WSJ: Internet Wrecking Ball

Imagine a town that has all sorts of gasoline pipelines running by it but only one gas pump. Rationing is inevitable. So are price controls.

Everyone gets equal amounts, except of course first responders like police and ambulances, which should get all the gas they want. And, well, so should the mayor. And if you can make a good business case that you work 60 miles away, you can file paperwork and perhaps pull some strings for more gas. How about those kids hot-rodding around town who can't drive 55? They get last dibs, and maybe we can sneak in some gas thinner to slow down their engines and not waste gas.

You can do all that and constantly update the gas neutrality rules -- or you can just open another gas station across the street. Or one on each corner.

The trick to an open and innovative Internet is not sneaky technical fixes nor more rules and regulations and bureaucracies to enforce them. The Internet will only expand based on competitive principles, not socialist diktat.

This is the essence of the Ed Markey's (D., Mass.) Orwellian-named Internet Freedom Preservation Act of 2008, which would foist network neutrality on the wild and woolly Internet. The Federal Communications Commission is holding a public hearing today at Harvard Law School in Cambridge, Mass., to build the case for the ill-conceived idea of preventing, as Mr. Markey's bill would, network operators from using technologies that may favor one application over another.

It's a bad idea because the only thing Mr. Markey's bill will preserve is mediocrity via the lack of competition, and full employment for regulators micromanaging a business whose very innovation comes from the lack of rules. With net neutrality, there will be no new competition and no incentives for build outs. Bandwidth speeds will stagnate, and new services will wither from bandwidth starvation.

The idea of network neutrality is that all of our Internet packets are equal, and that the spirit of the Internet and its ability to create wonderful new applications like Google, MySpace and Facebook is predicated on open (albeit limited) access for all. Yet, despite an overabundance of bandwidth pulsing throughout the U.S., we are still stuck with rationing to our homes. Haven't we learned that advancing technology is never served by arbitrary rules to divvy up scarce resources? Look at the dearth of good cell phone applications. Rules make incumbents lazy.

This is all in response to Comcast trying to kill off pirates. Arrgghh. After denying it, Comcast was caught "traffic shaping," sending TCP Reset packets to stop P2P BitTorrent downloads.

In plain English: Comcast is this country's second largest Internet provider and has been plagued by mostly illegal copyrighted video file sharing that is chewing up half or more of its precious bandwidth. More of that than you'd think consists of "Family Guy" episodes. Comcast, whose growth is slowing and whose stock is down 30%, is acting scared of the day when video is delivered one episode at a time instead of via Basic Cable, threatening its bread and butter.

So Comcast took matters into its own hands and applied a sneaky technical fix, a fake message that severely slowed these peer-to-peer video downloads. By the way, this same technique is used by the so-called Great Firewall of China to censor search requests like "Falun" or "Tiananmen." Nice company.

So that's it, isn't it? Comcast's franchise is threatened so it got out the bag of dirty tricks. Google, who you would think has a huge incentive to kill the video star, supports net neutrality. Google has become an incumbent, protecting its no-longer-modern textual ads.

But new layers of regulation just mean long gas lines/slow bandwidth. We have faux competition, cable monopolies versus phone monopolies. Cable modems work by taking away a TV channel or two and using them for data, at $59 per month for 4.5 megabits per second and $69 for 8 meg (while 100 meg in Japan is $30/month).

I have no problem with Comcast cutting back BitTorrent or anything else, as long as I know about it and I have a choice to go elsewhere with my business. But I don't. I might like Comcast service without BitTorrent because my Web pages will come up faster. Others won't. But there is no elsewhere. Antiquated franchise rules mean there's only one cable provider in most towns, and AT&T's DSL service over creaky phone lines is way too slow.

We need policy to help cut a path for more competition, rather than protecting incumbents -- a Bandwidth Competition Act of 2008, not bogus net neutrality. All takers should be allowed access to poles or underground conduits. This is where neutrality should be enforced, instead of being a choke point.

