Net neutrality: A web of deceit

By Steve Forbes
June 9, 2014

Wheeler testifies before a House Energy and Commerce Communications and Technology Subcommittee hearing on oversight of the FCC on Capitol Hill in Washington

Special-interest groups are calling for public-utility regulations to be placed on the Internet — the most innovative and society-shaping deregulatory success story of our time. These people are trying to exert control over the Internet through “net neutrality” regulations that will likely benefit only a few huge Internet companies and the top 1 percent of Internet users.

Net neutrality was developed to ensure that Internet users had the freedom to view all the legal content they wanted. Recently, however, there has been a shift in focus:  Some of the largest Internet companies are citing “net neutrality” as a reason to enshrine specific privileges that largely benefit them.

If these content companies get their way — and the Federal Communications Commission is now deliberating this — Americans will be forced to shoulder the costs for the high-speed networks and infrastructure upgrades needed to support high-volume Internet traffic generators, such as Netflix.

The Netflix logo is is shown on an ipad in Encinitas, CaliforniaWhether they use those services or not.

The math is simple. As a network carries more traffic, it has to grow or it will become congested. To expand a network requires significant investment and expense — tens of billions of dollars a year in the case of Internet service providers (ISPs).

These costs can be recovered in two ways: Either by charging all consumers equally or by having the large companies that use far more of the network resources pay their fair share.

In the real world it is reasonable and even expected that people pay more for a resource they use more than others. Under the guise of net neutrality, however, the large companies want everyone to pay more so that they and their users — the people consuming the bulk of the resources — do not have to.

Net neutrality advocates claim they are doing this for the good of the Internet and to protect future startups. But neither claim stands up to even the faintest scrutiny.  They are both a cover for a bold-faced attempt to force the many to subsidize the powerful few.

The only way the Internet can thrive is if all parties have incentives to improve — and more efficiently use — our high-speed networks. If Internet service providers are forced to serve as mere intermediaries, carrying content for other large companies, there will be little motivation for them to invest in their networks and foster innovation. Similarly, there will be no incentive for the heavy-traffic-generating companies to develop new ways to reach their consumers.

An eBay sign is seen at an office building in San Jose, CaliforniaAs for the small companies and startups that the proponents of Internet regulation are allegedly trying to protect, they are the ones who benefit from the kinds of creative network arrangements now available in the absence of Internet regulations. These arrangements differentiate them from the larger, more established companies who have developed their own ways to provide faster service to their consumers built on existing service provider networks.

No startup or new-market entrant can afford to spend considerable resources on their own global networks. That’s why the arguments from the large-content providers are self-serving: They have preferred access to consumers and want to keep it that way.

Contrary to the claims from those who are now most vocal in calling for 1930s “common carrier” regulations — dating from the age of the telephone-monopoly — be placed on the modern Internet, their true aim is to ensure that a small handful of companies do not pay their share.

Though that may be a successful, if questionable, business model for them, they risk subjecting the Internet to stifling regulations that will deter the long-term investments needed to power our Internet economy.

Regulators at the FCC and those on Capitol Hill who support the large content companies should be able to recognize this masquerade — and abandon any effort to impose public utility regulations on the Internet.

 

PHOTO (TOP): Federal Communications Commission Chairman Tom Wheeler testifies before a House Energy and Commerce, Communications and Technology Subcommittee hearing on Capitol Hill in Washington, May 20, 2014. REUTERS/Jonathan Ernst

PHOTO (INSERT 1): The Netflix logo is shown on an iPad in Encinitas, California, April 19,2013. REUTERS/Mike Blake

PHOTO (INSERT 2): An eBay sign is seen at an office building in San Jose, California, May 28, 2014. REUTERS/Beck Diefenbach

 

25 comments

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Shame on you, Reuters, for printing this propaganda.

Why anyone would believe a single word from this self-serving clown is beyond me. He manages to get this exactly backwards while pretending that large corporations are the only ones pulling for net neutrality…they are not!

