Fw: Article from James: broadband competition & internet neutrality

----- Original Message -----
From: "JAMES DONALLY" <afjmd@uaa.alaska.edu>
To: <clancy@hughesair.com>
Sent: Tuesday, October 24, 2006 5:37 PM
Subject: Article from James: broadband competition & internet neutrality

Hello Clancy,

I thought you might be interested in this:
Congress must keep broadband competition alive
By Lawrence Lessig

Published: October 18 2006 18:51 | Last updated: October 18 2006 18:51

"The question of internet “network neutrality” has been bounced around
by Washington policymakers for more than a year. Yet most still have
no idea what it means. Google’s gobbling of YouTube should make this
critically important policy issue quite clear. For the phenomenal
success of YouTube is testimony to the extraordinary value of a
neutral internet.

YouTube is the internet’s latest marvel. Less than two years old, this
video-sharing site draws an audience that rivals major television
networks. Some videos are television shows or films a user thinks
others would like to see. But many are user-created video, either
funny or very serious. The internet pulses with the latest YouTube
hits.

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But YouTube is not the only video-sharing service. Indeed, Google
Video, launched just before YouTube, is one of its most prominent
competitors. Google Video was good but YouTube was better. Precisely
why is hard to say. YouTube aggressively deployed superior technology
and no doubt many were happier to share content on this upstart site
than with a company seen as The Establishment.

YouTube could beat Google because the internet provided a level
playing field. The owners of pipes delivering video content to users
on the internet did not prefer one service over the other. The owners
of pipes simply passed the packets of data to users as the users
chose. No doubt Google and YouTube worked to make that content flow as
fast as possible by buying caching servers and fast connections. But
once it was on the internet, the network owner showed no preference,
serving each competitor equally.

Network owners now want to change this by charging companies different
rates to get access to a “premium” internet. YouTube, or blip.tv,
would have to pay a special fee for their content to flow efficiently
to customers. If they do not pay this special fee, their content would
be relegated to the “public” internet – a slower and less reliable
network. The network owners would begin to pick which content (and, in
principle, applications) would flow quickly and which would not.

If America lived in a world of real competition among broadband
providers, there would be little reason to worry about such deals. But
it does not live in that world. In the US, at least, broadband
competition is dying. There are fewer competitors offering consumers
broadband connectivity today than there were just six years ago. The
median consumer has a choice between just two broadband providers.
Four companies account for a majority of all consumer broadband; 10
account for 83 per cent of the market.

This absence of competition puts new applications and content on the
internet at risk. For if network owners are permitted to set up
internet toll booths, imposing a special tax on providers of content
and applications, then it will be the new innovators who bear the
burden of these taxes most heavily. The point is obvious when you
think about the history of YouTube. Had network owners been charging
an access premium, investors in an upstart like YouTube would have had
good reason to think twice. All taxes are a barrier, but this tax
would be a particularly high barrier to innovation. It would hinder
newcomers such as YouTube by favouring established companies such as
Google and Yahoo.

Network owners say this is worth it as their tax will help fund the
development of a faster network for everyone. But will it? When you
can charge content providers a premium for access to a premium
internet, what incentive is there to improve the rest of the internet?
If the regular internet is fast and reliable, why would a Google or
YouTube pay for the premium? The better the “public internet” is, the
less valuable premium service becomes. Bandwidth scarcity becomes a
business model that conflicts with the dream of a fast, ubiquitous
network.

The answer is not a massive programme of regulation. It is instead a
very thin rule for broadband providers that forbids business models
that favour scarcity over abundance. That is the aim of the very
best “network neutrality” legislation. Network owners would be free to
compete in all the ways that push deployment and drive down prices.
They would be blocked from models where more profit for them means
less broadband for us.

The US is facing a competitive crisis in broadband deployment. Yet as
it continues to fall behind its competitors, the Federal
Communications Commission continues to live in denial. The more it
has “deregulated” telecommunications, the worse (comparatively)
broadband competition and service have become. When it was 10th in the
world George W.&#8201;Bush, US president, said that “10th is 10 spots too
low”. The nation is now 16th. Broadband in the US is 12 times the
price in Japan and six times the price in France.

Network neutrality legislation alone will not solve those problems.
But it will make sure that the one bright spot in the internet
economy – the one place where vigorous competition continues – will be
protected. Congress needs to remove the incentive to keep broadband in
its currently hobbled state. A thin rule of network neutrality could
help do just that."

The writer is fellow at the American Academy in Berlin and a professor
of law at Stanford Law School

Copyright The Financial Times Limited 2006

http://www.lessig.org/blog/