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Thursday, February 22, 2024


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There are three ways to have high speed internet. You can get high speed Internet via cable, telephone, and cell phone. The issue is in many areas you only have one provider of high speed internet and rarely more than a few. This means that there is no real competition.

The Internet Service Providers monopoly was built with the help of the government. Counties and municipalities signed exclusive franchise agreements with cable companies. Phone companies provided lines with numerous government incentives including the Universal Service Fund. The government auctioned off the wireless spectrum to only a few companies. Regulations can restrict innovation.

Currently there is little or no innovation. The telecommunications companies do not have to compete or innovate. These companies are now seeking to control the infrastructure of the internet. They want to be able to regulate connection speeds to certain sites (throttling) or exempt certain sites from counting towards the customer’s data cap. Net neutrality seeks to treat the infrastructure as a utility and prevent the telecoms from regulating or obstructing the usage of this utility.

In 2006, Ed Whitacre, Chairman of AT&T, said that Internet companies (Google, Netflix, etc) need to pay for access to his customers. This ignores the fact that people are paying AT&T for access to broadband to connect to these Internet companies. I pay AT&T to access the Internet and AT&T wants to charge NetFlix for access to me. AT&T does not provide internet content. I pay them to have access to the Internet content and then they want to charge Internet companies to have access to me. Without the principles of net neutrality, AT&T would be able to double dip.

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That is exactly what Comcast did earlier this year. Comcast demanded that Netflix pay them a fee (millions of dollars) or they would slow download speeds for their customers trying to stream Netflix Movies. Netflix did not pay, and their Comcast customers could not watch Netflix movies. This chart shows how the download speeds were effected by Netflix’s decision not to pay and then how it improved after they caved in to Comcast’s extortion. Comcast exploited its customers to extort money out of Netflix. Comcast’s customers are already paying them to be able to connect to Netflix and stream their videos at a reasonable speed. Netflix should not have to pay Comcast to deliver what they already promised their customers. Netflix’s cost of having to payoff Comcast will inevitably be transferred to it’s customers who have already paid Comcast to be able to download movies. This illustrates how the lack of competition leads to open dishonesty and unethical behavior. If Comcast had to compete, they would never think about purposely slowing download speeds because their customers would simply switch to a different provider. In the current marketplace, consumers come last. A certain level of net neutrality has been maintained through merger concessions. When AT&T merged with BellSouth in 2006, re-conglomerating the “Baby Bells,” they agreed to the following for a period of 2 years:

AT&T/BellSouth also commits that it will maintain a neutral network and neutral routing in its wireline broadband Internet access service. This commitment shall be satisfied by AT&T/BellSouth’s agreement not to provide or to sell to Internet content, application, or service providers, including those affiliated with AT&T/BellSouth, any service that privileges, degrades or prioritizes any packet transmitted over AT&T/BellSouth’s wireline broadband Internet access service based on its source, ownership or destination

The problem is, what happens when these companies reach some sort of merging threshold? There will be no ageements preventing them from behaving badly. Comcast is now trying to merge with Time Warner. If the merger is successful and no net neutrality concessions are made of them, I am sure they will continue to uphold the same level of honesty and integrity they have operated under in the past.

Wireless companies like T-mobile, AT&T, and Comcast are currently capping data. They have contracts with certain web apps like Pandora, or iTunes so that when customers use these designated apps, that usage is not counted towards their data cap. When a customer exceeds their allowed usage or data cap, they are then charged certain fees. T-mobile does not charge fees but slows down your connection. Pandora or iTunes is essentially free to use since it doesn’t count towards the customer’s cap. They have a great advantage over other streaming video/music apps since they are free and the others are not. This stifles the innovation of startups and their ability to compete with the established giants.

For years telecoms and cable companies have been testing the grounds to see how far they can move towards “net inequality” because it increases their profitability. They have their tentacles embedded into all political realms. Check out how much cable and telecoms have contributed to the campaigns of the Congressmen on the committees that oversee the FCC. Tom Wheeler, the head of the FCC appointed by Obama is a former cable lobbyist. In May, Wheeler completely undermined the principles of net neutrality when he submitted a plan that would allow ISPs to provide superior service to content-providers for a higher price. Under the President’s plan on net neutrality, the FCC would have regulatory control of the cable providers. So given that the head of the FCC is a cable lobbyist and the majority of congressmen overseeing the FCC have accepted campaign contributions from the cable companies could we trust them with honestly enforcing the principles of net neutrality? Take a look at how the ICC handled implementing similar principles on the railroad industry. If FCC adopts net neutrality, voters and consumers must be vigilant to avoid further corruption of the internet. We must hold politicians and ISP’s accountable.

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