the technology before you spout off next time.
You sound like a knee-jerk liberal that has not done his homework to understand the problem you believe you are solving.
Sorry for replying to my own post, but I'd like to add:
Who has the most to gain by claiming that NN is bad for innovation (Whose innovation ? – the internet's or that of the ISPs ?).
… bad for investment (Investment in the internet in general – or investment in the particular ISP that must provide a transparent service for its customers instead of being allowed to charge business partners big $$$s to access their captive customer base on a preferential basis ?)
Remember Obama's Health Scare plan ? That big pool of national customers that insurance companies can tap if only everyone in the country can be forced to join that pool of insurance customers ?
Same concept – just with the ISP's customer base instead of a nation-full of insurance customers.
Your hatred for progressives has blinded you to the facts in this case, then.
NN is an attempt to leapfrog the FCC by encapsulating a free internet into law at the congressional level.
Technology and internet data-communications professionals realize that the war against the better funded, better connected ISPs at the FCC level is probably lost (the fight goes on within the FCC, but corruption has already set in and everyone knows it).
Taking the fight to the congressional level effectively escalates the issue to the elected representatives of the American people that use the internet – a broader number of individuals not as susceptible to telco chicanery as the FCC.
Most Telcos in the traditional sense only provide transport capacity for data from ISPs unless they are also ISPs themselves. Also if I may, the potential problems you mention have not widely manifested themselves to my knowledge any way.
If I could humbly suggest my post farther dow below, you will hopefully see the point I make about the questionable at best FCC currently in power in this Administration…
Yeah, I know a few folks in S. CA who've been waiting forever. Where I am, I have several choices including 35Mb cable. On 6Mb ADSL ATM but thinking about hybrid fiber/copper FIOS as they just placed a DSLAM box fairly close.
"…..ISPs will have closed all the on/off ramps to US citizens. That will leave us with MSM….."
And I'm the one drinking the Kool-Aid? Sorry. I don't trust the govt and especially not this govt. There's more to this than meets the eye, as was made evident by Julius Genachowski's 'reclassification' move: http://biggovernment.com/capitolconfidential/2010...
Perhaps you should have Googled "NNTP". Maybe then you'd know what I meant by 'news'.
You sure sound kind of nutty for a person who goes around calling everyone else nuts.
Yup, that would be global warming, we know, we know…
Fine the only solution I see to your argument is to legislate what the max profit of an ISP can be. i.e. after operating cost they are allowed 2% profit. Even with said limit I see your cost going up if you mandate no filtering. As an ISP operator you should be well versed in how much addition infrastructure will be required if you remove inspection and filtering.
As far as an attack on Obama I never went down that road.
I guess I look at this much like the health care debate. I do not trust the intelligence of the people in office to appropriately regulate ISP’s. In addition since Google is getting its nasty hands in to the NN I am even more worried if the legislation produced will actually be better for the consumer.
As for your comments on the cost of bandwidth I go back to what I said those cost are based on assumption that you will only use X % i.e. some % less than 100. If you want 100 % all the time you pay for an SLA for that amount which has always been significantly more. Is that not true? Dark fiber is cheap i.e. it has already been paid for out of a cost center but that does not mean the server CO has spare ports or an open blade to populate. At Some point it will require a purchase of additional equipment. Filtering is built in to the routers and firewalls which have already been purchased based upon what ISP’s assumed were the rules of the game.
You are asking for the rules to change in the middle of the game. My argument is that those changes could cause explosive bandwidth growth. That growth would demand a capital investment. Do you expect the corporation to eat the cost?
Those big evil Corporate too big to fail ISPs have had it too good and should pay for it right /ok sarcasm off
Be careful what you quote. It's not only the progressives that have mastered the art of propaganda.
The press is full of paid-for studies that always manage to find conclusions that are favorable to those that pay for the studies.
All sorts of organizations are guilty of selling out their integrity for $$$. Gartner consulting has been proven to have undertaken studies paid for by MS or even to take MS studies and publish them under their names.
Telcos have lots of friends (kinda like congress critters) that go under all sorts of altruistic-sounding names. It appears (from the URLs you cite) that they all refer to the same study. Who paid for that study ? Who conducted it ? For what purpose was it undertaken ? I suspect you've got a 'propaganda-study' there.
Hatred? Your word, your opinion, with an opening remark like that, clearly it would be a waste of my time to converse further with you…
Really? You think anything from this creepy administration in dc is going to be good for innovation?
When the LSM started blatantly lying to everyone,most people said "Eff you.I'll go get the truth myself".
The web is a source for the truth and a delivery tool for many people and the left cant have that.Think for a moment if we didnt have the web and still relied on the idiot box and newspapers.Millions more would be brainwashed.The net is a thorn in their side and they want to control that just like they did with the newspapers and the media.
It doesnt matter what religion,ethnicity, or political affiliation -bottom line is 90% of what the government touches they ruin and then tax you to make it better.If you cannot see our government is our biggest threat,then you need to be put on a boat and pushed out to sea because you are part of the problem.
Diminution in “motive”? The motive is profit, and while I'm sure every one of these companies wants to squeeze every dime they can out of the American public, this is beyond laughable. With a market that includes 99% of the developed world the incentive to innovate and be chosen by as many customers as possible will always exist. Rather than threaten us with stagnant technology, maybe the writer of this article should consider the real damage of abandoning net neutrality. If ISPs can choose which web sites receive priority bandwidth, or connectivity at all, maybe they'll suffer from "diminution in motive" to provide access to anything that might impact their bottom line… ranging from difference of opinion, competition in the marketplace, or the interests of their strategic partnerships.
Correction, please redirect my ire towards the moron that published that "study." Mr. Darby.
[...] » Study: Net Neutrality Bаԁ fοr Innovation, Investment аחԁ … [...]
I am assuming that Ford charges a toll for the road, otherwise they just wasted a lot of money buying a road, correct? By allowing only Ford cars on their road, they are losing all other customers, who will go to competitors' roads. Heck, the competition might build a new and better road. That's how economics works: if you provide bad service for a customer, they will take their business elsewhere.
Are you talking about those dirty pictures groups? Most providers have just removed the binaries anyway…I hear. ahem….
You must be logged in to post a comment.