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21 July 2017 12:39 (South Africa)
Opinionista Ivo Vegter

Network diversity is better than network neutrality

  • Ivo Vegter
    Ivo Vegter

    Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets. He is seldom wrong.

A recent “Net Neutrality Day of Action” blanketed the entire world with protest about a US policy issue, which other governments will also consider. But network neutrality is not as nice as it sounds. Policy-makers would do better to pursue network diversity.

The participation of many major internet companies in a Net Neutrality Day of Action on 12 July 2017 broadcast a controversial matter not only to Americans, whose laws and regulations are at issue, but also to the rest of the world.

Net neutrality,” to use Wikipedia’s definition, “is the principle that internet service providers and governments regulating the internet must treat all data on the internet the same, not discriminating or charging differentially by user, content, website, platform, application, type of attached equipment, or mode of communication.”

The campaign protested against the proposed repeal of a 2015 order by the US Federal Communications Commission (FCC), which regulates telecommunications. This order, known as the Open Internet Order, prohibits blocking lawful internet content, applications, services or devices; prohibits throttling users on the basis of which content, application, service or device they’re using, and prohibits paid prioritisation to benefit particular content, applications, services or devices. These rules, it is argued, prevent network operators from creating “fast lanes” for certain traffic, or censoring content from competitors.

Net neutrality rules, according to the Battle for the Net campaign, are what prevent “internet service providers from slowing down and blocking websites, or charging apps and sites extra fees to reach an audience (which they then pass along to consumers.)” It goes on: “Without net neutrality, the internet will become more like Cable TV, where the content you see is what your provider puts in front of you.”

This all sounds lovely. Who wouldn’t want an unrestricted, open internet, without censorship, throttling, discrimination against content providers who cannot afford to pay for the privilege of priority traffic, and data caps? Net neutrality is an idea we can all get behind, and if we’re not in the US, we should want our own government to institute the same rules. Shouldn’t we?

One side of the case, against net neutrality regulations, is made mostly by major ISPs and US cable companies, which have a pretty bad reputation not only because they’re greedy capitalists, but because they’re would-be monopolists with rather spotty track records. I certainly hold no brief for them.

On the other side, in favour of net neutrality regulations, are activists who don’t mind that they stand alongside another set of greedy capitalists, like Amazon, PornHub, DreamHost, Twitter, Yelp, Spotify, Tumblr, Google, and Netflix, many of which are also would-be monopolists with spotty track records. Just like the big network operators on one side, these activists, and the big content companies behind them, use seductive words, exaggerations and misdirections to make their case.

For example, let’s consider the claim that without the 2015 rules, your internet service provider will decide which content you get to see. This is how the internet used to work, back in the day. Service providers like AOL and Compuserve curated and managed “walled gardens”, from which it was difficult or impossible for users to escape.

It was technological development and free-market competition that drove these restrictive models out of business, years before the 2015 rules came into effect. Sure, there were occasional abuses, but those were dealt with quite effectively by the US Federal Trade Commission (FTC), which reacts to complaints of anti-competitive or deceptive behaviour, rather than establishing a priori one-size-fits-all rules like the FCC.

Back in the day, streaming video across the internet was choppy and video calls were jerky and unstable. Technical innovation and traffic prioritisation is what enabled Skype, YouTube and Netflix to deliver high-definition video at the click of a button, long before the 2015 net neutrality rules came into effect.

Throttling and data caps might not be nice, but they are the reason that a handful of hardcore downloaders don’t overwhelm networks and crowd out the majority’s ordinary traffic. If you want more or faster data, you surely ought to pay for it. If you want a premium service that lets you send “big data”, surf pornsites, trade stocks, or download movies all day, is it not reasonable to expect to pay more than someone who uses less demanding applications like web browsing, email and social media? If content providers want to send time-sensitive traffic, like market data, telemetry, video-on-demand or voice-over IP, is it not reasonable to expect them to pay more to be prioritised over status updates, blogs and email?

It is much more likely that companies will develop their networks to accommodate the demands of diverse users or content providers if they get paid to do so. Otherwise, they’ll just settle for the 80-20 rule, catering to a common denominator that is low enough to make most users happy. Contrary to the arguments of the net neutrality crowd, it was the ability to price-discriminate and prioritise that made newer, more demanding content, services and applications possible. If that ability is removed by regulation, and it makes no financial difference to network operators how fast they get a content provider’s data to a consumer, why would they bother to accommodate YouTube, Netflix, Google Maps, PornHub or Skype? Is faster, more reliable content delivery not why website owners subscribe to services such as Akamai and CloudFlare? Or should every website be as slow as the average blog?

Yes, private companies sometimes try to institute unreasonable restrictions. Some would prefer to direct you to their own content, instead of content they cannot profit from. But that is why customers have a choice. In the US, AOL was instrumental in rolling out dial-up internet to the masses, but eventually, its walled garden model was superseded because customers preferred to use ISPs which didn’t place such restrictions on them.

It is also true that in some markets, customers do not have much of a choice. And that really is a problem. But that problem was created by telecommunications and internet regulation in the first place. Monopolies created by the state were broken up, but still were well-protected against new competition. It’s ironic how often regulations are justified by saying they will undo the ills caused by regulation in the first place.

Net neutrality creates a heavy burden of regulation on ISPs. They have to disclose lots of data about their networks to the government, so that the regulations can be enforced. Especially for smaller ISPs, this will be a costly exercise. It raises the barrier to entry, which benefits large incumbent operators. Either way, customers will pick up the tab.

And who administers network neutrality? The same government that brought you the Post Office, Telkom and the SABC? The same government that has failed to deliver universal broadband while private mobile operators managed to get cellphones into the hands of the poor masses? The same regulators that for decades held back the internet, and suffer chronic capacity problems? Or would you prefer that the vigorous competition between ISPs remains a benefit to internet users and content providers all over the world?

Pinning one’s hopes on the free market instead of regulators is not just a matter of ideology. It is borne out by history. Lawmakers don’t even understand new technology. They’re politicians. What makes anyone think that their rules can promote innovation? Bureaucrats have always been obstacles to progress.

Network neutrality enforces sameness on companies. It does not allow them to discriminate or differentiate. It will stifle competition, not promote it. It will give network operators a shield behind which they can economise on network infrastructure costs, because it doesn’t matter to them who gets their data how fast.

Policy-makers would do better to aim for “network diversity”. Under this scenario, competing network operators and ISPs would try different approaches to managing traffic, in the hope of satisfying the needs of content providers and retail customers alike. Those whose solutions best address the widely divergent and sometimes conflicting needs of customers will thrive in the open market, while those who do not serve their customers well will wither and die unless they change their policies.

The internet has grown because of free markets and despite bureaucratic intervention. Why would we want to turn it over to government’s tender mercies now? Down with net neutrality! Let’s see more network diversity! DM

  • Ivo Vegter
    Ivo Vegter

    Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets. He is seldom wrong.

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