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What the heck is Net Neutrality?

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What the heck is Net Neutrality - and why might we need it?

Net Neutrality is all about "Who pays" when you access a website or read an email.

Right now - you pay your Internet Service Provider...the "ISP" (typically a cable TV company or a telecom business) for the bandwidth - and the owner of the website pays for the content and the computers to "serve" that data.

Net Neutrality means that your ISP is not allowed to block specific sites without your permission, not allowed to make data from one site get to you faster than from some other site.   They are like the phone company - it's their job to route calls - and it's none of their damned business what's in the call or who you're calling.   For example, a phone company cannot legally give you worse audio quality on a call to a rival phone companies subscriber.  They can't see that you need to call your Mom frequently and jack up your rates for calling her number.   "Phone Neutrality" is something we all enjoy and assume.

Abandoning Net Neutrality means that ISP's can charge you extra for accessing certain websites - and make websites that they don't like go so slowly that they might as well have blocked them.

For example - most ISP's in the USA are either cable TV companies - they are the only businesses with enough of the right high speed wires to get data to your home...so they are very likely to be your ISP.  Now, some of the more popular websites are NetFlix, Hulu and Amazon-Prime - and people are switching from watching cable TV to watching NetFlix, Hulu and Amazon-Prime in vast numbers.  So - without Net Neutrality - what will the cable-TV companies do?   Dunno about you - but if I was them, I'd slow down the data from those three companies (and others like them) to the point where they were unwatchable...this would force people back to watching cable TV.  Another possibility is that they'd charge you an extra fee to get fast access to those websites - which means you'd be back to "Paying your cable bill".   Perhaps the most likely result would be that the ISP's would go to those streaming companies and demand payment in order to not slow them down and put them out of business.

None of those three options is particularly attractive to us, the paying customers.

But all three of them cause another subtle - but very dangerous - consequence.   It stifles innovation.

Suppose you and I get together and decide to start a new video streaming service...we think of some clever innovative way to do it, or we find a novel kind of content that people really want to watch "All Cat Videos - All The Time!" maybe...but basically, we want to compete with NetFlix and the other big guys.

Right now - with Net Neutrality - we can set up our site, upload our video content, promote the heck out of it - and who knows?  Maybe we become billionaires overnight - or maybe it bombs horribly.   But the point is we can "Follow the Great American Dream".

Without Net Neutrality, the moment the ISP's (aka Cable Companies) figure out that we're starting to get liked - they'll either:

  1. Slow our feeds down until we're unwatchable...and we go broke for sure.
  2. Charge their customers extra to watch our cat videos...and we go broke (almost) for sure.
  3. Charge us money to stop them from doing either (1) or (2)...and we go broke for sure.

If Net Neutrality had not been the way things worked back in the day - we wouldn't have NetFlix or YouTube - they'd never have gotten started.

But it doesn't stop there.   It's not just competitive video streamers that the ISP's might go after.   Suppose, for example, your local cable company is run by someone with strong political leanings.  Without the guarantee of neutrality - they can slow down sites that support their rival political party into oblivion.   They can completely prevent any message that's contrary to their viewpoint from ever being seen.

The political proponents of abandoning Net Neutrality say that the market will sort this out.   So, their idea is that if some ISP's did anything obnoxious like this - we'd just pick a different ISP...the bad ISP's would lose customers to the good ones - and the bad ones would either mend their ways or go out of business.

I don't know about you - but do you actually have a choice between two cable companies?   I don't...nobody I know does either.   Basically, if you want to watch decent TV, you can choose between THE ONE AND ONLY cable company that has cables that reach your home - or you might be able to use Satellite or Cellular Wireless.   But those last two options aren't workable for Internet access - they are just too slow, and they rely on using radio waves - which are a shared resource...the more people who use those services, the slower they become.  Also, the laws of physics limit the speed you can get out of them.

The ONLY way to get fast connectivity is physical wires (or optical fibres) running through holes in the ground to your house.

The Cable companies own those wires, and the poles and tunnels they go through - and no "new" cable company could possibly afford the costs to dig up all of the streets to get more wires to your home to give you a choice.   Google tried that - and even with their enormously deep pockets and huge incentives - they couldn't get it done beyond a few key cities - and even that is being back-pedaled on.  In the few places they DID get into, the local cable companies paniced and put in faster service to their own customers to compete.  So clearly the cable companies are using their monopoly status to avoid having to do upgrades that they could quite easily do.

