Monday, May 15, 2006

The Internet Has Always Been Regulated

It started off as a government network designed to survive nuclear attacks (which, as everyone notes, is why it’s so good at routing around damage, including censorship) and along with government research labs its initial backbone was universities. All through that time, and indeed through the 90’s and almost up to the current day, there was a simple rule - you couldn’t discriminate against traffic. You couldn’t give some packets priority over other packets. That was the rule. It was the regulation. The FCC recently got rid of that rule. However they can put it back any time. What the telecom companies want is to take that authority away from the FCC and write into law that they can charge extra for good service, and for those who don’t pay – provide lousy service. The reason they want to do that is that they know that the minute people have to pay extra to get their e-mail on time, to get streaming video, to play online games, and so on – they’re going to scream to high heaven. Now the telecom companies will tell you that they need the extra money. They don’t. They are heavily subsidized already by the Federal government, to the tune of many billions, plus all customers pay for access. They aren’t losing money on running the network backbone. What they want, instead, is an oligopoly position where they can charge as much as the market can bear. Stirling has compared this to the 19th century railroads – who would charge farmers just enough so that it was farmers could make a bare living. Many of them, of course, fell below average, and died. The modern internet would be destroyed by what the telecoms want to do – anything that does not make much money, or that loses money now, would lose money, or lose even more money. Many services and websites would go away – probably including things like Flickr and Skype. The real time gaming industry would be gutted. Anyone offering heavy graphics downloads would see their costs soar – which they would either try to pass to you, or go out of business. Organizations doing real time data transfers (the entire financial industry) would be forced to pay even more, and brokerage fees would rise. Etc… This is also the perfect example of what I’ve been talking about for years – the best way to make money in the United States is to have the government force people to give it to you. Get the government to allow you to create a monopoly or oligopoly, crank your rates up, and tighten the screws. The telecoms are spending many millions of dollars promoting this bill. They aren’t doing so because they don’t expect a huge return on it. And that return will be paid by YOU. The money won’t come out of thin air, it will come from people who use the internet. You will have less services, and you will pay more for them, and the telecom companies will laugh all the way to the bank. Meanwhile the sort of applications that require heavy broadband will be developed and brought to market in places other than the US, because in the US the cost will usually be prohibitive. Places like Korea, and Europe, and Japan, will pull even further ahead of the US in internet penetration and capability, and the marvel the US created will be fully exploited by non-Americans.


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