Innovate or Pay

• May. 2, 2006

Whether or not you attribute the discovery of radio to Marconi, Lodge, Dolbear, or Tesla is inconsequential to the truth that 100 years ago, the US government declared that the air had no individual ownership. People could own property, but all of the heavens were shared amongst the masses. The radio was the largest advancement of its time, ushering in an era of communication innovations that not only shrunk the perceived size of the world, but with the invention of the radio telescope, brought the heavens within reach of every grasping hand.

A lot of people hold the creation of the Internet in the same regard as the radio; as an impetus for a golden age. Whether or not you allocate this much regard, you cannot argue the fact that the Internet has facilitated a revolution in the way the world thinks, engages, and learns.

There was a time, just three or four centuries ago that a single individual could have all of the world's knowledge; have read every book; have learned every concept, dream, and philosophy. Now, it would be impossible for us to even fathom the pure parameters of the world's information bank. People make their livings, good livings nonetheless, at filtering this bulk into sizeable and digestible nuggets - remember how hard it was to research papers when there was a card index, or no Cole's Notes.

Of course, we know that the Internet doesn't physically exist, anymore than radio. It is energy, a medium, and not a box in the basement of a building on 5th. If we were to make an analogy, the Internet is like the radio waves and not the radio. And yet, last week, the same US government (some would wonder if there were still some remaining members from the radio days) that made the heavens free, did not pass a Bill to make the Internet free. They saw the Internet, not as energy, but as something that can be physically owned, or did they?

Net Neutrality is not a new concept. It was born out of the same idealistic minds that played with code in garages and feared any Brave New World of censorship. But I want to pose the question, now that those idealists are living in palatial California homes and feeding information of censor reform advocates in China - is Net Neutrality a right for all people?

Already I can see the backs getting up and the poisoned pens coming out of their barbs, but I'm asking the question anyway. Is this government action an abandonment of the people's civil liberties, a way to get fat Telecom fatter, and an utter squash of innovation - or is it something else?

To me, there are so many issues involved here, all of them tied to economics and the need for market changes.

Which road, which road?

Currently, the Internet is based on a user-pay model. It has to be. Even though we, and anybody still reading, think of the Internet as an extension of ourselves - it still hasn't hit the global mass market, and because of the relatively small total market penetration, there can be a user premium on the service. In fact, Telecom has made a lot of money to pay for a lot of infrastructure based on this model - and what's the going rate? Anywhere from $20 - $40? That’s pretty cheap for us early adopters - $40 for all those torrents, streaming videos, video messenger....

The problem - the more popular the technology, the more infrastructure required to keep it going. Okay, but Telecom is getting $40/month off of all those people - that's a lot of money, isn't it?

More subscribers split the fixed costs, but the variable costs keep growing - in fact, at a certain point all costs become variable - meaning that Telecom needs to make more investment, requiring more money - meaning either smaller profit margins or raising the rates. Shareholders will not allow the first option, and users will not allow the second - the price is already at equilibrium.

Sound like a rock and a hard place?

Now don't get me wrong, I'm not supporting Telecom's lobbyists, but I do understand the dilemma on the horizon. The Internet has to be available, fast, and capable of handling the traffic. Without all of these, it doesn't work - and I'm not willing to pay any more than I already do. Neither are you?

Only those people that use it heavily should pay? The truth is, now that ABC and the likes are making sitcom episodes available online; now that Google is demanding unique content in order for you to be indexed; and now that YouTube is becoming more than just a fad - that heavy user is you, or soon will be. If you're not willing to pay more, who will?

Should content providers pay? As a content provider, I don't think so, but if not us, then who? After all, we're the ones making hundreds of millions of dollars, aren't we?

The problem with charging content providers is that you force them into the Telecom market to ensure sustainability and the ability to cannibalize those other content providers with less available capital. Think that there is a reason why Google has been buying up all that dark fiber?

But if you charge providers, you also force them to innovate how they deliver content. Costing is what forced ESPN.com to revamp how it serves up content so that it freed up 2 terabytes/day of available bandwidth.

Gas prices are what are finally driving the Big 3 to give precedence to fuel consumption.

Make it cost prohibitive not to innovate and you will be surprised at how imagine takes off. Maybe we providers should be forced to innovate - in fact; innovate to levels where Net Neutrality might actually be fiscally possible.

But did the government choose the right path?

I don’t think so.

Why?

Because there has to be a compromise, there has to be guidelines and restrictions; leaving it up to Telecom to decide who and how much they charge is nonsensical. You can't trust those guys. Ask any former WorldCom worker.

But this Bill did have one positive effect. It has people talking about who should pay for and rule over the Internet - who owns it - and it has a lot of other people looking for innovative solutions - changing the market. These kinds of discussions might prove to start some very positive change. However, I greatly fear the day coming when content providers start controlling the infrastructure as well, because I'm not sure we can trust all of "them" either.

Rick Tobin
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