The Department of the Internet

There were no local providers at the time. I’m really old.

Even further. In a bit extreme example the phone companies could start their own pizza delivery services and drive the competitors out of business by sabotaging their ordering phone lines.

Something like that already happened with cable services sabotaging Netflix.

http://knowmore.washingtonpost.com/2014/04/25/this-hilarious-graph-of-netflix-speeds-shows-the-importance-of-net-neutrality/

It will be interesting to see the Feds fight with the local authorities. Each state has their own broadband/catv regulating agencies. The Feds regulate pricing only. They do not regulate what’s on the poles.

If the Feds do this, it will be tied up in courts for so long we will all be dead before it’s resolved.

This is a states rights and private property issue. Most of the plant is privately owned, built, and financed. All of that plant is taxed as property every year.

I say, bring it on. The Feds will look like fools.

This is close enough.

http://en.wikipedia.org/wiki/Fairness_Doctrine

The Fairness Doctrine was a policy of the United States Federal Communications Commission (FCC), introduced in 1949, that required the holders of broadcast licenses to both present controversial issues of public importance and to do so in a manner that was, in the Commission’s view, honest, equitable and balanced. The FCC eliminated the Doctrine in 1987, and in August 2011 the FCC formally removed the language that implemented the Doctrine.[1]

The Fairness Doctrine had two basic elements: It required broadcasters to devote some of their airtime to discussing controversial matters of public interest, and to air contrasting views regarding those matters. Stations were given wide latitude as to how to provide contrasting views: It could be done through news segments, public affairs shows, or editorials. The doctrine did not require equal time for opposing views but required that contrasting viewpoints be presented.[2]

If you like your internet, you can keep your internet.

Google it. Just use the exact title.

So every person with an Internet service plan should be forced to pay for Netflix's intensive data usage, even if they don't use the service themselves? Cause that's what will end up happening if net neutrality proceeds.

Karl Denningner put it quite well here.

xxxx

An open letter to the FCC, transmitted to openinternet@fcc.gov, the FCC's comment address for their "Open Internet" rulemaking process.

Dear Mr. Wheeler;

The recent debate on Open Internet has been entered by stakeholders on all sides. Unfortunately, in my opinion, many of those presenting positions are failing to disclose their true intentions and bias, and in fact are attempting to use the government to force cost-shifting from their firms to others.

I am a former CEO of an Internet concern, MCSNet, which operated in the greater Chicago area during the early days of the public Internet (1993 - 1998.) The company was sold to Winstar Communications in 1998.

The issues being discussed today are not new. As the Internet transitioned from a government-funded (primarily National Science Foundation) interconnection for research and education into a privately-funded network accessible to the public, technological change brought many points of friction that served to place competing interests into conflict.

Internet providers, then and now, sell service to consumers and business interests. These providers either purchase the service they resell or they build private networks and interconnect them at public "meet points" operated by various entities. Many have a hybrid structure where both private network construction and the purchase of transport takes place.

All providers of Internet service, for cost reasons, oversell. That is, a service provider who has 100 Mbps of aggregate capacity in and out of his or her network will sell far more than 100 1Mbps connections to the public. This is very similar to how roads, water, telephone and electrical systems work. There were approximately 7 million people in the Chicago metropolitan area in the 1990s when I was operating my ISP, but all 7 million of them could not possibly travel on the freeways in the area at one time. My home has 200 amp electrical service but there is not sufficient electrical power available from my power company for myself and all of the other people in my neighborhood to each consume all 200 amps of electrical power at once. I have a connection to the water main at the street and nominally there is 40psi of pressure at my tap, but if myself and all of my neighbors open all of our taps at once the pressure will drop to nearly zero, because the main cannot serve every house in my neighborhood using its full capacity to deliver water at one time. And while we all have cell phones in our pocket these days, and used to have a phone on the wall or a desk in our homes, if everyone tried to make a call at the same time the majority of them would not go through as there is insufficient capacity for everyone to make a phone call at once.

