IS "NET NEUTRALITY" A SCAM?
2008 July 30

Dear Mr. Griffin,

I want to say thank you for devoting your life for the cause of freedom.  Last Friday I was reading your newsletter and I saw a link to the following. 

http://freedom-force.org/pics/icon-video.gifWhat you need to know to stop corporate Internet Service Providers from squeezing out small web sites and independent bloggers. YouTube Posted 2008 June 21
http://www.youtube.com/watch?v=G5RQrxkGgCM
 

This video is sponsoring Net Neutrality which is a proposal by Google and Microsoft to regulate the Internet.  Internet Service Providers are currently developing a new protocol, IPTV, to distribute television content over the Internet.  The Internet Protocol (IP) has built-in routing making it easier for distributing TV content all around the globe at lower cost. 

There is a big business opportunity for ISPs to deliver high quality video on the web and replace Cable Television. The problem is the current bandwidth (capacity) of the Internet is not capable of distributing high-quality video, meaning significant investment must be made to increase bandwidth by 10 to 100 times. 

ISPs want to offer website packages to their customers for high-quality video, the same as when a user subscribes to special channels on Cable TV.  Your PC or TV setup box would “connect to a special website” and you would have access to the TV channels you subscribed.  Of course, those websites will have priority over the other websites because of the real-time nature of delivering video content.  At the moment, you can watch video on a pay-per-view basis.  The video is stored on a nearby server owned by the ISP to ensure reliable smooth video experience. Watching a video from a remote server requires much higher bandwidth and a protocol to ensure reliable delivery.  Bandwidth, which is finite, must be allocated based on the priority, meaning some network packets must be dropped in case of network congestion, the same as you have to slow down (or stop) when there is a traffic jam on the freeway. Internet Service Providers must be allowed to prioritize packets and charge a different price based on the bandwidth quality. The corporations sponsoring Net Neutrality, such as Google and Microsoft, want to get the same bandwidth windfall so their website get the same priority as the privileged video websites.  Net Neutrality is rent seeking, that is, having equal access to distribute the videos using the ISPs network, without investing in the network infrastructure.  Following the same logic as "Net Neutrality", the same could be said for "Television Neutrality" where any corporation could add their own TV channels without paying anything to the Cable TV providers.  Because the Internet is gaining popularity and technology could allow real-time high-quality video, there is an irresistible temptation for non-ISPs to legislate bandwidth so they can distributing video on the web, replacing Cable TV.  The cables are the property of the ISP and the ISP should have control what content they distribute on their hardware.  Yes, there is a danger the ISP may throttle websites like YouTube which was purchased for $1.65 Billion by Google, however competition will make sure that if bandwidth is too restricted, subscribers will switch to another ISP.  Google pretends to be the savior of all us;  in reality they're just another big company looking out for their own interests.  

Traffic control is built-in to the Internet.  The TCP/IP stands for "Transmission Control Protocol / Internet Protocol".  Building a network without traffic control (throttling) is like building an ATM Cash machine without handling the case of insufficient funds.  In order to deliver high-quality video on the Internet, some network packets must be prioritized, and by definition, some network packets must be dropped.  There is a fear some websites will be blocked - this is not true - just delayed.  High quality video is very bandwidth-intensive and requires prioritization, otherwise the video will pause all the time.  Just to give you an idea, watching a full DVD would take over a week to download using the fastest dial-up modem, assuming everything is running at full speed (which is never the case; you can easily double or triple the download time).  In order to deliver high-quality web entertainment, new investment must be made to increase bandwidth significantly, and in order to justify this investment, ISPs must have the flexibility to charge a premium for those who wants these new services. 

Some network packets are more important, say speech, while other bandwidth may be sold at a lower cost, say performing a download or backup during night time. In all industries, there are different prices for different services, such as local and long distance calls, purchasing airline tickets, vacations, meals during lunchtime and evening and weekends, hockey/football/baseball tickets, and so on. If a customer is not happy of his Internet connection, he can upgrade his package or switch to another ISP. There is still competition, and it is only competition that will ensure quality of service. Politicians and bureaucrats are not able to determine what is acceptable for every customer - only the customer himself. 

The term Net Neutrality is very deceptive.  The sponsors are using fear to pretend the Internet will be gone, and therefore urge people to support Net Neutrality.  This is not the first time corporations are predicting Doomsday for the Internet. AT&T is predicting full capacity by 2010 (http://news.zdnet.com/2100-1035_22-6237715.html) and wants the government to give them billion of dollars to upgrade their infrastructure. AT&T has a long history of receiving corporate welfare and government handouts.  There are many other videos http://www.youtube.com/watch?v=t89WwcsOj9U (Net Neutrality), http://www.youtube.com/watch?v=A2XPiqhN_Ns (2012: The Year The Internet Ends), http://www.youtube.com/watch?v=AA5ZR_jxdXU (Net Neutrality Emergency Broadcast) talking about a conspiracy to “take down the Internet” and web entertainment will go away. Those socialist intellectuals are saying companies only care about making money and we should call politicians for help. The Internet is not a charity organization. In fact, most people probably don't understand how the Internet works and who pays for what. In any regards, it is because of profit motive and competition we have low bandwidth costs and web entertainment today. 

