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I've been working on this post for a few days and I'm still not sure which side of the argument I fall on, but for now and until further notice I am a "net neutrality supporter". I'll get to that reason why in a moment.

Firstly, Network Neutrality is the name given to the movement to regulate the internet such that private bandwidth providers will not be able to discriminate between data packets. I recommend reading that wikipedia article. It seems to be the most comprehensive non-biased explanation of the debate.


This might not seem important, but some signals need a very low ping time. For example, VOIP and most online gaming needs a low ping time, other applications are in the works also, such as video conferencing and other inventions which "have yet to come to pass".

For me, this comes down to three things, the degree of rivalness, the degree of excludability, and the marginal cost of consuming one more "unit" of bandwidth. If we add one more unit of consumption and if that adds some cost, or lets say it slows down the network, by adding one more person then the service is rival. If the companies can refuse service to people, then the good is excludable.

For the internet, the telcos are arguing that the network is rival. The more people and services we add, the more the service will slow down adding some kind of social cost. They are arguing that their level of excludability is not enough and they are asking for more.

Now, let's further say that for each consumer of bandwidth imposes some cost on the firm. If they can not pass this cost on, no one will provide faster speed networks in the future. However, the other side of the argument, let's say it costs nothing for the firm to add "one more marginal unit", for example they need to constantly upgrade their network anyway because of deteriorating equipment.

Here's an example which everyone already knows. Cable providers are non-rival and excludable. It costs them nothing to add one more unit of consumption, but they exclude people from buying the service and further they can exclude within the service itself, the HBO package for example. It wouldn't be very efficient to have 10 different cable providers all with different cables going every which way, and so there is this existing capital which the cable company can bid on to provide service to the local community. This bidding is good, if it is competitive and no one is colluding, because it extracts those monopolistic rents and shares them out to the community.

I suspect the telco's and cable cos want to operate like the cable tv model. They already can throttle your bandwidth and charge you for more bandwidth. The access they want is called the "last mile": the pipe that runs from your service provider to your house. Kind of like the railroads being able to kickoff any other competition, the situation is analogous.

Here's the other argument and here is also what I really think. Wi-fi. Forget about all this land line stuff. That will only be relevant for those out in rural areas. Where the big money is, is where the big money has always been. Urban dwelling. With wi-fi I can set up a network (I actually have a transponder myself) and transmit a wi-fi signal that anyone can use so long as they are in range. Some communities have taken the initiative and may soon be offering wi-fi community based projects. The telcos look at this and have a minor heart attack and in typical rent-protectionism, try and manipulate the marketplace VIA the government to make the marketplace for favorable to them. Wi-fi is the way of the future and some day soon we will see wi-fi transponders that will connect entire cities and maybe beyond. The question comes down to who is going to pay for it, and with Google ponying up, I'm not sure this is such a big problem.

There is a ton of Georgist analysis that could go into this. But, I will say to close this thing, the community should tax the land and not the infrastructure, incomes or sales in order to pay for this thing otherwise we will end up with more problems then we will know what to do with.

Originally posted to eire1130 on Tue Jun 20, 2006 at 08:24 AM PDT.

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