The same is true for the gas station on the corner. The owner has purchased enough storage to hold a reasonable amount of gasoline, but if I and everyone in my neighborhood tries to buy gas all at once not only will we wait for hours in line to get to a pump he will run out and be unable to serve all of us.

Please take note a few points in the above examples, however. My electrical use, water use and purchase of gasoline are usage sensitive. That is, there is a natural process by which I am disabused from consuming an unlimited amount of water -- the size of my water bill. Likewise, I do not waste electrical power, because I am charged by the kilowatt-hour for it.

Most Internet access at the consumer level, with the exception today of cellular phone delivery, is unmetered. That is, I pay a flat price no matter how much I use. This model, with minor changes (e.g. a cap on use) is what has evolved in the marketplace as the pricing model preferred by consumers. MCSNet sold service we called "PackRAT" during the era of dial-up modems which was nominally unmetered but had a 200 hour per month cap on it, with a fee per-hour beyond that. This amounted to about 6.6 hours/day of actual use. Since you must eat, sleep and do things other than stare at a computer the cap was not intended to prevent you from using the Internet as you choose but rather to prevent you from abusing the service by locking up a limited (and expensive) resource on our end (in this case, the line and modem you were connected to) when you were not actively using the connection.

As the Internet has developed there have been people who have sought to try to shift their cost of innovation and content delivery to others. These people often couch their "innovation" in lofty terms, as if they are somehow providing a public service. What they are actually doing is attempting to run a business at a profit. Today's pet example is Netflix (Nasdaq: NFLX) but they are hardly the first. Youtube, back in its early days, created somewhat-similar if less-severe issues of the same character we face today.

Let's take the Internet "neutrality" position out of cyber-space and into the physical world. We'll assume that I develop a really innovative movie theater that immerses the viewer in some new way in the film they are seeing. We'll also assume that this theater only works financially if I can manage to get 10,000 people into it for each showing; the cost of building and operating it is large enough that unless I can amortize those costs over that many people I will lose money and eventually go bankrupt.

Whose responsibility should it be to construct the roads, infrastructure and parking lots so as to be able to fill that theater every two hours during the business day, efficiently directing traffic into and out of the complex so that I can attempt to make a profit? Should that cost fall on the persons who watch the movies (whether directly via fees on their use of the infrastructure or indirectly via my ticket prices, with the city assessing me for the necessary improvements) or should I be able to force everyone in the Chicago area to pay those expenses, whether they want to watch movies in my theater or not, by convincing the City Government to increase property and gasoline taxes?

This is the essence of the problem we face today with the Internet. Netflix has developed what many view as a "disruptive technology" through on-demand delivery of movies to the consumer. In order to perform that function they must deliver a multi-megabit/second uninterrupted stream of data to your computer that meets certain specifications. Any failure to deliver this stream, even momentarily, results in your display "stuttering" or stopping entirely.

But this requirement is dramatically more-stringent than it is for you to watch short video clips on Youtube or to view a web page. There a short interruption in transmission or slowing of the transport results in you waiting a few tenths of a second before your page refreshes or is displayed in full. The same delay while watching Netflix makes their service unusable.

There are other firms that would like to develop and deliver other services over the Internet with similarly-stringent requirements. Most of these attempts will fail commercially, but some will not -- and eventually another "great new thing" will burst onto the scene.

The problem Netflix and similar services produce is that the technical requirement to deliver their service on an acceptable performance basis to the end customer is dramatically more-stringent than existing requirements for other Internet services. Netflix purports to sell their service to the end customer for $8 per month.

But this premise, and thus the entire business model Netflix is promoting, is a chimera and unfortunately the common law of business balance (which states that you cannot get something for nothing) has caught up with them.

When Netflix was first starting the available margin between the engineering for a typical customer connection and what the customer actually used had some slop in it. This is good engineering practice, and what most ISPs do. That is, the ISP models all of their user behavior and says "We sell 20 Mbps service" while knowing full well that the customer bursts to 20Mbps of performance but on average uses a tiny fraction of that -- typically less than 10%. The reason is simple: You browse to a web page -- even a very graphically-intensive web page -- and then read it; during the time you're reading the usage is zero.

