I think we need to get beyond the religious debate that has net neutrality pitted as a black and white argument. The emerging issues are much more subtle, and if we don’t solve them we will have even more pressing issues.
“Net Neutrality is crucial for small business owners, startups and entrepreneurs, who rely on the open Internet to launch their businesses, create a market, advertise their products and services, and distribute products to customer”
Others argue that the internet is a critical infrastructure, a human right even, and that it is replacing things like ports and rail as the drivers of the digital revolution.
The key element of this is that the internet makes commerce frictionless. Gone are many of the high cost elements required to start up a business and reach a huge audience. Only its not frictionless, not really Bandwidth Growth proves this.
“That’s an increase of 46 per cent in six months. Most of the increase was in just three months”
The reality is that the friction has been moved to other parts of the value chain. Effectively someone else is doing the investment, not you the start up, especially in distribution.
Sure consumers pay the ISP for internet access, and to some extent I do buy the argument that for their money they should get full access to the internet. But the dynamics on the industry challenge this ongoing. Here in NZ we’ve seen a roughly 35% CAGR in bandwidth growth according to the commerce commission, yet prices have fallen 7%. That points to an unsustainable position. Sure there has been the inevitable impact of Moores law, equipment costs have fallen, but i doubt that this is offsetting the cost increases driven by volume…
So we circle back to net neutrality…. If we truly want a robust internet that will allow start ups then we must continue to invest in the internet itself.
Picking up the meme that the internet is a critical infrastructure like a Port. There are differences that should be thought through. A container ship pays landing fees and the cargo handlers. The goods are then offloaded onto alternate transport, this is paid for but the goods owner. The alternate transport provider pays road user charges, contributing to the infrastructure upkeep. Key difference is that the infrastructure isn’t required to double every 18 months…. So that model doesn’t work….Added to that, it appears that quite of lot of these global internet entities have structured themselves to minimise local tax spends.
And while the ecommerce models have resulted in end customer benefit due to price reductions, i’m not convinced that all of the efficiencies are being past onto customers, that is the internet entities are largely holding onto as much margin as they can (which I would too).
I wonder if there is an alternate solution, one without blanket rules. What about a model where small startups continue as is. For most of them their traffic volumes and corresponding costs are so low it doesn’t matter. But what about a model whereby when you hit certain volumes (adjusted for cost reductions due to infrastructure) then perhaps you contribute to the costs you are driving. Google, upon entry into the telco space has changed its stance toward net neutrality…. Perhaps also because it now has scale enough to pay for the costs it drives or perhaps because they now know the true costs of being a carrier. Or perhaps they have reaslised they are wholly dependant on a viable internet to be in business. Only they know.
What is clear to me at the least is that the current approach is unstainable. Netflix is big on the customer experience, even going as far as (potentially) shaming ISP’s by putting out lists detailing which ISP’s perform the best. But if ISP’s are forced to deal with a 46% increase in traffic without any increase in revenue, then they cannot and will not be able to maintain the user experience. So there is a bigger game, one that all the players in the end to end value chain to get to grips with else no one will have a business model…
Disclosure: These are my own opinions, and yes i work in the Telecommuncations industry