Municipal or privately run wireless data services using Wi-Fi or WiMax should be sprouting like weeds. But they aren't being built because of lack of access to street lights, of all things, to set up access points. Verizon is busy rolling out a fiber optic service, FIOS, that will provide much higher speeds and real competition to Comcast. But it is slow going, as state by state video franchise rules still favor cable over any newcomers.

A stroke of a pen can cure these ills, incumbents be damned. They will adjust. I personally would climb telephone poles on my street to run fiber if I could get 100 megabit Internet service. Any takers? Talk about an economic stimulus; this is the type of infrastructure we need. The stock market will fund it all as well as resolve overbuild problems.

Don't think of Internet access as a static business -- someone put in phone lines 50 years ago or cable lines 20 years ago, and we are stuck with their limitations. Technology changes the game every few years. Even fiber lines put in today will be obsolete within 10 years and need upgrading. Same for wireless systems.

The trick to an open and innovative Internet is not sneaky technical fixes nor more rules and regulations and bureaucracies to enforce them. The Internet will only expand based on competitive principles, not socialist diktat. The more we can do to clear a path, the greater our national wealth will be. Comcast did us a favor by bringing this net neutrality debate out in the open. I hope the FCC doesn't fall for this lousy idea.

Mr. Kessler, a former hedge fund manager, is the author of "How We Got Here" (Collins, 2005).

Comments

[Les Cargill]

The last mile is a disaster area. Like the battle of Cold Harbor, it's trench warfare and technology will not change this. It will only make it worse. WiMax is stillborn and will continue to be. Comcast et al are driven by having to pay huge economic rents to content providers and that seals their fate. Without those rents, there will *be* no content. See "Be Kind Rewind" for details. The only thing they can afford to do is play defense. But the economic rents of the content providers will drive anyone who "competes" to the exact same behavior.

We've already seen Yahoo et al be prepared to discard mechanical licenses on replicated, downloaded content - which leaves the creative contributors out in the cold. Shades of LeRoy Percey and the Greenville Flood - ironic, given the historical role of the Lomaxes.

Other than doing something straight out of Proudhon, nothing can be done. It's Chinatown, Jake. Grab a banjo (or oud, or froglike magic twanger) and make your own entertainment product. Only live music is any good, anyway.

[Matt]

Andy - in your gas example, you make it sound as though there is enough gas for everybody and that we can open have more output at no cost to anyone already consuming. This is just not a true analogy. We are close to the point where there is not enough bandwidth. By giving more bandwidth to the highest bidder you are forcing other players out. THAT is what will stifle innovation, not the other way around - Matt.

[Edward R. Wales-McGrath]

Why are European bandwith rates so much faster than ours when they have net neutrality. This sounds more like a lobbying piece from Comcast/ Verizon than any sort of rational opinion. There is very little honesty here.

[Ben]

I agree with Matt -- how can you expect faster bandwidth speeds at better prices if the net isn't neutral? Even worse, imagine if your ISP decides to give you slower than usual access (or none whatsoever) to The Wall Street Journal website because it is affiliated with the New York Times. Maybe next time you should check with some experts in the field (ie John C. Dvorak of PC Magazine) before hastily coming to an opinion.

[John Gage]

You have no understanding of this bill or the internet apparently. The internet isn’t like a gas pipe BTW.

The Internet Freedom Preservation Act only guarantees that the Telcos don't cut secret backroom deals with other “mega-corps” to throttle the bandwidth they've sold me.

Connectivity in the USA is ranked 17th in the world... in many other countries bandwidth is faster, cheaper and regulated. The current system isn't working… internet connectivity should be treated like an "information utility" and regulated as such.

[Rob Eamon]

This response from John Dvorak is a bit in your face, but there are many salient points:

http://www.pcmag.com/article2/0,2817,2269835,00.asp

[Rafael]

A guy that thinks Internet bandwidth is like gas is a guy who does not understand what Internet is. Do not let this corporate lackeys fool you, use the Internet, get more information on the subject and you will know how far off this guy is..

[Mark]

I think the point is to eliminate bad legislation instead of layering more bad legislation on top.