Enter two new paradigms that break this model: Embedded audio/video advertising and streaming video content.

Let's assume that I am a site such as Facebook, and I want to sell video ads to companies. Now when you browse to a Facebook page Facebook "pushes", without user request, video advertising content to the user's screen. This dramatically increases the amount of data that the consumer is using and requires that the data be delivered on a highly-stringent technical basis, lest the video "stutter" or fail to play at all. Note carefully that the consumer did not request or benefit from this "video advertising" yet they paid an ISP for the connection to deliver it. Facebook sold the advertising and benefited from it but did not compensate the consumer or their ISP for the higher load on his connection despite imposing that load on him or her.

The question becomes this: If Facebook delivers a sufficiently-large number of video ads such that it begins to impact network performance and thus forces upgrades of the ISP's infrastructure who should get the bill for that upgrade?

If the bill falls only on those who use Facebook and thus view their ads consumers may (rightfully) reject Facebook since the additional cost imposed on them is not present so they can look at a picture of their friend's cat, but so companies can advertise to them! It is thus strongly in the interest of Facebook to hide this cost from those users by trying to impose it on everyone across the Internet so it cannot be traced specifically to their commercial, for-profit activity.

The same applies to Netflix. If a sufficient number of people subscribe to Netflix the stringent demands for delivery of Netflix bits to the consumer will force the ISP to upgrade their infrastructure. Who should get the bill for that upgrade?

If the bill falls only on Netflix customers then their bill will likely more than double; suddenly that "$8/month all you can eat" video streaming service might cost $25 or even $50.

What is before the FCC today is the fact that the cost increment to deliver what Netflix and Facebook are pushing to the consumer is real; the only point of debate is who pays for it and how.

Those arguing for "strict" Net Neutrality argue that the ISP should be barred as a matter of law from telling Netflix or Facebook that if they wish to have this level of performance available to them, since it is outside of the engineered and normal realm for all customers, that they should pay for that enhanced delivery -- and if they refuse, there is no guarantee their content will display as desired.

If the "Net Neutrality" argument wins the day it will force ISPs to bill all customers at a higher rate to provision that level of service to them whether they want it or not.

Why should a customer who has no interest in having high-bandwidth advertising shoved down his throat pay a higher bill because Facebook has decided to force him to watch those ads in order to use their service?

Why should a customer who doesn't want to watch Netflix pay a higher connection charge to an ISP because 20 of his neighbors do want to watch Netflix?

This is the question before the FCC, in short.

When you boil this down the question before the FCC is whether it is about to implement Communism when it comes to the Internet. Does the FCC, in short, use the government's ability to forcibly compel the purchase of a service by a customer who doesn't want it and won't use it, leaving the consumer with only one option to evade a forced and undesired purchase: Buying no Internet service at all!

There is a legitimate issue with the Internet today when it comes to "last mile" services. Unlike ISPs who typically can purchase long-haul services from many different providers and enjoy a competitive marketplace for those services consumers do not typically have free and open choice between multiple providers. When I ran MCSNet there were roughly one hundred dial-up and several dozen ISDN provides selling service in the greater Chicago area. We all competed on price and service, and some of us were more successful than others. For business leased-line services in the Chicago Loop we had three competitors available to us; MFS Datanet, TCG and Ameritech. This competition kept prices low and service levels high; during a five year period I enjoyed a roughly 60% decrease in the cost of leased line services to customers where multiple options were available. This resulted in "all-in" monthly recurring cost for T-1 service to business customers falling from approximately $2,000 a month to about $850 over the space of a few years.

Sadly, that same competition was not available to the average consumer; they had exactly one choice, Ameritech, for their "last-mile" phone service. Thier phone bill over the same time period did not decrease.

But even in the "business service" area we had occasional problems; the only "neutral" meet point available in the area was the Chicago NAP, run by Ameritech. To get to the NAP since it was on Ameritech's property you had to buy a circuit from them. I was able to buy circuits of the same speed and character that spanned much larger distances from competitors going to other places at a dramatically lower price, yet I could not use those competitors to reach the NAP. It was Ameritech's government-granted monopoly position along with its effective monopoly on the so-called "public meet point" that enabled this distortion to exist in the market. Attempts to appeal to the State Regulatory apparatus in this regard (the ICC) were unsuccessful.

