Net neutrality and preserving the dinosaurs

I recently had a chat with a peer/CTO-type who has argued before Congress a local board on net neutrality. Got me thinking again. Even though I made these arguments in the mid 00’s (in a more, um, polemic venue) I thought it might be worth revisiting.

The idea of legislating the flow of bits over the Internet strikes me as saying, we like the Internet the way it is now, please don’t let it change.

(Legislated) Net neutrality preserves the Internet like bugs in amber

But we don’t know what the Internet is, or what it “should” be. Certainly, no legislator willed Google or the iPhone into existence. Few people thought that pushing TV shows or real-time audio was an appropriate use of the web in the early 90’s.

The Internet is an essentially emergent medium. We don’t know, a priori, what will and won’t work, what should and shouldn’t be.

And so, to say what private companies can and can’t do with their pipes is to foreclose future possibilities. Perhaps Verizon will only be a provider of dumb pipes. Or perhaps they will invent something crazy that consumers love, but which doesn’t adhere to our 2010 concept of “neutral”.

In fact, maybe we’ll chuckle at the quaint term “ISP” in 10 years time. Maybe a brick-and-mortar will sell broadband. Maybe an advertiser will build its own network. Seeing “content” and “delivery” as separate things, and believing that it must always be so, lacks imagination.

To put it another way: should we have passed a law 10 years ago forbidding Amazon from selling anything besides books?

I’m not arrogant enough to say what the 2020 Internet “should” be. Are you?

Regulation is great for dinosaurs

Here’s the thing about regulation, especially at the federal level: it benefits the big guys.

A high regulatory bar means higher costs of compliance — more lawyers and more lobbyists. Big companies can absorb costs like that, while upstarts can’t. Advantage: incumbents.

And this is to say little about regulatory capture, wherein established players with fortunes to protect work hard to ensure that legislation is written in their favor. Do you know why Wal-Mart supported the federal minimum-wage hike a few years ago? It wasn’t goodwill.

Wal-Mart can afford a higher minimum wage. The local Mom and Pops against whom they compete, can’t.

And so, AT&T et al will accept net neutrality if they see it as inevitable. At that point they will pivot to ensure that the legislation is onerous enough to handicap would-be challengers. And in 10 years, we’ll have the same duopoly.

If you’d like to see the Goliaths slain, create the conditions where it’s easier to be a David.

Yes, we have a last-mile problem

There is not enough competition for the “last mile”, i.e., consumer Internet access. This is a legacy problem which we need to overcome.

We are still emerging from 80 years of state-sponsored monopoly in telecoms. The Bell companies and the cable companies were given essentially exclusive rights to run copper and coax for a long time.

We are emerging. Cable companies now offer phone service. Phone companies offer TV. Both of those things used to be illegal. Now the terms “cable company” and “phone company” are becoming anachronistic.

But we are not there yet. A friend works for Verizon (as a vendor) and I wondered why, in the middle of Manhattan, I cannot get FIOS on my block. His short answer was, Verizon needs special permission from the city to install new service, block by block and neighborhood by neighborhood. (I subscribe to Time Warner, my only option.)

Two competitors is fundamentally different than one. And yet, we have a regulatory legacy that makes competition illegal. And if some politically-unconnected upstart wants to run a fiber to my building, ha! Good luck.

Net neutrality is intended as a salve for this lack of competition. But the last-mile problem is the result of the same sort of (well-intended) lawmaking.

Let’s focus on lawmaking that actually enhances competition by removing barriers for companies that want to build networks — even those that can’t afford lobbyists!

I understand that net neutrality sounds like a cure. It’s time to recognize that it’s actually a recurrence of the same disease.