Unfornutately while you can create laws far to easily, you cannot understand an entire economic system. You cannot predict with near good enough accuracy human behaviour and responses to artificial incentives. Every model, no matter how robust, is somewhat wrong. Mix in the speed of technological change, and there is no way government can get it right in this case. The only good laws are one that protect individual freedoms, including the freedom to compete. I firmly believe we have a dominant technology industry in the US because it was thankfully left alone. Let's continue that trend.

[Nick]

Andy has written about this before - http://www.weeklystandard.com/Content/Public/Articles/000/000/012/348yjwfo.asp?pg=1. I would read this before calling him a "corporate lackey."

[Matt Stofko]

In how many places can this article be inaccurate or paradoxical? Let's start counting:

1. "This is all in response to Comcast trying to kill off pirates. Arrgghh."

BitTorrent can and is used for much more than "Arrgghh, pirates." So, more accurately, the quote should read: "This is all in response to Comcast trying very unsuccessfully to kill off pirates. At the same time, they severely inconvenienced their customers, who often have no other solution to turn to."

2. "With net neutrality, there will be no new competition and no incentives for build outs. Bandwidth speeds will stagnate, and new services will wither from bandwidth starvation."

Net Neutrality is the idea of preserving how the internet currently has been operating. We aren't introducing anything new here. So, you're saying that if we preserve things how they currently are, that bandwidth speeds will stagnate. Well, in 1993 I was using a 14.4 Kbps modem, and now I'm using an 8 megabit cable connection. While not with pace of the rest of the world, I hardly call that stagnation.

3. "Municipal or privately run wireless data services using Wi-Fi or WiMax should be sprouting like weeds. But they aren't being built because of lack of access to street lights, of all things, to set up access points."

The lack of municipal Wi-Fi access comes in the form of fat payoffs to municipal governments. Why don't you state that? Probably because it has nothing to do with this argument at all. Let's move on...

4. "Yet, despite an overabundance of bandwidth pulsing throughout the U.S., we are still stuck with rationing to our homes. Haven't we learned that advancing technology is never served by arbitrary rules to divvy up scarce resources?"

Which is it, an overabundance or a scarcity? Make up your mind.

5. "The Internet will only expand based on competitive principles, not socialist diktat."

The Internet will expand, period. Currently, the "socialist diktat" is a government sanctioned monopoly on high-speed access. Asking for those government sanctioned monopolies to play fair doesn't seem like an impediment to expansion. Instead, it's the only way to get some guarantee of service in a market where a customer basically has no recourse.

Like the article states: "We have faux competition, cable monopolies versus phone monopolies." You can thank the socialist diktat for that. Until that one is lifted, I want some neutrality among the players.

[Jimmy Daniels]

Hey, maybe he was confused from the Internet is a bunch of pipes guy and thought the gas analogy sounded good. He's obviously too busy to actually check the facts to see what net neutrality really is.

[Rob Eamon]

Thanks for the link, Nick.

http://www.weeklystandard.com/Content/Public/Articles/000/000/012/348yjwfo.asp?pg=1.

That's a much better article on the topic than is the one here. It's almost as if they were written by different people. The one here is awful on many counts.

The point in the link above about how net neutrality legislation most likely won't be anything like what most posters here want to be was interesting. As with so much legislation it seems, a law will likely have the opposite effect than what was intended.

[JJ]

An article that contradicts itself, but I particularly love this bit of self-immolation: "Cable modems work by taking away a TV channel or two and using them for data, at $59 per month for 4.5 megabits per second and $69 for 8 meg (while 100 meg in Japan is $30/month)."

Here's a link to a Washington Post article from last year talking about Japan's internet industry, which contains this tidbit: "Japan has surged ahead of the United States on the wings of better wire and more aggressive government regulation, industry analysts say."

http://www.washingtonpost.com/wp-dyn/content/article/2007/08/28/AR2007082801990_pf.html

[MasterRanger]

You, sir are either an idiot or a shill for the telecom companies.

The sad state of competition in connecting to the internet comes not from Net Neutrality. It comes from the fact that the telecoms in the 90's conned the government into giving them hundreds of billions of dollars in tax breaks on the PROMISE that they would provide fiber to the home.

Instead they bought all the small companies that were providing access, or drove them out of business, then re-conglomerated into the new AT&T. Your world, delivered to the NSA.

