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The FCC plan to undo its net neutrality rules

washingtonpost.com

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Re: The FCC plan to undo its net neutrality rules

#81

Post by AnthonyMouse »

splintercell wrote: post #37
outsidetheparty wrote: post #30

Earlier quoted context omitted.

Eliminating net neutrality incentivizes ISPs to build auxiliary services that they can artificially support by throttling the bandwidth of competing products. It incentivizes them to seek profit by favoring some net traffic over other net traffic. It does not in any way incentivize them to build larger or better networks. It does not incentivize them to invest in their infrastructure. All it does is let them make mor…

Business Model 1: Build your own services and throttle everyone else's services unless they pay a premium (in which case your own services would be cheaper, but the profit they get from their own services must be higher than the profit they get from NOT selling the bandwidth their premium service uses, to third parties). Let's put it this way, if a hotel builds a Jacuzzi, you're argument is that the hotel owner will…

> You're claiming "There is no way they will go for business model 2, they will go for business model 1". But you have no presented any reason why they would do that?

There are two reasons they would do that.

The first is price discrimination. Suppose Spotify makes $2/month worth of profit but uses $0.05/month in bandwidth. Now Verizon can charge them $2/month for that amount of bandwidth and take their entire margin. Even if Spotify nominally continues to exist, they now have no margins to reinvest or use to attract new private investment, so they're walking dead. Which harms customers because now Spotify can never improve their service. And if Verizon does have a competing service (see also: TV and phone) then Verizon's service gets an insurmountable competitive advantage.

Which leads to the second reason, which is to extract monopoly rents. Suppose Spotify charges $10/month because they have competitors, so they can't charge more without losing business. But if they had no competitors then they could charge $25/month. Which means that Verizon can charge $25/month if they can get rid of all the competitors, which they can do by just charging them all unsustainably high data prices.

Hotels can't do this because hotels have real competition.

Re: The FCC plan to undo its net neutrality rules

#82

Post by F2 »

splintercell wrote: post #56
__jal wrote: post #15

Earlier quoted context omitted.

He's just spewing bullshit to get past the decision becoming final. Engaging on a level of logic with someone who is seeking an outcome and just says whatever they think will support their view. This is about the exercise of power. And as has happened since Reagan, when the clownshow in office is finally shown the door, the D's get to clean up the mess, work towards fixing economy yet again, and the cycle of life is…

In past I've seen comments and incendiary language like this be given warning from the mods. I come to this site because despite of being more liberal leaning, I can have calm conversations with people.

How exactly is the comment you're replying to "incendiary"?

Re: The FCC plan to undo its net neutrality rules

#83

Post by throwawaymaroon »

splintercell wrote: post #56
__jal wrote: post #15

Earlier quoted context omitted.

He's just spewing bullshit to get past the decision becoming final. Engaging on a level of logic with someone who is seeking an outcome and just says whatever they think will support their view. This is about the exercise of power. And as has happened since Reagan, when the clownshow in office is finally shown the door, the D's get to clean up the mess, work towards fixing economy yet again, and the cycle of life is…

In past I've seen comments and incendiary language like this be given warning from the mods. I come to this site because despite of being more liberal leaning, I can have calm conversations with people.

there's nowhere to run and hide from the building rage, nor should there be

Re: The FCC plan to undo its net neutrality rules

#84

Post by rayiner »

ficho wrote: post #76
twoodfin wrote: post #69

Earlier quoted context omitted.

Demand for water isn't growing at nearly the rate of demand for bits. If communities expected their regulated water utilities to deliver twice as much water every 18-36 months, they'd be in for some tough times.

That's irrelevant, if anything in your example you should compare growth in productivity for bits and for water independently and see if they manage to meet their demands Also water is a much more finite supply. The point of my example was that as you leave government out of the tap water market and instead of getting more of it, you get less, more expensive and of lesser quality. Economics teach that in some industr…

The difference in demand is highly relevant: U.S. water utilities can't even attract enough investment to replace century-old lead pipes and sewers; similarly tepid investment in internet infrastructure would have left us all with dial-up still.

The U.K. and France have both privatized their water systems and it has worked fine. Conversely, U.S. water systems, which are mostly still publicly owned, are a total disaster: http://www.mlive.com/news/index.ssf/2015/09/epa_1_trillion_n....

Economics certainly teaches that some markets are susceptible to natural monopolies and government regulation is appropriate there. But it also teaches that making a kind of business less profitable will drive investment away from that business. The question is how do you regulate to balance those competing concerns. You have to protect consumers, but you also have to figure out how to get sufficient investment into the industry.

The U.K. does a good job balancing the interests. There is a single, regulated monopoly that owns most of the last mile (BT Openreach), but the regulations are designed so that the monopoly is actually very profitable. Most state and local governments do a terrible job balancing those interests with regards to utility companies. Regulated rates keep water and sewer bills low, but dramatically limit the profitability of water utilities. As a result our water infrastructure is hundreds of billions of dollars in the red.

