November 12, 2008

Network Neutrality and Groundhog Day

The following is adapted from a posting of mine distributed on Dave Farber's IP list earlier today ...

Greetings. I can only assume that much of the readership feels trapped in a situation like that of Bill Murray in the film "Groundhog Day" -- when the usual suspects start batting Net Neutrality back and forth here in IP.

But there are underlying truths in play -- this isn't like a movie review where opinions are mainly a matter of taste.

Let's start with a number. According to the best public estimates right now, the top 5 ISPs have over a 55% U.S. market share. The top 23 hold more than 75% market share.

Everyone else, including most of those 4000+ wireless ISPs that Brett Glass likes to talk about, are clustered down in the remaining less than 25%.

Brett portrays his (often laudable) business practices as if they were representative of the ISP industry at large. But even his own statements illustrate why so many observers put the dominant ISPs in a completely different category. From Brett's last posting here in IP:

"While the government seems intent upon making it impossible for us to compete by denying us reasonable access to radio spectrum and by allowing the telephone and cable companies to engage in anticompetitive practices with impunity (witness the Trinko case), we are surviving and growing nonetheless."

Who are these "telephone and cable companies" being referred to? None other than the dominant carriers with that monster Internet access market share!

Why aren't wireless ISPs on the radar for most consumers? In many cases, it's because they are not accessible for technical reasons in a given location, or can't offer a similarly attractive price/performance package as the dominants, frequently due to the anticompetitive situation that Brett cites.

David Reed brought up a critical point that illustrates why so many of us bristle when some advocates attempt to draw comparisons between Google's market share for particular Internet services, vs. the extremely limited practical competition for Internet access services for most U.S. Internet users.

The term "monopoly" gets thrown around a lot but it's a much more complex subject than simply a board game with a "Get Out of Jail Free" card.

First, it must always be remembered that whatever Google's scope, your friendly ISP has it beaten in terms of your data seven ways from Sunday. Every single blessed byte you send or receive, every TCP or UDP connection you directly establish, every piece of e-mail passes through your ISP. That is power with a capital P.

And how did these ISPs attain such exalted positions? Much of the time, simply by edict. Your local DSL and cable firms are usually the direct descendants of the basic telco and CATV services that were typically granted monopoly (in the most basic sense of the word) status in any given location.

This is precisely the sort of telecom situation where regulatory apparatus historically has been most applicable.

Google is entirely different. They weren't granted any exclusive establishment rights by municipalities or other government entities. They didn't even twist arms the way that courts have found Microsoft guilty of widely doing.

Google got to where they are now "simply" by being so effective at providing the services that they deploy, and through Internet users -- remaining free to enter non-Google URLs into their browsers at any time -- who have chosen to use those Google services.

A firm that achieves market dominance in any business segment through its own hard work and customer satisfaction is not the same as a company that achieved dominance by virtue of special privilege grants or illicit manipulation of the marketplace.

While it can be true that any dominant firm may sometimes be subject to certain extra responsibilities and in some cases specific restrictions, attempts to equate Google to ISPs in these regards are in my view misleading and inaccurate, and do not well serve reasoned dialogue on the serious issues involved in the Network Neutrality debates.


Posted by Lauren at November 12, 2008 06:31 PM | Permalink
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