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What Do Santa Claus And The Internet Have In Common?

The shills for the billion dollar content companies (also known as “Save The Internet”) have launched a new video. It’s pretty amazing how blatantly they’re misrepresenting the facts of Net Neutrality – especially given their proclivity for claiming that’s what phone and cable companies do.

First of all, the “founding principle” of the Internet is not Net Neutrality. Net Neutrality is a big government intrusion into the net. The government had previously understood that regulation of this still nascent medium is a terrible idea. Yet now the Net Neut proponents want to freeze development in its tracks – ostensibly convinced that innovation can go no further.

The proponents will tell you that net neutrality has always been – based on a law that applied to 40% of the broadband connections carried by DSL lines. It never applied to cable – which accounts for about 60% of the broadband connections. So NN was never “the founding principle”. It was a hindrance to DSL, and the lack of it allowed cable to arrive on the scene and steal the market (well, that and the fact that cable had faster lines and a $100 billion network investment to make it better).

The video also fundamentally misrepresents the state of what we call the Internet today. I’ll get into why there really is no Internet as most people think of it in just a moment, but let’s look at their definition first.

They claim the Internet is a series of pipes and the phone and cable companies are not allowed to mess with what is in those pipes. That’s simply not true. Phone and cable companies mess with what’s in those pipes 24/7. It’s called “managing the network.”

What that means, for instance, is they give video and VOIP traffic preference over e-mail. They move video and voice to the front of the line so you see smooth video instead of the choppy, buffer-problems you used to see a couple short years ago. As more and more video is watched, it requires more and more management (which requires investments in administrators and equipment).

What Net Neutrality argues those pipes should just sit there and let e-mail spam duke it out with YouTube to see who gets there first. They call that “dumb pipes”.

“Dumb pipes” really is a founding principle of the Internet. That’s how it used to be, but managed networks made it better for everyone. Occasionally they’ll allow for management and priortization of video and voice over other traffic, but it’s usually for disingenuous purposes (but more on that later).

Now the Internet, as you probably think of it, does not exist. A lot of people hear about DARPANet and the government creation of “the internet” and they think there is this great big thing out there somewhere – some sort of tangible item.

That is not the case.

“The Internet” does not exist. It’s like Santa Claus. It’s a great myth perpetrated on the uninformed people of the world. The Internet is a series of interconnected networks – not one big thing. The term “Internet” is exactly what the Latin root of its name implies. Inter- means between and Net is short for networks. The Internet is nothing more than a method of exchanging data and traffic between separate, usually privately-owned, networks.

That becomes important when you consider what net neutrality really means. It means someone who invested $100 billion dollars in a network is now being told they cannot manage it as they see fit simply because someone who invests $49 is afraid they may not be able to access

Let’s say you have a network in your home – say three computers all linked together – for you, the wife and little Johnny. Johnny wants to spend all day downloading the complete director’s cut of the Lord of the Rings trilogy. That, however, brings your network to a crawl, so you, and the router in your closet, set to work to prioritize the rest of the traffic on your network so Johnny has fast access to educational sites, and the rest of the family can use the net, and The Lord of the Rings is throttled back.

That sounds like a great solution except Little Johnny, not happy with your choices, decides to petition the government to get involved, and they pass a law saying you cannot manage the network to impede Johnny, regardless of the negative impact to the rest of the family.

That is exactly what Net Neutrality does.

Your home network, the moment it connects, IS the Internet. You may have heard your computer geek friends mention TCP/IP or more often an IP address. Well, the IP stands for Internet Protocol. That is the language that machines on the Internet use to communicate.

If the government came to you with new regulations for how you could manage your own home network, simply because you use Internet Protocol to connect your home network you would probably oppose that. If they’re doing it to somebody else, does that make it a good idea? No.

As with most things, Net Neutrality comes down to a simple conflict between two forces that involves a whole lot of money.

In this case Net Neutrality proponents like Google Amazon, eBay, and Microsoft are lining up against net neutrality opponents like Comcast, AT&T, Verizon, Cisco, etc. There are literally billions and billions of dollars in the balance.

You see, usage of the Internet to view video is exploding. Some people believe – in the very near future – we’ll view more video via the web than we watch on TV. Much of that video will be viewed on web sites.

Now the phone and cable companies spent hundreds of billions of dollars developing their network so they could sell you services and video. The web sites spent considerably less not building networks, but instead establishing large server farms to provide you with video over the other guy’s network.

The phone and cable companies (the access providers) have realized that they may be unable to recuperate the costs of building those networks if their customers buy someone else’s products and services. Worse yet, they are realizing that the customers who do buy their services and products could have the quality of delivery for those services seriously degraded by people buying from their competitor.

That’s fine with the content providers. They would be more than happy using a cable company network to deliver video to you. The content providers are hoping to deliver their video to you for several dollars per video. Most of that money will go straight to their bottom line (that’s Net Profit for those who have never seen a balance sheet) because they don’t have to pay for delivery.

Imagine a world that would allow me to create a huge business that relies on shipping packages. Rather than using my own trucks or planes, however, I can just walk to the FedEx drop box and throw my stuff in it. I don’t charge you much for shipping, and what I do charge you is almost pure profit. It would take no time at all before I was the busiest shipping company in the world with revenue in excess of $100 billion dollars – all borne on the back of FedEx.

You would use me because I provide a better cheaper shipping experience than FedEx, but with their same great reliability. The best part is if FedEx complained about my tactics, I would ask the government for a new law requires FedEx to deliver my package to you with no questions asked.

That is the founding principle of Net Neutrality.

So the access providers came to the conclusion that the content providers should pay for the amount of space they take up on the network – not an unreasonable solution. if I’m going to ship packages, and want to use FedEx trucks, then I need to pay FedEx.

The content providers, not wanting anything to come between them and their profits, are opposed to this, so they’re looking for government regulation to prevent it. They want to freeze the Internet pricing model now, so they won’t have to pay anything later. It’s disingenuous and will work to the detriment of those who use the Internet.

That’s the issue. No matter how many web videos distorting that are created by the pro-NN crowd, it will remain a battle between billion dollar companies. The sooner people realize that, the sooner they will conclude that the battlefield for billion dollar companies is the free market, not the halls of Congress.

(Disclaimer: While I work for the National Cable and Telecommunications Association, this post should in no way be construed as an official position of the Association. Thoughts in this space are mine and mine alone and do not reflect the views of my employer.)

Written by Michael Turk