Monday, December 12, 2005

What a Network Neutrality Rule Wants

From David S. Isenberg's musings about loci of intelligence and stupidity,  Good Stuff!!!

What a Network Neutrality Rule Wants

Network Neutrality, that is, a network that just delivers the packets, stupid, with no cognizance of what app, device, or end-user generated them, is an public good that gives rise to much innovation, value creation and economic growth at the application layer. It is the single greatest factor in the success of the current Internet.

But a Network Neutrality rule, even a strong one, can fail. Here's my thinking:

1. The carriers have huge incentives to discriminate, as a ground-breaking paper, entitled Towards an Economic Framework for Network Neutrality Regulation, by Barbara van Schewick clearly shows. One major finding is that a carrier does not need to be a monopoly to reap clear benefits from discrimination; carriers can benefit from discriminating even in a competitive market.

2. Anybody who says that there's no need for Network Neutrality because the carriers have no intention to discriminate is ignoring the carriers' huge incentives to discriminate. Please, Mr. Fox, guard my hen house; I know your intentions are pure. [Link]

3. No mealy-mouthed language. Any Network Neutrality rule must be iron-clad, with no possibility of misinterpretation. Because carriers will try to misinterpret it. Because they will have economic incentives to do so.

4. The punishment must fit the crime. Network Neutrality rules are not in the carriers' best interests. They put carriers in a self-competitive situation, that is, in a situation where following the rule is not in their self-interest. Therefore, if carriers stand to make billions by violating Network Neutrality, then the punishment must be in the tens of billions.

5. Physical network development is still a problem. Under Network Neutrality and competition, unless we find a way around the Paradox of the Best Network, carriers do lose incentive to build according to the latest technology. We need to solve this problem by confronting it squarely, by dis-entangling the network development issue from the network neutrality issue.

Network Neutrality is a clear case of public good versus private benefit. That's what regulation is for. In this case, competition will not replace regulation. We don't need any old Network Neutrality rule. We need a network neutrality rule that is (a) clear, (b) strongly enforceable, and (c) incents physical network development. Anything less is bound to fail.

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    Title: What a Network Neutrality Rule Wants
    Author: ~isen
    Publication Date: 12/12/2005 8:46:42 AM

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