Corporations live to make money, the same as individuals work to earn their living.  There is nothing sinful about making money, as long as the money received comes from voluntary exchange rather than taken by force, theft, or extortion. In a free-market economy, corporation must serve the people in order to remain in business.  If the corporation does not sell anything useful to the population, it won’t have any customers, therefore no income, and will go out of business. In a free-market economy, big corporate earnings can only be achieved by having many customers purchasing goods and services. The good news is you have much more control over your wallet when you subscribe to Internet services than you have with the money you send to politicians. ISPs want your money badly. No ISP will dare to limit your access to a few selected websites, risking to lose a valuable customer to a competitor.

On the other hand, government takes your money by force (taxes) and by theft (inflation). The more money the government has, the more power it has over corporations in need of money. Since corporations want to maximize their profits, they will use the easiest possible way. Behemoth corporations find it easier to lobby the government for privileges (regulations) and handouts (subsidies), than by working hard and selling goods and services to customers. Corporations are loyal to their customers, and when the government is the corporation’s biggest customer, the corporation stops serving the people and starts serving the government. Corruption becomes irresistible. To secure the loyalty of its customer (the government), the corporation will hire (bribe) politicians and bureaucrats to secure its income and obstruct competition with new regulations. This is how corporations gain control of the government. The root of the problem is giving our money to the government.

“Net Neutrality” is NOT an act of the free market, but a political mean to regulate the Internet.  A group of corporations are seeking privileges, with the help of the government, to gain control of a market. In this case, the rent seekers are the new media producers, such as Google and Microsoft (both sworn enemies uniting together with the government), wishing to distribute their content, such as videos, over the Internet. There are immense opportunities to replace Cable Television, however there is one problem: bandwidth cost. Until a few years ago, distributing video over the Internet was impossible due to bandwidth costs. Thanks to the free market and competition, bandwidth costs have lowered about 100 times. In year 2000, I was very happy to pay $10 per GB (as many ISPs would charge up to $100 per GB); now I pay less than $0.10 per GB, plus I get a higher bandwidth quality, both in reliability and lower network latency. At $10 per GB, downloading a full DVD of 4.7 GB would have cost $47, which was more than purchasing the DVD and having it shipped to your door. Downloading the content of a full CD of 700 MB would have cost $7 which was still too expensive to build any profitable business model distributing media content over the Internet. 

With today’s low bandwidth costs, video can now be distributed over the Internet, however the bandwidth costs are still there. On a network link, bandwidth is finite, and when traffic congestion occurs, some network packets must be dropped. Net Neutrality wants to force the ISPs to ignore the bandwidth costs so the new media producers can build a profitable business model at their expense. If you want bandwidth-intensive content, you have to be ready to pay more than you would pay for a 56 kbps dial-up connection. Legally forcing ISPs to ignore bandwidth throttling is theft. Legal plunder is still plunder.  Regulating the Internet will lead to unforeseen consequences. The European Commission was planning to foster broadband penetration across European countries, and got the opposite. Feel free to read the article for details http://www.mises.org/story/2851  

Notice the following phrase at http://compnetworking.about.com/od/internetaccessproviders/f/net-neutrality.htm contradicts itself: 

    "Some service providers may prefer to regulate the flow of traffic through their networks for business reasons, while free economy advocates suggest that traffic controls are unnecessary" 

Free economy advocates should not call for regulations.  ISPs have the right to limit bandwidth to their customers.  The debate is not about ISPs blocking websites; it is about ISPs giving higher bandwidth to chosen websites for high-quality video.  Likewise, ISPs may wish sell subscriptions to access to web channels, the same as Cable Television.  The good news is Internet access will be faster, so the 'slower websites' will still be faster than what we have today. 

Ironically, without the ISP’s freedom to limit bandwidth to customers, we will never have quality video on the Internet. If an ISP starts distributing video on the Net without charging extra, than everyone will want to watch those videos for free. This is called tragedy of the commons. Video is so bandwidth-intensive that the Net will be clogged, and emails and websites will become inaccessible. I am not making this up: a typical small web page having 150 KB of content is divided roughly in 100 network packets for transmission on the Internet. If 50% of those packets are lost, then there is one chance in 1267650600228229401496703205376 to have the page successfully delivered without retransmission. Now, imagine you are downloading an email containing a picture attachment from a megapixel camera. The chance would be 2^100 which is a number having more than 300 tailing zeroes.

Also, there is no incentive for an ISP to increase the bandwidth if there is no possibility to earn extra income from the expanded service. Sadly, the only remaining option will be the expensive Cable Television run by a cartel of large corporations controlling the mainstream media.

So far, the Internet has been doing fine without Net Neutrality. This legislation is trying to fix a problem that does not exists. To my best knowledge, I am not aware of anyone, or know anyone who knows someone having his website blocked by his/her ISP. Yes it is true that without Net Neutrality, some websites will have higher priority than others, but even the low-priority websites will benefit from the extra idle bandwidth. By increasing competition, it is likely prices for Cable TV will drop, the same as long distance calls are dropping because of VoIP. We will also get more relevant news and perhaps more coverage for our candidates in the debates.

The Internet is a very important tool to fight for our freedom.  I don’t trust politicians to free the Internet. 

Yours in Liberty,
Daniel Morin.
514-616-3455 

 


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