My house is wired for two internet service providers: Comcast and CenturyLink.

Comcast provides what is called cable internet. They have a network created originally with the intent to deliver paid but limited commercial television. That clearly didn’t work out as intended though becuase cable television now has more commercials than free ad-supported air-wave television; but I digress.

CenturyLink on the other hand, is a DSL provider. DSL uses the old phone network that they didn’t build, they just use it. While the maximum speeds of DSL internet are slower than the maximum speeds of cable internet, they are usually cheaper, likely due to the smaller amount of infrastructure overhead. They also have a reputation for being unreliable, though that hasn’t really been my experience.

Herein lies the problem. My house is wired for only two internet service providers. In December of 2013, the FCC released a report in which was detailed the number of landline internet providers available per household. The statistics…​

  • 33% have access to 3+ providers

  • 37% have access to 2 providers

  • 28% have access to 1 provider

  • 2% have access to 0 providers

The survey shows that 67% of households have access to 2 or fewer internet service providers. Further, that number will likely not change much in the future because the only way to get a new provider into the mix is for that provider to use the phone network (DSL), or to have enough funding as a startup to build their own network, which is incredibly costly. In other words, the cost of entry is so high in this market, that it is a barrier to entry. That makes the few landline internet service providers monopolies, doesn’t it?

Utilities

The idea has been discussed of declaring internet a utility in the United States. That is an interesting thought, full of complications. What are some utilities we can compare to get a better idea of what that would look like?

  • Water: Each house has its own water pipes put in when it’s built. Laying a second set of pipes for a different water provider would be far too costly (probably impossible). The service of in-house water access is effectively a monopoly on a city-by-city basis, and thus is eligable for government regulation since its existence as a monopoly cannot be avoided.

  • Electricity: Again, when a house is built, its lines are connected to "the grid". That grid is owned usually by a very large company (like Xcel) who has the money to build out those lines, or by the city who also has the money to build out those lines. Either way, electricity can only be acquired from one provider for the given dwelling. Like water, the product of electricity is an unavoidable monopoly worthy of government regulation.

  • Gas: I’ll just be quick on this one. Gas, pipes, one provider per house = unavoidable monopoly.

The commonalities of the three afforementioned utilities are

  • Cost to market entry is prohibitively high by the nature of the product

  • Government intervention is required to keep sole providers from abusing their powers as sole providers

However, if internet is to be a utility, it should [in theory] have similar characteristics to a utility, notably, limitations.

Most folks want their unlimited data (I’m one of them). However, when you pay for your electricity bill, you may notice that they charge you (in the US) per kilowatt hour. With water, they charge for gallons used. With internet, it would presumably be charged on a per gigabyte basis. Regulation then would not be on how much you get access to, but how much you pay for increments of said access. Many companies have implemented a small, medium, large product set wherein you pay the company multiple hundreds of percents higher than the product is actually worth for a limited product which if you exceed, are charged exorbitent fees almost as if you breached a contract. This isn’t how gas, electricity, or water work. An increment could not be "small, medium, or large", but "You used 15.9 gigabytes this month".

Government Regulation/Ownership Stops Innovation

The subject of this section makes plain what it is about. If you disagree or dislike this, please read anyways as the entire topic of net neutrality should not be discussed withtout bringing this in (it’s not a real discussion anyways if you dismiss the other’s viewpoints without first hearing them out).

The United States capitalist-oriented economy and law have without a doubt gotten the nation where it is today (for better or for worse). Yes, we have some companies (I won’t name any, but I’m sure you can think of some) who have abused their wealth to exploit people. On the flip side, the United states also has the most robust, thriving, and enduring economies in the world. Nearly every other nation, if not every other nation bases their currency on ours (I’m an American by the way).

It’s an easy-to-prove fact that most (always avoid absolutes) game-changing innovations have come out of the United States private sector. Some more notable ones are Walmart’s best-in-world inventory tracking, Amazon’s user preference algorithms, Google’s search algorithms [originated here], computers in general (though now they are often manufactured in other countries), Pixar’s renderman, the internet (though that was originally comissoned by the government supposedly), the cell networks. The list could go on.

Now think of the last time you went into a government establishment, be it a court house, the DMV, or somewhere else. Did you notice that they’re still running Windows XP with 4x3 monitors and very old desktops? The best innovation we’ve seen near the DMV as of late is the ability to renew one’s driver’s license on their website. However, as we’ve seen with the latest healthcare.gov screwups (let’s face it, that’s what it was), the government isn’t good at doing much that the private sector excells at.

A Balance

However, if the private sector were really as good at everything as it may seem I just implied, why do we even have a government? I won’t deny that a government is needed to intervene. We do need a governing body that is above all others so it can govern. That’s why we have anti-monopoly laws that are actually enforcable (remember all the attempted purchases of T-Mobile as of late?) amongst other laws that protect citizens, and in this case, consumers of the internet.

More thoughts more thoughts more thoughts…​

Category:Politics