Today the promise of competition for high-speed Internet access is essentially non-existent for most consumers. Most households can only obtain like kind and character high-speed Internet access from one, or perhaps two, companies. In my local area we have a cable company and a phone company but they are not equivalent -- DSL service is not of "like kind and quality" to Cable Internet with the disparity being as much as 10:1 in terms of available speed. Virtually all Americans today have an insufficient set of options available to promote effective competition, and as a result we have relatively high costs and relatively poor service compared against other developed nations.

We should not, however, and indeed must not conflate these two distinct issues. The problem with last-mile access and discriminatory conduct is real, as are the issues with previously-granted monopoly access to rights-of-way that exist across our nation. Not only do those effective monopolies exist but many states and localities have passed ordinances and laws prohibiting municipally-funded or other third-party alternatives from being established, with carrier lobbying groups typically spending large amounts of money to influence that process. That activity facially appears to be a rank violation of The Sherman and Clayton Acts and should be met with investigation and, where appropriate, prosecution.

Resolving the last-mile monopoly issue is separate and distinct from creating a government mandate that effectively allows established businesses to shift their cost onto others who do not wish to consume their service.

At the end of the day what those arguing for "Net Neutrality" in the context of today's submissions are demanding is the ability to use government force to compel the subsidization of a private, for-profit business service.

The FCC not only has the right, it has the obligation under the Constitution's demand for Equal Protection as found in the 14th Amendment to reject such entreaties and expose them as a sham argument and blatantly improper attempt to force consumer subsidization of their businesses interests.

PS: On 5/21 I got back a letter from Chairman Wheeler (presumably a form letter) thanking me for my submission -- and including what appears to be a unique response number. I presume this means it was "accepted" into the public record. Good.

xxxx

So yeah.

Can you cite me any examples of how “tyranny” has impacted a public utility such as landline phone service that already operates under a “net neutral” model?

Pricing models for public utilities enable them to charge a maximum in every market, having no relation to costs. Prices are set at what the market will bear, no matter how ridiculously high that is.

Utility prices, for the same service, vary dramatically depending on how affluent an area is. The idea is that the biggest revenue potential is in the suburbs and cities, and they want the price as high as possible in those areas.

It results in windfall revenue, and the companies do a terrible job of investing in their own infrastructure. Instead, money is wasted.

I've talked to a few folks who worked for telcos, and they recount stories of ridiculous spending. I suggested to one that it was because if budgeted spending was not spent it would be removed from the next years budget, and he said no, it was spent because otherwise it would just continue to pile up. I've worked at telcos myself, and they simply hire armies of people and have a culture of everyone just sitting quietly in all the insanity of waste and taking their paycheck. I personally know of an offer of 2,000 hours of programming contracting (a year) to "do something sexy", where there really nothing that needing doing.

Any time they want a rate increase, they can push it through.

Us NJ folks have seen the local NJ power utility landscape get consolidated into a large regional. They "saved" money by downsizing local maintenance staff. They keep a smaller team locally, which is supplemented by resources farther away if necessary. But is any savings passed on in the form of lower bills ? Nope. They "saved" by not cutting enough brush around wires. The past decade or so has seen terrible responses to outages, and more outages than I can ever remember for far weaker storms than decades ago, when the power rarely went out, and if it did it was back on at the most in a few hours. One town buys their service in bulk, resells to their own citizens, and does all their own local line maintenance. When "superstorm sandy" hit - they were the first town with power, needless to say.

The tyranny of it all - this all makes utility services far more expensive than they have to be.

And that most painful impact of that - THE POOR. Even if they don't own a home but they rent, they still pay for utilities, either directly or they are included in the price of rent.

All this legislation - they say - is to help the "little guy", the "poor", the "disadvantaged". In truth, the legislation KEEPS OUT COMPETITION.

The price of computing has gone down by thousands of percent in the past few decades. What amounts to a supercomputer can now be purchased for a couple hundred bucks.