I am sure this obfuscation on this crook’s party is no accident, but rather is calculated to confuse people who he condescendingly assumes to be even more stupid than he is. He owns media companies for Christ’s sake! This is not some neutral party

Posted by Benny27 | Report as abusive

I agree with many on who have made comments

Posted by elutheria | Report as abusive

WOW!!! I amazed at how little Mr. Forbes understands about Net Neutrality but yet seems able to make such an “informed” article. 1. What is an “Internet” company. Is it a company that provides carrier service to access Internet services; does he mean companies that sell merchandise on the Internet like ?Best Buy? or ?EBay? which is an intermediary between people selling goods; Mr. Forbes had a picture of Netflix does he realize Netflix is a streaming video company not an ?Internet? company; does Mr. Forbes mean companies that have web pages like churches and non-profits ? Maybe he should have started their, defining what he means by ?Internet? companies. 2. The basis of “Net Neutrality” insures that any Internet based service (Internet based services are but not relegated to: http, vpn (private tunnels to your corporate or home network), H.323/SIP (common VTC protocols like Skype), VoIP (Vonage, MagicJack), streaming media (iTunes, Youtube, etc?)) is delivered at the same speed no matter what or who the company is or what they believe in. To understand what ?Net Neutrality? protects we need to understand how and what the Internet is comprised of. A very brief summary is the Internet is an umbrella of different protocols that help to deliver desired services. Web pages and other sites that use the top level domain (WWW) are a gateway to those services that flow over those protocols. So an example is lets say you use a VPN to log on to your corporate network to work, without ?Net Neutrality? I can charge more or completely block VPN protocol. Within the VPN protocol you can block ?http? protocol, ?ssh? if you use that or other services so I can grant one and not the other or, deny both or, charge you and your company and exorbitant fee to use a vpn connection. ?Net Neutrality? keeps a company from blocking content based on political views or other beliefs but without it companies can block, not just slow down access to content based on belief. 3. ?Net Neutality? prevents the opposite from happening as well. Let?s use Netflix as an example since Mr. Forbes has done so. Maybe Mr. Forbes does not realize how much bandwidth, how many OC (?Optical Carrier?, information over fiber optic lines and ?fiber optics? are physical cables made of thin glass thousandth?s of millimeters thick which send information by reflecting light allowing for speeds that have yet to maxed out by current networking devices) 192, OC292, or gigabit ether lines Netflix has to lease, how many servers they have to buy to provide streaming video service. So let say Netflix decides to start buying up networks and decides they will only stream Netflix movies (i.e movies they make themselves) or Google buys up networks (which it more than has the ability to do) and only allows content to companies and sites they own, that would be about 10% of most Internet usage. ?Net Neutrality? prevents this from happening. It allows writers like Mr. Forbes to make unintelligible comments like this without being discriminated against just because an ISP does not like Reuters or Forbes. 4. Does Mr. Forbes actually think it cost $100 a month to deliver 50mb of bandwidth. That $100 pays for installation of media as well as networking equipment that has already been in place for years maybe even a decade. 5. Lastly ?Net Neutrality? prevents a Gestapo media. We have seen in the news, whether you agree or not, how the government or particular intelligence agencies have targeted ISP?s. Now imagine an ISP that can block content at will based on it?s own desires but these companies are under government pressure to give up information on users and users search habits. What stops them now. I can block content based on search habits when in actuality it is the government directing these companies to do so. We need to think about the far reaching effects of removing ?Net Neutrality? especially since individual ISP?s are increasingly being eaten up by major network corporations . Maybe Mr. Forbes would do well to research in detail such an important subject before he decides to comment on it for his constituents.

Posted by thilips | Report as abusive

What a load of FUD!

Mr. Forbes either know next to nothing about the internet, or is invested heavily in Comcast.

If net-neutrality is killed by corporate interests, the US will slip further behind in connectivity and smaller entrants into the market will be effectively blocked by the large monopolies currently running the industry.

Shame on you, Mr. Forbes!

Posted by MacMan | Report as abusive

What nonsense! Content providers pay network providers to upload content to the internet. Consumers pay their ISP to receive content. In the middle, interconnect agreements between major network providers allow them to pass each other’s traffic back and forth for free. Otherwise, accounting for it alone would be a nightmare.

It’s no more complicated than that.

If network providers want to raise their rates to recover costs, they are free to do so at any time. But hiding it by trying to introduce a third payment to the equation is disingenuous. They’re essentially extorting money from content providers like Netflix, etc. by threatening, and in Netflix’s case, actually slowing down their content delivery.

There’s a growing amount of propaganda, like this article, out there.

Major network providers (Verizon, Comcast, etc.) had record profits this year. Google it. But this type of article is designed for people who don’t understand how internet plumbing actually works. Don’t fall for it!

Posted by DW6 | Report as abusive