The meaningless rules and regulations imposed on newcomers by the government gives more power to the incumbent player. Similarly, established ISPs will gain more power as the restrictions on the sector increase
What is the motivation for ISPs to invest in better infrastructure to deliver video content if they cannot charge them differently? What is the incentive for a newcomer into the video streaming business to come up with a better technology that would reduce the bandwidth consumption while giving the same service? None, for he will be charged at the same rate as Netflix. In addition, no wonder Netflix and other established businesses support this so called ‘non-discriminatory’ pricing. As nobody can now threaten their business models.
Net neutrality also prohibits any collaboration between the video streamer and the ISP to innovate a technology to give a better experience for the user.
In 2011, MetroPCS, a mobile network company, was accused of violating net neutrality principle as it favoured YouTube over other video streaming sites. The background story is - MetroPCS provides low-cost unlimited data consumption plans for price conscious customers. Since they deliver it via 2G technology --which is not technically broadband -- they would not allow video streaming or VOIP calls (actually this itself violates net-neutrality principle, but the complaint was not against it). Nevertheless, when they approached YouTube and learnt how to compress their videos to deliver over the 2G network efficiently, they added “unlimited YouTube videos” to the data packages they were offering. This bit, though provide better experience for their customers, is criminal under net-neutrality principle.
ISPs can’t discriminate content providers, but what if the content providers discriminate ISPs?
ESPN3.com is an online streaming service that broadcasts global sports events. If you go to their website, it will only let you watch their videos, if your ISP is registered with them. This means content providers can have their own revenue models, but ISPs cannot have that freedom. If you are taking the creative element out, why will anybody want to invest in this business? This will stall the internet penetration rate and the ones who do not have access to internet will continue to suffer. India, with only 20% internet penetration, if any, should be giving more freedom to the ISPs.
However, it is astounding how the principle of net neutrality garners so much support, for it can be clearly seen to be failing when applied to networks in the physical world. In a book publishing chain, author writes a book; publisher evaluates and publishes it; and then it reaches your nearest bookshop. If you apply the principle of not discriminating data packets based on the content they are carrying, the government should be forcing the bookshops to price books based on the number of words present in it. After all, the data packets in this scenario are words/alphabet. Sounds foolish, no? Who does that, you may think? Well, the Indian Govt, in 1956 passed a law, which forced newspapers to price their dailies based on the number of pages they are selling. Here is the stated purpose for the law.
An Act to provide for the regulation of the prices charged for newspapers in relation to their pages and of matters connected therewith for the purpose of preventing unfair competition among newspapers so that newspapers may have fuller opportunities of freedom of expression.
The tone of this should sound familiar to net-neutrality debaters.
Under this law, a new entrant in the media business, if he wanted to give a taste of his ideas to the readers by adopting a market strategy to offer a six-month free subscription, he cannot do that. Moreover, the law talks about “freedom of expression”. The entry barrier created by not letting the newcomer use pricing as a strategy to enter the market can only benefit the established businesses. However, the act says it is there to prevent “unfair competition”.
Yes, whether it is 1956 or 2015, every government regulation wears the mask of protecting “freedom of expression” and preventing “unfair competition” but does exactly the opposite.
People ask, is it not a threat to freedom of speech if ISPs block content as they wish? No, just like it cannot be considered a threat to freedom of speech if your neighbour does not let you speak in his house. Property rights precede freedom of speech. If there is an agreement between you and the ISP that they will not block any content, and if they still do, they would be liable for violating the contract. However, if you ask how do I know if they are blocking any content? Well, there will be a market for this, where third-party rating services will be equipped to certify ISPs on their internal workings, and you can chose ISPs based on that. In addition, ISPs can sell transparency as a feature of their service to attract customers.
There is this allegation that ISPs will block, for instance Google, and offer their own search engines. Like a company-owned showroom, they display only their products and block others’, or do they really? Well, even if they do it, it is their property and it is their prerogative, but they will not do it, it is not profitable.
The last mile ISPs have too much power they say. Like the local kirana store can dent the Colgate and its consumers by not selling its toothpaste, right? If one kirana store does not sell, the other will. If no one wants to sell it, Colgate will open its own store. Like how Google ventured into ISP business with ‘Google Fibre’. What gives more power to the local kirana store is if the govt puts meaningless rules and regulations to give a license for a new comer to open his own store. Similarly, established ISPs will gain more power as the restrictions on the sector increase.
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