So we're NOT going to have a choice of ISP's.   They are little local monopolies.

Monopolies do not obey the laws of supply and demand - they can basically do what they heck they want, and their customers have no choice but to suck it up and suffer.

Monopolies are a rare example of an industry that has to be regulated by the government.   Yes - I know, the Republican's hate government regulation - but in the case of a monopoly - it's a necessary evil.

So what might happen if Net Neutrality falls?

It is my belief that the cable companies do not have the will to cause the online video streaming services to die by choking off their bandwidth and slowing them down to a crawl...this would cause howls of anguish from you and me - and would make them look very, very bad.  The word "MONOPOLY" would start to be writ large - and that would force politicians to do something.

I also don't believe that they'll be prepared to jack up our rates for accessing those services - again, customers are railing against the cost of cable TV services already - making that worse might drive everyone over to mobile devices and put the cable companies out of business forever.

What is almost certainly going to happen is that they'll charge those services for the privilage of reaching their customers.   So NetFlix et al will have to negotiate rates with each individual ISP in order to get their services to us.  If that's how it works out then the owner of the website may have to pay ISP as well as you - and the ISP will get paid twice.  Theoretically, they'll use this money to invest in faster internet or they'll reduce your Internet bill - but in practice, (since they are each a local monopoly) it's much more likely that they'll just treat this as a gift from the government.

In itself, that might not be so terrible - but the nature of the Internet - and what made it become the single greatest achievement of mankind - would be entirely destroyed by this subtle change in the answer to the question: "Who Pays?"

We'll get to the net neutrality bit in a minute - but let's first think about "Who pays?"

So let's spend a while thinking about the "Who Pays?" question in general.  Every form of long-distance communications has to be paid for by someone...and who the "someone" is gets interesting.

The Postal Service.

In the early days of postal communciations (before about 1830) anyone could send a letter for free - and the person receiving it had to pay to get it from the postman.   This is an interesting system - but it proved problematic in practice - the poor postal carrier had to go to all of the cost of getting letters to their destination, and then find out that the recipient didn't want it and wouldn't pay.  So in 1840, Great Britain introduced the concept of the postage stamp.   This allowed the person who SENT the message to pay for the postage - and to stick the stamp onto the letter to prove that it had already been paid.  This is a great system for physical mail - and these days, that's how all mail is sent.  But mail isn't like the Internet.  When you visit a web page, you're ASKING the content provider to send it to you.   It's not like email spam of junk postal mail - you have to ASK for the content.

Broadcast TV and Radio.

With the advent of radio, there was an interesting problem - who would pay for it when anyone could receive it?  The "recipient pays" model was not technologically reasonable - and gradually, four different solutions have emerged:

  • Adverts.  By airing adverts, the end user perceives the service to be free.  The content provider (the radio station) collects money from advertisers to pay for the transmitters - so for them, it's a profit-making system.   The losers are the end users - adverts waste your time.
  • In the UK, we have a "Radio/TV Licence".  This is a fee charged by the government to anyone who owns a TV - it's currently £147 (around $200) per year.  This money handed directly to the BBC.  It pays for a couple of TV channels, four national radio stations and "the world service" radio station - all of which have no adverts, no sponsors - and a reasonable quantity of new content.
  • Charity.  The PBS and NPR TV and Radio stations in the USA are paid for by simply asking listeners to send them money.   Amazingly, this works quite well - but they often still use "Sponsorships" - a backdoor advertisement.
  • Direct Sales.  A few TV channels exist to sell people things - it's effectively like an online store on the Internet.  There is generally zero content other than the continually rolling adverts.

Outside the UK, nobody wants a TV license fee.  The "charity" approach doesn't work for big, costly productions (all of the expensive PBS TV shows are made by the BBC!).

That leaves "Direct Sales" - which only works for content that is selling some other product...and Adverts.   So it's no surprise that adverts are the main way that people get to see broadcast and cable TV.

So - what's so terribly wrong with that?