Re: The FCC plan to undo its net neutrality rules

#85

Post by outsidetheparty »

splintercell wrote: post #50
outsidetheparty wrote: post #42

Earlier quoted context omitted.

Because it's obvious. Business model 2 involves significant capital expenditure. Business model 1 involves the same profit without the risk; all they have to do is cut deals and act as rent-seekers on their existing infrastructure. They'd have to be fools to go for model 2.

You're not thinking it clearly. As long as you assume them to be profit seeking individuals and not some inconsistent model, then their choice leans far too heavily towards investing in their own infrastructure (even if you assume a bully who is ripping people's lunch money to invest some of that lunch money into a gym membership). If they launch Verizon Music, then they'll have to build a service as good as Spotify…

> As long as you assume them to be profit seeking individuals and not some inconsistent model, then their choice leans far too heavily towards investing in their own infrastructure

How so? How does eliminating net neutrality give them incentive to improve their network? You've provided no support for this at all. (In which you have much in common with Pai!) if it were as simple as "more infrastructure equals more profit" then they'd already be building more infrastructure, neutrality rules or no.

> If they launch Verizon Music, then they'll have to build a service as good as Spotify (if not better) in order compete with Spotify

But that's the point: they wouldn't have to make a better service. All they'd have to do is throttle Spotify's traffic down to the point that their own service seems preferable. Or (more likely) just extract a toll from Spotify in exchange for not doing that.

Re: The FCC plan to undo its net neutrality rules

#86

Post by __jal »

splintercell wrote: post #56
__jal wrote: post #15

Earlier quoted context omitted.

He's just spewing bullshit to get past the decision becoming final. Engaging on a level of logic with someone who is seeking an outcome and just says whatever they think will support their view. This is about the exercise of power. And as has happened since Reagan, when the clownshow in office is finally shown the door, the D's get to clean up the mess, work towards fixing economy yet again, and the cycle of life is…

In past I've seen comments and incendiary language like this be given warning from the mods. I come to this site because despite of being more liberal leaning, I can have calm conversations with people.

What specifically do you find incendiary? I'm not using Washington political euphemisms, but I honestly fail to see anything "rabble-rousing, seditious or subversive" about what I've said. I'm calling it like I see it. Please do explain.

Re: The FCC plan to undo its net neutrality rules

#87

Post by s73ver »

Veratyr wrote: post #18
notadoc wrote: post #3

How, specifically, is this helpful to the consumer or to the internet in general?

Why would you think a US government commission is being run in the interest of consumers or the internet in general? How much money do consumers and internet users donate to the government's election campaigns compared to the cable companies?

Why do you think simply leaving that in the hands of the ISPs, who have demonstrated in the past that they are more than willing to screw over consumers, is better?

Re: The FCC plan to undo its net neutrality rules

#88

Post by AnthonyMouse »

twoodfin wrote: post #69
ficho wrote: post #49

"“Two years ago, I warned that we were making a serious mistake,” Pai said. “It’s basic economics: The more heavily you regulate something, the less of it you’re likely to get.” Just reading this makes me angry. Has he ever heard of monopolies / oligopolies, or simply the place of government in regulating public utilities. Apply his quote to water supplies and see what happens.

Demand for water isn't growing at nearly the rate of demand for bits. If communities expected their regulated water utilities to deliver twice as much water every 18-36 months, they'd be in for some tough times.

A government fiber utility installs fiber once, just like a government water utility installs pipes once. Making it faster means replacing termination equipment. In what way is Verizon better at doing that than a public utility company would be?

Re: The FCC plan to undo its net neutrality rules

#89

Post by joezydeco »

Wouldn't it be fun if Netflix, Hulu, HBO, and a few other streamers all decided to throttle the Washington DC area down to, say, 10% of normal outbound bandwidth for a long weekend?

Maybe it wouldn't touch Pai, but if it pissed off a huge block of his neighbors maybe he'd start to understand the idea.

Re: The FCC plan to undo its net neutrality rules

#90

Post by outsidetheparty »

rayiner wrote: post #70
outsidetheparty wrote: post #30

Earlier quoted context omitted.

Eliminating net neutrality incentivizes ISPs to build auxiliary services that they can artificially support by throttling the bandwidth of competing products. It incentivizes them to seek profit by favoring some net traffic over other net traffic. It does not in any way incentivize them to build larger or better networks. It does not incentivize them to invest in their infrastructure. All it does is let them make mor…

That 97% number is bogus. It is computed by assuming that all the costs of the network are borne by video service, and that the broadband service is essentially pure profit. Look at carriers' actual audited financial statements: https://www.verizon.com/about/sites/default/files/annual/ver... . Verizon's wireline division had an operating profit margin of 5.8% in 2015, 2.7% in 2014, and 0.9% in 2013 (see page 24).

Fair. That number did seem improbably high, I should not have included that in my argument.
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