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Tuesday, 19 April 2011

Net neutrality - it might be like socialism: great in principle

Me in Havana, Cuba. I like Cuba.
I'm 100% behind the principles of network neutrality but I have a fear; that it may be a form of socialism: great - in principle..

Just like network neutrality, the principles of socialism are sound.   UK has a national "income" well over a trillion pounds per year; which, divided equally amongst the population, would solve a great number of social ills.

But I think it's widely acknowledged that, in the real world, our GDP - not to mention some of our basic freedoms - would be at risk if we opted for socialism. 

Like socialism, ensuring our networks remain free may perversely require rules.  Legislation to ensure all traffic remains equal.  Or at least some groups like La Quadrature Du Net seem to be arguing the European Commission should intervene now.

Four bits good, two bits better? [ref]

Will this work, or will market forces ensure that, whatever the rules say, some traffic will always find a way of becoming more equal than others?

My fear is that burdening ISPs with regulation to ensure all bandwidth remains equal may have the unintended consequence of stifling innovation, and have an overall effect of stunting growth in capacity.

Before you open fire at me - can I add that the other end of the spectrum, unbridled capitalism or right-libertarianism clearly brings its own problems.

Clearly there needs to be some safety net.  ISPs must offer a good social offering to all connected parties so that innovation can continue with little or no barriers to entry.  And there must also be a regulatory framework to prevent monopolistic anti-competitive practices.

But I'm starting to believe that direct regulation to ensure network neutrality may be the worst option.  As I wrote last month, the lesser evil may be not to regulate.

I see growing monopolies over the internet audience as the biggest threat to online innovation, once one considers all the costs involved in starting a new internet venture.

Cost of starting a new internet business

Connectivity is of course a cost consideration, and could become more so if businesses have to start paying ISPs for preferential traffic treatment. I find the thought of such payments thoroughly distasteful, but in the grand scheme of a business start up I don't see it as a major hurdle to innovation.

Already I see small innovative businesses spending tens of thousands per year on advertising and promotion.  And these are businesses with great products!  The biggest hurdle most businesses face is the classical marketing snag of letting people know - in great numbers - that they have a great product; getting the audience.

Stick a website up on the internet today and, even with reasonably good search engine optimisation you don't have anywhere near a sustainable business.  You have a shop in a desert backwater with passing traffic at 3-5 human visitors per day.

Competition in the ISP market and ease of switching providers

Granted, a lot of what I'm writing is little more than thinking aloud.  I can't predict the future, and legislation may prove necessary if for example the social offering is not good enough for self publishers, local businesses and start-ups to test the water.

But in the UK at least we have competition in the ISP market.  Hundreds of ISPs exist (225 according to this list on ISPReview) and although most use the BT infrastructure BT Wholesale to connect people to the internet, each ISP can implement their own traffic management policies. If the basic offering is not good enough, ISPs should lose customers*

*Yes, I know it needs to be quicker and easier to switch broadband provider, and long contract lock-ins need to be examined.

My points: don't be fooled into thinking non-neutral networks will be the first, or the largest barrier to entry for innovation; micro-regulation at the ISP level may stunt capacity growth, especially since the internet is relatively young and we don't know enough about how technology or market forces will evolve; and macro frameworks to promote fair competition is in my view preferable to regulation of ISPs.


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