In effect, the recipient pays in their own time and attention span.  But it's an inefficient approach.

TV ads in the USA consume about 20% of your viewing time - if you charged your time at minimum wage (say $7.50 per hour) - then you'd have to say that TV with adverts costs you about $1.50 per hour to watch!   This isn't "free".  If you watch 100 hours of TV per month (pretty typical) - then that's $150 a month...comparable to a cable bill.   And if you watch with your family - then the total cost of the time you watch for BY FAR exceeds your cable bill!

But it's worse than that.  Adverts push up the price of the things we buy.  Imagine you're buying a new car.   The advert for that car probably cost around $500,000 to $1,000,000 to make.  It costs another $500,000 every single time it's broadcast.  About 30% of the price you pay when you buy a car is the cost of the adverts they had to show to pursuade you to buy it!   The numbers are different for other products - but they aren't THAT different.    This hidden additional cost is built into the price of every single product you buy that is advertised.   That price hike by far exceeds the cost of your cable TV bill.

TV supported by adverts is a collossal waste of your time and money.

Cable and Satellite TV.

With Cable and Satellite TV - the data stream is encrypted - which solves the problem that TV and Radio had that anyone could watch it without paying.   So now, it's possible to have a true, simple "Recipient pays" system.  We pay a small fortune for access to these forms of TV - but despite that we're still subjected to horrible numbers of adverts...which is surprising - but it's the industry norm, and it's unlikely to change.   Clearly the cable companies are very fond of this approach - it's a win/win for them.  You pay them directly in dollars for your cable access - then you pay again in the consumption of your time watching the accursed adverts - then you pay a third time in the increased cost of the products you buy.

This is a HORRIBLE system!

The Internet.

So what happens with the Internet?   It's somewhere in the middle of all of those things because content creation is separated from transmission means.

We pay our Internet Service Provider (ISP) for the privilage of using their wires - just as we do with Cable TV.   But because the ISP's have no ability to insert adverts (although a few have tried!) - they have to rely on just that one single source of revenue.   But on the other hand - they aren't making any content - so their costs are lower - and it's a sustainable approach.

Since many ISP's are cable companies - and they see themselves losing their cable TV business to Internet streaming services like NetFlix - in theory, it increases the number of people who buy high speed internet service - but they are used to "double-dipping".  In cable TV, they get money from the consumer AND money from the TV channel (which gets money from adverts).

With our current "neutral" network, they can't double-dip...and that's why they are pushing the government to abandon net neutrality.

The content is paid for by the web sites themselves:

  • Some sites (like my own home page) are provided completely for free - I take a small hit in doing it (about $10/month) and everyone has the opportunity to get my content for free.
  • Some sites rely on adverts...nothing much new there!
  • Others (NetFlix, for example) charge a small monthly fee - it's much less than for cable TV - and even without advertising, they provide similar amounts of content.   They can do this because we're already paying our ISP's to provide the data capacity.
  • Some sites sell stuff...the blog you're reading right now is funded that way - but since everyone is already paying their ISP to transfer the data, we don't need to do any high pressure sales in order to support the content we provide.

Back to Net Neutrality.

Sooo...coming back to the topic at hand...what is this "Net Neutrality" thing?

There is are a couple of additional, more serious problems.

Suppose you're a small business owner - someone with a blog like this one.   If the ISP requires you to pay a fee for the transfer of your data to your customers, who do you actually pay?  There are literally thousands of ISP's operating in the USA alone.   You could end up having to write checks for a dollar here and there to each of them every month!   The sheer difficulty of doing that would be daunting.   Secondly - what happens if something you put up on your website "goes viral"?   If ten million people decide to look at your amazing cat pictures - you could easily be hit with an unexpected million dollar fee!   Nobody could possibly take such a risk.

The practical consequences of that could easily be to drive 99% of websites into oblivion.   The only way to have a web presence at all would be to set up shop on FaceBook or sell your products through Amazon or eBay - and rely on them to pay the ISP's and to negotiate good rates.

What we just did was to create "cable TV channels" for the Internet.  All of those organizations would cover your content in adverts - and now we added a third party to the communications between users and web sites.   Those 3rd parties have to make a profit - so the cost of absolutely everything on the Internet goes up to pay for this unnecessary middle-man.