Wake up, old man. You know nothing about technology.

[Will Woodard]

I'd like to hear Mr. Kessler respond to the points raised in these comments, please.

[Jared Hansen]

What on Earth would you do with a 100mbps internet connection, anyway? You'd be completely occupying at least one corresponding server to do it. I don't think you understand how expensive (and how absurdly limited the market is) for that kind of bandwidth, now and for the foreseeable future. Even video on demand doesn't need anything close to that. If you want it, go ahead and buy it now - it's called a pair of T3s. Have at it.

And fiber optics don't need to be upgraded every 10 years. Only the transceivers on each end need to be changed! (which is a "cheep" upgrade that effectively happens on it's own anyway in the form of replacing failed equipment).

Net Neutrality comes in a lot of different forms, but to simply say that ISPs cannot limit bandwidth based on server source is a no-brainer. This is saying the equivalent of "Comcast can't block Google or a whole Google sub-service." This doesn't require a bunch of regulation. It would be easy to identify it when it starts to happen en-masse. However, ISPs do and should have the right to say end-customers can't run a high-bandwidth server on a consumer line. They ought to disclose these policies more clearly, as well as define what they are going to do when congestion occurs, but they ought to maintain the right to simply manage their networks. This isn't some dark privilege. To say that is to say the electric company can't install circuit breakers!

It's important to note that cable and wireless delivery mechanisms are much more limited in their overall bandwidth than direct technologies like Fiber and DSL. Comcast CAN deliver up to 8mbps speed at times, but they can't deliver it to everyone, all the time. That's a limitation of their technology. You, the consumer, are responsible for understanding what you're buying. If you want consistent speeds, get DSL! I've used Comcast and AT&T DSL and work in the IT industry - I need a certain amount of bandwidth. I can tell you that the differences in actual speeds is negligible in almost all cases except for very large downloads from very well-hosted sites (just because you might get up to 8mbps downloads doesn't mean the servers you're downloading from are going to deliver anything close to that - and almost universally, they don't). When is the last time you downloaded something that took 1-2 hours? For 99.99% of Americans, the answer is "almost never". Or the question, "If you had the choice of paying 3x more for being able to download something in 2 hours instead of 6 hours, while all other services stay the same, would you?" 99.99% of people will probably "No."

Therefore, there is competition (I'd like more, but...), and the insistence that we need ever-marching bandwidth really isn't founded in reality. One good idea, however, would be to have a single physical pipe along the "last mile" that anyone can slide their cables or wires into. The pipe is owned by the city, not any individual company, and companies pay a mild rent on the pipe. The first company to dig also puts in the pipe but gets reimbursed for the expense. That way, we stop wasting so many resources installing redundant infrastructure, lowering the barriers to entry and facilitating new-comers and competition.

[M]

This is a copy of a letter I sent to the FCC and also posted on John Dvorak's forum.

To: KJMWEB@fcc.gov, Michael.Copps@fcc.gov, Jonathan.Adelstein@fcc.gov, dtaylortateweb@fcc.gov, Robert.McDowell@fcc.gov

Good Afternoon,

I am writing to you about two current issues that are both closely related to one another. I am referring to the practices of cutting off service to so called "Bandwidth Hogs" and the practice of interrupting particular types of network traffic, also to stop bandwidth hogs. With so many new technologies hinging on open Internet access, it would not be in the best interest of consumers, or for the country as a whole, to allow individual ISPs to decide what traffic they will or will not allow. The USA, once the undisputed technology leader of the world, is falling behind in nearly all aspects of technology. Much of this is because of established industries trying to protect their business models. The Cell Phone industry and Internet access speeds are two examples of the USA falling behind other world nations. Our falling behind is not due to inability, it is due to corporate greed.

