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July 14, 2017

“Net Neutrality” Protects New Monopolies from Old

Over the next decade which companies do you think will be better able to exercise monopoly power?

  1. Amazon
  2. AT&T
  3. Comcast
  4. Facebook
  5. Google
  6. Regional phone companies
  7. Verizon

If you’d asked me this question in 2000, I would’ve picked AT&T, Comcast, Verizon, and regional phone companies. They are part of local duopolies for wired infrastructure.  They had a comfortable relationship with the FCC which regulated them nationally and with most of the state regulators. They saw the Internet as potentially disruptive and would’ve preferred to have its potential for innovation slowed by regulation. Amazon and Google (and most of the Internet community of the day) were against FCC regulation of the Internet exactly because that would chill innovation.

The Internet won; the FCC chose only the lightest of regulation. We got innovation; Facebook and Twitter happened; Google and Amazon grew enormously.

And then guess what. In 2014 at the urging of Google, Amazon, and the rest of the Internet establishment, the FCC decided it needed to regulate the Internet after all. In an Orwellian twist, this regulation was given the attractive name of Net Neutrality. Its stated purpose is to protect us from abuses that AT&T, Verizon, Comcast and the like “might” commit.

Are the telcos more powerful than they were in 2000? Of course not; even their landline duopolies are less powerful as more and more last mile access to content is wireless and wireless becomes more and more competitive.

Are Google and Amazon more in need of protection now than they were then? Sounds absurd but they’re the establishment now. They are strong enough so they can’t be toppled by smaller competitors with the same products. The only commercial threat to them – as it always is with dominant players – is disruptive innovation. And what better way to slow innovation than regulation? Note also that regulation is usually favored by those who think they can control the regulators (telcos in 2000; dominant Internet players in 2014).

“Net Neutraility” forbids telcos for charging content providers a premium for “fast lanes”. But Google, Amazon, et al already have private fast lanes and local data centers and data caches so that their content can reach consumers faster than content from anyone else. Conveniently Net Neutrality regs don’t cover the private internet expressways. In fact if you pay Amazon to host your site, you too can have a fast lane. But you can’t buy that fast lane from AT&T ala carte without the hosting because they’re not allowed to sell it.

What if someone were to provide a drone-mesh-based fast lane and charge more the faster you want your content to go? Would that be a threat to us? No. Would it be a threat to Amazon and Google? A little; it might be disruptive. Better, in their minds, to subject that service to the strait jacket of regulation. What if telemedicine requires a guaranteed faster service than the public Internet provides? Does it just have to wait until the whole Internet gets faster to start saving lives? Why shouldn’t AT&T or the drone-based ISP be able to sell the faster service at a premium?

If all the ins-and-outs of the Net Neutrality debate are hard to follow, just ask yourself in 2017 if Google’s search dominance is more of a present danger than AT&T’s eroding monopoly. I’m not for regulating Google or Amazon purely because of their size; but I’m certainly against regulation like so-called Net Neutrality which protects their dominance.

See also:

Internet Fast Lanes

An Open Letter to My Friends at Google

Don’t Make the Internet Safe for Monopolies

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