Thursday, May 6, 2010

Internet Neutrality and a Simple Proposal

Internet neutrality is really a simple thing. It means that the providers are disaggregated and get to do what they should do. Regulation on the other hand is a very complicated thing and it means that we always have regulatory lag, a phenomenon that those of us around long enough remember.

You see there was a time when the FCC regulated everything, thanks to the Progressives who believed in the Government having a heavy hand and that was when the choice you had was black rotary phones. Again you see that was the direct effect of regulation. But as they say, I digress.

Let us look at what makes up an Internet connection. In simple terms it is shown below:



















There are the seven elements we show in the figure. The Internet Neutrality issue is then who controls what and how much?

Now below we show the way it is today on cable.



















Cable controls it end to end. Including the modem. That is one of the major problems. That also was what cable used to call it an information service and Title I. Frankly it is common carriage at face value but the FCC in its immortal wisdom decided against it. In many ways over its period of existence the FCC has been the main problem in impeding telecom in the country. Yet it has prospered despite the FCC.

Now a simple proposal. We show below what we propose. Just separate the services, mandate open modems, and let the customer get services from whomever as we tried to do under the last telecom bill in 1996.



















Let the cable company provide non integrated transport, that is what they sell. Regulate that. You see my Cablevision Internet fails every day at 11:00 AM, I can set my clocks by it, the service drops more frequently than the leaves in the fall! It costs $55 per month and works at best 80% of the time. Yet there is no alternative. So why not regulate it as a common carrier, just the transport side.

The problem will be however the FCC. They never do anything simply. The FCC will make this more complex, will permit more loop holes and will drive Internet access into the ground and will drive the prices sky high! Why, it is in the DNA.