Comcast is currently using deceptive practices to limit what they call "bandwidth hogs." Comcast says it is doing this for the benefit of all users, but it is really doing it for its own benefit. Any other type of business has to increase its capacity to accommodate its customers. Isn't it illegal to sell a service that one cannot provide? If I sold 1000 concert tickets for an event being held in a 500 seat hall, wouldn't I get arrested for fraud? What about a restaurant that controls ketchup usage by only have one bottle to be shared by every table. (It's not our fault you have to wait for the ketchup, Sir. That hog over there is using too much.) Comcast was happy enough to sign everyone up, but now that there are so many more services and activities available online, they do not allow their paying customers to use the service they are paying for. To cover this poor business practice, Comcast is saying they are doing it to "protect" the other users in the neighborhood. That is nonsense. It is an excuse to avoid upgrading their infrastructure to provide the service they have already sold to their customers.

I have been online researching IPTV. That is, to be able to watch TV from anywhere in the world on my PC via the Internet. It is available in other countries. Apparently, from what I have read online, American ISPs block Internet TV from geographical regions other than one's own. This is to stop users from accessing free content that could compete with the products they sell. I feel this is monopolistic behavior, and illegal censorship. This should not be allowed under any circumstances. Most high speed ISPs are either phone companies or cable TV companies, both of which are trying to compete in both phone and TV content markets. Should Verizon or Comcast be allowed to send reset packets in the middle of Internet phone calls to "protect" the other users in the neighborhood? If a paying user is downloading or receiving streaming movie content from another service, should the ISPs be allowed to send reset packets, or block it entirely? If Comcast were to buy public stock in Microsoft, should they then be allowed to send reset packets to anyone attempting to use Google's free online office programs to "protect" other users in the neighborhood from those "Google using Hogs"?

Another aspect of what Comcast is doing is cutting off service to paying users that "use too much" of the service they paid for. Comcast is charging approx. $45 a month for Internet access. Most users check their email, and surf the web a little. They do this for maybe an hour or two each evening, and much of the bandwidth is idle while email or web pages are being viewed. With web browsers caching most of the elements in web pages, rather than re-downloading them on each visit, the actual downloaded data is further reduced. I doubt the average user actually consumes 1.0% of the potential bandwidth available. (Actually, I doubt the average user consumes 0.1%. I looked at a breakdown of bandwidth usage at work several years ago, and it was well below 1%!)

I feel that in order to get my money's worth, I need to have a continuous stream of data going up and down my wires. In other words, I need to use 100% of my potential bandwidth. Then, and only then, would I be getting 100% of my money's worth. Due to the overhead involved, I doubt even the "Bandwidth Hogs" are using 50% of their potential bandwidth. And this is on top of the fact that one rarely, if ever, actually sees the "Max" speeds that have been (falsely?) advertised. Comcast is claiming downloads of up to 12 Mb/sec. That equals 1.5 MB/ sec. Multiply that by 60 sec/min, times 60 min/hour, 24 hours/day, and that equals a potential of 129,600 MB day. Comcast has disconnected users for 1000 MB/month. That is 0.0078% of thier potential. Who is the real Bandwidth Hog? Comcast, that's who. Comcast wants to get rid of the hogs and keep the "1 percent-ers" at full price. If they were to go to a "pay what you consume" format, they would have to provide detailed usage reports, and people could see what they have actually used. Rather than charging the "Hogs" more, Comcast would have to refund the 1 percent-ers 99% of their money.

Right now, we are looking at the age old question of "Where do we draw the line?" How much cheating do we let slide? How much corruption do we ignore? How much unfairness is fair? The only fair place to draw the line is at ZERO! I am personally not concerned with foul language on the radio or nudity on TV. I am able to change the station myself. I need you to focus on important issues. Important issues like Net Neutrality, and affordable unfettered internet access for all Americans. By upholding Net Neutrality, and forcing ISPs to be opened and honest in their business practices, American consumers will be better served, and the new technologies appearing right now and in the future will be available for us to consume and expand upon. Otherwise, the USA is doomed to being a backwater nation in world technology. Please do not let this happen.

Sincerely,

Michael P. Lashinsky

mlashinsky@gmail.com

cc: John Dvorak, PC Magazine

[Bill Kleinebecker]

It seems this whole discussion can be focused on the residential "last mile" market. We have competition and the abundance it brings about in the national backbone and, in large cities, the metropolitan networks.

