Point. Click. Profit. (As published in The Business Journal)

Net Neutrality on the Information Superhighway

Net-Neutrality

Getting around these days has become more complicated. And if you’re not prepared, you may end up at a toll booth with no cash, something that happened to me recently near Denver. I was just able to scrounge up enough from various compartments in the car, but I could easily have gotten stuck.

Back home, now that I can use my EZ-Pass on the Ohio Turnpike, as well as the Pennsylvania Turnpike, the problem of loose change is taken care of, though toll increases have been recently announced. Notably, drivers paying cash will pay more than EZ-Pass drivers.

Toll roads and public highways have been on my mind as I’ve reviewed the so-called net neutrality debate. Software services and content providers are pushing for legislation that ensures Internet services providers (ISPs) may not specially meter or otherwise block specific sources or types of content.

The U.S., they argue, already lags in the widespread availability and affordability of broadband Internet access. Internetforeveryone.org, an advocacy site for net neutrality, points out that “The Japanese, for example, pay about half the price for an Internet connection that’s 20 times faster than what’s commonly available to people in the United States.”

A recent Reuters article (http://www.nytimes.com/2010/08/16/business/16views.html) profiled the economics between what it called the “Pipes” (the telco giants, like Comcast and Verizon, providing the infrastructure to deliver the bits) and the “Swipes” (the tech giants, like Apple and Google, whose software and devices are making increasing demands for data). The article contrasts the Pipes’ “combined net debt of around $143 billion” to the Swipes’ “combined net cash pile of around $140 billion.”

Perhaps realizing this disparity is primed for a confrontation, Google and Verizon issued a joint statement on the topic. The apparent conclusion these two giants have reached is that the wired world should have different rules than the wireless world. To be sure, there is a distinction to be made. Cellular networks were designed for transmission bursts. Meanwhile, today’s 3G-enabled iPhones and iPads are using the same infrastructure for extended downloads of files and streaming multimedia.

Many proponents of net neutrality criticized Google for joining the dark side. Andrew Jay Schwartzman of the Media Access Project warns, “It may make some services unaffordable for consumers and access to those services unavailable to new start-ups.”

F.C.C. commissioner Michael J. Copps cited “many problems” with the proposal. “It is time to move a decision forward — a decision to reassert F.C.C. authority over broadband telecommunications, to guarantee an open Internet now and forever, and to put the interests of consumers in front of the interests of giant corporations.”

There are some who say ISPs who have invested their own capital in the development of expensive infrastructure should be able to profit to the extent that the open market will allow. Henry Blodget at BusinessInsider.com is one such voice:

“If people want their bits delivered quickly and securely, they can pay more.  If they don’t, they can pay less.  It’s as simple (and fair) as that.”

Blodget compares the lobbying for parity in bit delivery to physical shipping. “No one has any problem with the concept that the Post Office treats overnight packages differently than slow-boat ones.”

Blodget’s metaphor hits at the wrong layer, though. The comparable infrastructure is not the shipping routes of UPS and FedEx but that of the highway system itself upon which they have built their business models. If the caretaker of this public asset, that is the government, charged UPS more than FedEx, there would indeed be an outcry.

If you agree net neutrality is important to the encouragement of innovation, you can let the F.C.C. know at this site: https://secure.freepress.net/site/Advocacy?cmd=display&page=UserAction&id=321

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