Congratulations to David Cowan of Bessemer Venture Partners for his willingness to write a thoughtful post taking the "dark side" view of the religious war over Network Neutrality. The first post I ever did on this blog made it clear that I am on isen's side of the debate, and a post I wrote almost a year ago about bad VOIP performance on my Comcast cable modem service continues to attract new comments.
But that doesn't mean that I'm not willing to listen to the other side, and David makes some compelling arguments that are worth considering. I'm a believer in free markets, and his suggestion that companies should be free to innovate as they see fit is appealing.
But the Internet is different. David makes the point that it is not a public utility, and he is technically correct...but in practice, it has evolved into something that resembles one. All businesses, large and small, rely on the Internet today the way they relied on the telephone in the past...and on the US Postal Service before that. At various points in our history, government regulation has had to step in to ensure universal access to critical services even to those users who can not be served profitably.
David's example of Federal Express is an excellent case in point. For the first several years of FedEx's existence, only the largest cities were served. Then gradually service was rolled out more broadly. It was with great fanfare that FedEx announced after several years that they would deliver to all zip codes, but even today, their express service (10:30 am delivery) is only available to certain areas, while others can't receive packages until mid-afternoon. For certain special regions (big cities), even earlier delivery is available.
FedEx is able to make a profit because they cherry-pick the most lucrative part of the Post Office's business while ignoring the astonishing infrastructure needed to deliver a letter locally overnight, and pretty much anywhere in the US in two or three days, for $.39. I'm not suggesting that FedEx shouldn't be able to do what they do. I am suggesting that it only works if there is a "utility" in place to assure that the "basic" service is still available.
David mentions Akamai and Netli, two companies (uh, well, now it's just one company) that "accelerate" the internet for "premium" customers who pay them. That seems to work pretty well. In fact, Akamai's caching services actually help us to use the backbone more efficiently, so the existence of this "premium" service has a positive effect on the speed of "basic" traffic.
But premium services can't come at the expense of making sure that everyone's packets can move quickly and efficiently. If Telcos are allowed to become "Fedex" without a "Postal service" in place that provides universal access, they will by definition head toward the lowest hanging fruit, which will be large businesses that can afford to pay for these premium services...just as the CLECs did in the early days of telecom deregulation.
David leaves us with a dire vision of the US losing market share to competitors due to an over-regulated broadband carrier market that leads to "creaky, petrified infrastructure". I submit we're already there, and it's not because of regulation. Other countries with far more regulation routinely offer bandwidth rates to the home that businesses in the US can only dream of. Let's focus on building the fattest pipes in the world, so we don't have to spend time debating the need for a "fast lane". If we can't do that, then I believe regulation will be needed to ensure that there is a slow lane at all.