There are two camps in these discussions: tightly regulate broadband to the home because there is a duopoly in most localities and let there be competition, however cut throat. (Hey, unless you want to make this a national priority, which I've heard nothing in the general press about. What's different in these practices that is different from other fine print put in by vendors ward against have a "hog".)

There is a third way and that is to encourage new competitors based on new technologies that don't have barriers to entry like the cost of digging up neighborhoods. My faves of such technologies is Wi-Fi Meshes, WiMax, and Broadband over Powerline.

[Mike Fitzgerald]

Mr Kessler, perhaps you like having brownouts in the middle of a summer heatwave? The power companies can and do cut your power flow when needed to preserve the greater good, but at least there are fairly strong regulations in place to keep this type of action from being capricous.

Comcast's actions in traffic management are a response to selling more capacity than it currently has or is willing to invest in near-term. Bait and Switch? No, because the consumer knows what s/he's getting; the contract clearly states so. False Advertising? No, the fine print shows up just fine on TV - can't everybody read 6000 words per minute?

Maybe it's high time the deregulated utilities get called to the carpet by some reasonable Representatives and some new reasonable regulations.

[D Hicks]

I have found in life the following - The greater the education can mean a larger idiot, "Too bright by half".
Long live corp. welfare.

[GS]

You are far too quick to relegate almost complete and utter control to a very small subset of people. The Internet is lifeblood for many people and keeping that as open and democratic as possible is essential.

What you are implying is a dictatorship of control by media giants who have no vested interest other than to themselves. You speak of a very slippery slope. So much for the land of the free maybe we should rename it 'The land of the people who can only do things they are told to do and not anything else.'

The actions you describe are akin to saying 'Because some people steal money from a bank it MUST mean we have too many banks. Lets make it so there are only a couple of banks and limit what people can do to benefit the bank only'

You speak of an Internet with much much less competition. Less competition leads to stagnation... You have it backwards.

[Jerry Killian]

"I personally would climb telephone poles on my street to run fiber if I could get 100 megabit Internet service."

Please do. Would Friday be OK?
The weather channel predicts rain, with a possibility of lightning.

[Daniel Pennington]

The comments section makes it quite clear that there is a lack of understanding on both sides of this, with impassioned and somewhat naive opinion filling in the gaps.

Both Dvorak and Kessler have very good points, patronizing them over the analogies used to convey the general idea is probably one of the most giddy approaches you could take to argue on this... After all, maybe you understand the basics of load distribution across the internet but *you* don't understand how a gas pipeline works in-the-least...

I think 90% of these comments are being made by people with a heavy bias and maybe even with a pony in-this-race...

Bottom line is no one should have a monopoly on the web... take the Darwinian approach and stuff it, and take the corporate monopoly approach and stuff that even farther...

I find it extremely suspicious however that so many "open web" folks are wildly in-favor of regulation without any knowledge of the finer legal points of it...

Go look at the aftermath of the Federal Telecommunications Act (even it's own writers tried to stop it's enactment once they realized what they had *truly* done)...

Japan and Europe have great bandwidth, agreed... There's is a simple, albeit extreme, way for any of you to take advantage of that you know...

[Alan Stanley]

It seems that the article was a paid advertisement by Comcast. As usual, the 'facts' were supplied by the telecoms and not vetted by Andy. Too bad some people get paid for their 'journalistic' efforts. No, we are falling behind the rest of the world, but wait... isn't that what some people want? Don't they want to make the United States a Third World country? No, I don't need 'big brother' monitoring my Internet traffic and phone calls, and that includes my ISP. Sorry Comcast...

[Steve Uhrich]

"I have no problem with Comcast cutting back BitTorrent or anything else, as long as I know about it and I have a choice to go elsewhere with my business."
This sentence indicates your unapologetic, naive trust that Comcast and other big ISPs will not all eventually use selective traffic or their large market share to drown out less well-financed voices. This, as you might imagine, would leave you no choice to go anywhere else. While I normally respect your postulations, it seems you have fallen hard to one side. As if giving businesses the ability to court the hammer of the market to drive innovation will always be free and clear of any potential graft. As if the negative socialist tendencies you fear are inimitable in our socio-political system.