In that same time, communication costs have gone through the roof.

Since voice data is such a small part of network traffic, voice service should really be simply part of internet service, that is, internet should include voice for the same price, because that's all the hardware that's needed for voice. I have voice and internet coming over the same wire - but it's two different services with two different bills. But one wire ! The only reason voice is its own service is because telcos still have billions in sales of voice and don't want to give up that revenue. And they don't yet have internet service brought under control of their dear old FCC.

Instead of dropping the redundant voice business - they want to bring data services into the FCC REGULATION FOLD - to join voice there.

If data service was classified as an FCC-regulated utility, the telcos would then be ok with folding their voice and data businesses into one.

This is because the FCC and its regulation is a key part of the business model of the telcos - it keeps out small competition that would significantly undercut price.

Think about this information "superhighway" concept: what if the wiring for phone and internet service which is out in the street outside your home was owned and maintained by your town, like the road is. Most towns don't have separate road taxes, it's included with your property taxes. What if everyone could just string an ethernet wire out to the pole and connect to their town's internet service for no additional charge, if that's what their town decided they wanted to set up ? Better yet, what if multiple companies could wire your town - so you could choose which want you wanted to use. Don't like your service ? Switch a switch on your box and switch services. No regulation, but competition, with local governments able to get in on the competition if the citizens of the town decide they want to provide this service for themselves for free.

The days of $100+/month phone bills would be over. But the telcos would face stiff competition and have to compete for real, probably massively downsize; they no likey.

Haven’t the central comity already done that?.

“Chairman Wheeler’s” letter uses the same wrong story about netflix to advocate against net neutrality.

He is from the industry.

Thus, anyone who does not know what’s what will think - the big industry fatcats are AGAINST net neutrality, therefore, net neutrality must be good for the people and bad for the fat cats.

It’s an OLD TRICK.

It was used to get the Federal Reserve Bank in place.

After much wrangling, various bigshots in the banking industry - came out AGAINST the implementation of the Federal Reserve “central bank”.

That duped just enough people into thinking that “it must be good if the bankers were against it” and provided the political support to get the central bank implemented.

The whole netflix scenario is BS. Once you realize:

a) it’s common technology for routers and switches to put rate-limits on each connected port. That, combined with their NORMAL network monitoring, allows them to easily provide network connectivity services that perform to the service level they promised each customer.

b) every retail-sold internet connection today is rate-limited, both for upload AND download speed. They may be unmetered, but you’ll rarely if ever get more speed than you are paying for. Thus individual users are kept from hogging too much bandwidth. ISPs keep track of the USAGE PATTERNS of their user base, so they can time their infrastructure upgrades to always keep their user base satisfied.

c) internet connections are ALREADY priced according to their upload/download speeds. Want internet ? You shop around for the speed you want. You can easily use a testing website like speedtest to verify what you’ve got. If you are not satisfied that your ISP is providing you what you ordered and are paying for, you can change to a different provider.

d) the webserver side is sold the same way: you get what you pay for; there are options for both metered and and unmetered, but in both cases the customer is charged according to the throughput of the connection.

e) so dear netflix is paying to have their servers connected to an ISP. They are not using ANY MORE BANDWITH THAN THE ISP GIVES THEM. They can’t possibly do that. And guess what - they can use any amount of the bandwidth they buy and their ISP will have no complaint against them, not a valid one anyway. If they buy a 10G connection and they use all 10G, the ISP would normally be fine with that. If Netflix has 1,000 people watching videos at the same time, and that uses up all their bandwidth, and if then 1,000 more people start watching their videos at the same time, so the total is 2,000 - their users are going to have about 1/2 the packets per second they were seeing. The users can ONLY RECEIVE packets the webserver has SENT. If the webserver can’t send fast enough to satisfy all it’s online users, the users will see their videos slow down. Netflix, if they want to fix the problem, will need to buy more bandwidth.

f) if netflix’s ISP, or probably IPSs (plural) are oversold on their web hosting customers and it is impacting throughput, they can expand their infrastructure. They know this, and they continually expand their infrastructure to meet the needs of what they’ve sold. They monitor their network usage patterns for their hosting customers, and they know what their demands are - and they keep up because if they didn’t they lose their customers - fast.

g) this is a fake issue aimed at getting the internet regulated like a public utility. The industry bigwigs want the internet regulated by the FCC, they do not want competition, they want to be able to drastically shoot up rates for internet service by selling RETAIL END-USER CONSUMERS METERED BANDWIDTH, that is, you pay for each packet of data sent/received. Like “phone minutes” or “text messages”.