This cannot be allowed to happen.

It is VERY obvious from the movement of people away from Cable/Satellite TV and into the first competitor to ever appear, that people dislike the cable-TV model for doing business.   We LIKE that the cost of transmission is paid by us and that this gives us access to an almost infinite number of "channels" and other things to do.

Turning the Internet into something that's basically another Cable TV channel would be the death of so many good and wonderful things.

Ask yourself:  Will there be a "Wikipedia" in a non-Neutral net?   It's hard to see how.   Wikipedia is something like the 5th most popular site on the web - and it's run on a shoestring by donations with hundreds of thousands of volunteers adding content.    How could Wikipedia possibly pay the ISP fees?   Well, they'd either have to charge you to read their articles - or smother everything with those accursed adverts again.   Most likely, it would die.

Small businesses would have a much harder time being "on the net" - and innovative new business models that use the internet in clever new ways (things like Uber) could never happen because they wouldn't fit into the one-size-fits-all models of sites like Amazon and Facebook.   Failure to innovate and failure to support small businesses is a guaranteed way to lose jobs.

What Can We Do About It?

Oddly - we shouldn't have to!   Something like three quarters of all Americans want Net Neutrality to continue.   About the same number of senators and congressmen also want Net Neutrality.

Under the Obama administration, rules were put in place to assure Net Neutrality and everyone stopped worrying about it.

There are a small group of cable and satellite companies who think they can turn back time by lobbying hard to abolish Net Neutrality - and President Trump is seeming to agree with them and has instructed the FCC to abandon Net Neutrality.

The reasons are generally claimed to be to "save jobs" in the cable TV industry - but that would only come at the horrific cost of jobs in streaming video companies and in every small business website in America.

The cable TV model has run it's course.   It's become obsolete and it needs to die, along with broadcast TV, VHS tapes and 8 inch floppy-disks.   The companies that do this won't die because they can continue to charge end users for Internet access - and they can compete on bandwidth, customer service, etc.

Check out the videos halfway down this page:

https://www.battleforthenet.com/

What would happen if Net Neutrality goes away?

Well, consider this blog.

Readers here come from all over the world.  They use hundreds - perhaps thousands of ISP's.   If we have no net neutrality, I'm going to have to pay each one of those ISP's some (hopefully) small amount of money for each time you guys read my blog.   How the heck are we (a literal Mom & Pop operation) going to do that?   Clearly, it's impossible for us to verify that each of a thousand demands for money from ISP's every month is valid.   I can't possibly monitor that to veryify that they aren't lying to me.   I can't possibly cut 1,000 checks for $0.25 or whatever every month.

Without Net Neutrality, what would have to happen - just as a practical matter - is that organizations like Amazon, Facebook and Google would have to start to host small websites like mine.  They could monitor charges - pay the ISP's and send me the bill.

This means that ALL small websites would be forced - as a matter of practicality - to work through those services.   We'd wind up with cookie-cutter sites, fitting in with their corporate styles - and you can be sure they'll want their cut of whatever small profits we can make.

Worse still, they are not going to want me to set up  in competition with their core businesses.  Facebook would not be happy with me having "Comments" on my blog entries that don't go through their social network.   Amazon would not be happy with me selling models direct to customers without them taking their usual 10% cut of the sales price.

Instead of having the "wild and free" Internet - where any entrepreneur can set up shop and try to start a new business - we'd have a system just like cable TV.   There would be "channels" - like HBO or ABC...they'd decide which websites are allowed and which aren't.   They'd be sure to want to inject their own adverts.

Basically, the Internet would become indistinguishable from Cable TV.

But hold on a moment - aren't people "cutting the cord"?   We hate the way cable TV works...we LOVE the way NetFlix works.   So why the heck do we want to turn the greatest thing humanity ever put together into the old junky system that we're in the process of abandoning?

The move towards abandoning Net Neutrality would be a MAJOR disaster.   It cannot be allowed to happen.

 

Reader Forum: What the heck is Net Neutrality?

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From: Steve Baker  Date: 2017-07-09 14:48:49  

http://economixcomix.com/home/net-neutrality/
From: Steve Baker  Date: 2017-07-09 14:29:52  

Action Day is July 12th!