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Frankenstein Promises to Save Net Neutrality


On the day before Halloween, late at night, Igor called the Wall Street Journal to whisper that the Chairman of the Federal Communications Commission favored a hybrid plan for regulating internet carriage of communications. Igor the Leaker said that Tom Wheeler, spookily attired in a costume as lobbyist for cable companies, his former job, and with face made up to look like a determined protector of the public interest, believed his new plan meets legal requirements, unlike the two previous tries. The proposal, which Igor the Leaker didn’t call the Frankenstein Plan, will distinguish between wholesale and retail transactions.

It would apply utilitylike regulation to the wholesale portion, the exchange of data from the content provider to the Internet service provider for passage through to the end consumer. The retail portion, the transaction that sends data through the Internet service provider to the consumer and which allows the consumer to access any legal content on the Internet, would receive a lighter regulatory touch.

The rationale for the plan, explained Igor the Leaker, is that we wouldn’t want to burden the consumer with heavy regulation like we do to electricity, because that would bring out the twin zombies Discouraging Investment and Slowed Innovation, and we wouldn’t want that, now would we? As you know, the current regime of light touch regulation has so stimulated innovation and investment that we are now the proud nation of high cost for lousy service. A recent study looked at speeds of internet service and cost and found that US cities are slower and more expensive than cities in other countries. The industry claims that costs are higher and broadband access is lower here because the US is so big, but that argument is meaningless in the context of city to city comparisons, like the comparisons in the graphics here.

According to The Hill reporter Mario Trujillo put the work in to read that poorly written study:

The report found that U.S. cities with publically owned networks, like Chattanooga or Lafayette, have speeds far exceeding cities with only traditional Internet service providers like Verizon, AT&T or Comcast.

“In general, our research shows that these locally-owned networks tend to deliver better value to their customers when compared on a price-per-megabit basis to competing cable and telecom providers in their own cities,” according to the report.

The industry claims that it reinvests its profits, allegedly $1.2 trillion since the mid-90s. That figure by itself says nothing about new investment as opposed to repairs and replacement; and replacement of old parts automatically increases speeds as technology advances, because the each new generation of technology is faster than its predecessor. I suspect a significant portion of the money went to campaign contributions and lobbying, because that has the highest return on investment.

So much for the stupid argument that we need more deregulation to get better and cheaper service. What we actually need is tighter regulation to encourage cities to set up and operate their own systems. Study after study shows that companies with monopolies provide worse service at higher prices than tightly regulated companies do, and that applies to pretty much everything. For example, Swiss health insurance companies are tightly regulated, and they seem perfectly capable of making profits and providing actual coverage, unlike their US counterparts. Internet and cable are tightly regulated in France, but prices are lower and generally speeds are much higher.

The US decided to let gigantic corporations run things, corporations big enough to create the entire cable infrastructure, from wiring to distribution. Those corporations also have sufficient power over the government to insure that they are not regulated, that they are free from local regulation and from competition from municipalities in many states, and only have to provide minimum service, minimum customer service, and minimum quality in their markets, because they are protected by the enormous cost of entry barrier for new entrants. The control of the likes of Comcast and Time Warner and other cable and internet providers is evident in the fact that they are wildly profitable and yet they do not compete with each other in any significant markets. Why would they when they can effectively divide the country into sole coverage pretend markets in which they are a monopoly, one devised and protected by the federal government under the leadership of the FCC.

A recent article in the Daily Dot on the issue got a comment from a guy in France, claiming to pay 22 Euros per month for 1 gigabyte optical fiber service, including phone and TV. That drew this comment: “1gb???? Fiber optics??? 22€??? In France??? Yeah right…”. You can’t cure that free market fetish with facts, apparently.

The corporations that use their monopoly power to screw that guy who can’t believe internets are so cheap in France will fight this to the Supreme Court, as Verizon made clear in a position paper to the FCC. They can count on the courts to take away any victory for consumers, as courts always do. If we have to fight that fight anyway, why screw around with half-measures?

Of course, the real Frankenstein is the man who created the monster, Tom Wheeler from his spooky laboratory at the FCC. Actually, you know, it’s not a Halloween story, it’s an April Fools joke on US citizens.

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Frankenstein Promises to Save Net Neutrality


On the day before Halloween, late at night, Igor called the Wall Street Journal to whisper that the Chairman of the Federal Communications Commission favored a hybrid plan for regulating internet carriage of communications. Igor the Leaker said that Tom Wheeler, spookily attired in a costume as lobbyist for cable companies, his former job, and with face made up to look like a determined protector of the public interest, believed his new plan meets legal requirements, unlike the two previous tries. The proposal, which Igor the Leaker didn’t call the Frankenstein Plan, will distinguish between wholesale and retail transactions.

It would apply utilitylike regulation to the wholesale portion, the exchange of data from the content provider to the Internet service provider for passage through to the end consumer. The retail portion, the transaction that sends data through the Internet service provider to the consumer and which allows the consumer to access any legal content on the Internet, would receive a lighter regulatory touch.

The rationale for the plan, explained Igor the Leaker, is that we wouldn’t want to burden the consumer with heavy regulation like we do to electricity, because that would bring out the twin zombies Discouraging Investment and Slowed Innovation, and we wouldn’t want that, now would we? As you know, the current regime of light touch regulation has so stimulated innovation and investment that we are now the proud nation of high cost for lousy service. A recent study looked at speeds of internet service and cost and found that US cities are slower and more expensive than cities in other countries. The industry claims that costs are higher and broadband access is lower here because the US is so big, but that argument is meaningless in the context of city to city comparisons, like the comparisons in the graphics here.

According to The Hill reporter Mario Trujillo put the work in to read that poorly written study: (more…)

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masaccio

masaccio

I read a lot of books.