If you’re paying $180/month for internet+phone+TV, and if phone gets melded into cable, the network company does NOT want to DROP the price of your service. They want to charge the same $180 for internet+TV, and eventually, the same $180 for just internet. Well, except in a few years, to “keep up with inflation”, that internet price will need to of course get up to $300 or so. You know, for wire maintenance costs.

NAMBLA will get the same bandwidth as Netflix.

Obama is out of control.
They need to impeach him and send him to the slammer ASAP for his own safety.

Can you cite me any examples of how “tyranny” has impacted a public utility such as landline phone service that already operates under a “net neutral” model?

Have you by any chance seen any of the taxes, fees, and charges tacked onto land line phone bills? In a very short time the same taxes, fees, and charges will be tacked on to the internet services.

Ecclesiastes 1:9 - there’s nothing new under the sun.

http://en.wikipedia.org/wiki/Stamp_Act_1765

The Stamp Act 1765 (short title Duties in American Colonies Act 1765; 5 George III, c. 12) was an act of the Parliament of Great Britain that imposed a direct tax on the colonies of British America and required that many printed materials in the colonies be produced on stamped paper produced in London, carrying an embossed revenue stamp.[1][2] These printed materials were legal documents, magazines, playing cards, newspapers and many other types of paper used throughout the colonies.

The efficiency isn't tied to the government running things; it's based on the government ensuring open access.

Again -- I don't know that this will necessarily be better in the long run, but it's not as clear-cut as it might seem. I am familiar with a very similar "open access" discussion about the railroad industry that has been going on for years. The issue in that case doesn't involve government control of the railroad industry, but an anti-trust measure that would prohibit railroad companies from owning railroad infrastructure AND providing rail service.

Secondly about bandwidth issues, my impression is this is mostly about multi-media companies looking to protect their cable operations from streaming. My belief is this involves anti-trust issues and monopolies. These multi-media corporations should have never been allowed to dominate the marketplace as they have been.

This is a very interesting point, and I'm wondering if you would expand on it because I think that is critical to how I would come down on the issue. Which "multi-media corporations" are you referring to in this statement -- the internet service providers (say, Comcast) or the users who do the streaming (say, YouTube)?

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I have to concede that you’ve posted a good example. The irony is that the Fairness Doctrine was eliminated just as cable TV was in the early stages of making FCC oversight of broadcast television completely meaningless anyway. LOL.

You hit right on the key issue associated with a "public utility." Historically, a public utility was involved in industries where it was considered highly impractical to have competing private companies with their own infrastructure serving the same customers. I'm not sure there's any industry that would absorb the capital cost of constructing power lines and transmission stations and generating plants if they then had to compete with an identical competitor who offered the same services to the customer. I'd suggest that the "natural" end result of this scenario is declining prices -- and absolute garbage service, too.

Interesting about the New Jersey town with their own power company. I think there are actually nine of them that purchase electricity together in bulk. I'm most familiar with Madison, and you're right about their superior local service when it comes to repairs and restoring power after outages. The problem they face, though, is that the municipal power authority tries to run itself like a private business because they use the "profits" to offset property taxes. But they can't do it without absorbing some of the risks that a government normally wouldn't take on. This actually came to a head in a recent contract renewal in the late 2000s, when the town found itself in a position where it was paying a fixed rate for power from the providers under a long-term contract. But when gas prices dropped they were still paying for the power at the higher rate, and their local customers ended up paying more for electricity than their neighboring towns were.

I don’t like paying those fees and taxes either, but I don’t think that has anything to do with “tyranny” under an open-access business model.