On the Soapbox

Here's yet another article about the recent lust for content taxation that seems to be infecting various broadband ISPs. Read the article.

As if asymmetrical up/down bandwidths aren't enough, they are incensed that content providers don't have the right to use their pipes for free. Excuse me, their pipes? Their arrogance is extremely infuriating. Of course, Verizon owns the pipes, but the millions of Verizon customers pay a hefty monthly toll, and as a result, these customers should be expected to have the content that they want come through those pipes without meddling; by no means is Verizon giving away its pipes for free, contrary to what they would like for the public to think. If Verizon feels that its fees are not enough to cover the costs of maintaining those pipes, then it perhaps it should charge those people who requested the data, which it won't do because it can more easily get away with squeezing money out of various Internet companies than its customer base. Google is not enjoying a free lunch, either. It has to pay a hefty price for its bandwidth and for its connection to the Internet, though those payments do not necessarily go to Verizon. If someone makes a phone call, the caller is paying his local phone company for the right to use the lines to make outgoing calls and then the callee is paying her local phone company to for the right to use the lines to receive incoming calls. If this sort of thing goes through, it would be akin to forcing the caller to pay twice--once on his end and again on her end for the call, even though the callee is still paying on the receiving end, for a total of three charges.

In the end, Verizon and the other ISPs are doing this because they feel that they are in a position to dig into the profits of Google et al. and also because they fear that as Internet voice calls and other services become more common, they will lose out. Bundling their own (mediocre) services with their connection service is akin to Microsoft bundling their own software with Windows. While vertical integration can often be a good thing, this sort of alliance between content provider and connection provider is dangerous as the latter is monopolistic in nature. It produces a conflict of interest that has led to them toying with the idea of charging rival content services, which would be a gross abuse of market power, much akin to Microsoft charging rival companies for the their software to run on Windows.

This is a perfect example of when a small amount of government regulation is necessary (simply affirming the principle of network neutrality would suffice). Although there may be some token competition, the cost of switching ISPs and the impracticality of multiple companies laying multiple lines make it such that broadband ISPs wield near-monopolistic powers (and in some places, they do wield monopolistic powers). They are natural monopolies, which governments have the obligation to regulate in order to protect the free market, and if nothing is done to reign in abuses of power, then the Internet--one of the finest specimens of free market economics--will suffer. Much like the railroads of long ago, the Internet is the essential connecting fiber that binds our New Economy together, and we can ill afford the 21st-century equivalent of railroad robber barons.

Side note: I was greatly disappointed by the article, as it mostly dwells on arguments given by John Thorne, the Verizon executive, and the prominent placement of biased language such as "free lunch" will not help the average reader of this mainstream newspaper fully grasp both sides of this issue. That the arguments against the Verizon plan are presented very briefly and almost in passing at the very end is also unfortunate.