Why Net Neutrality is a Bogus Issue

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Why Net Neutrality is a Bogus Issue

• Presentation for Fall VON 2006
• Boston MA September 13, 2006
• By Scott Cleland
• Chairman, NetCompetition.org
• An E-Forum Funded by Broadband Companies
• www.NetCompetition.org --- www.precursorblog.com
• and President, Precursor LLC
• An Industry Research and Consulting Firm
• www.precursor.com --- scleland_at_precursor.com

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Why Net Neutrality is a Bogus Issue

• No real problem
• The core net neutrality assertions are false
• Driven by special interests -- not principle

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I. No Real Problem

• No consumer harm
• Prices falling choice and speed increasing
  healthy deployment explosion of new products,
  services and innovations
• Free speech and Internet access already protected
  
• Hypothetical unsubstantiated allegations
• One documented U.S. example in last five years
• Small telco Madison River, blocked VoIP swiftly
  punished by FCC
• Net neutrality punishes 2000 companies for the
  mistake of one
• Jumped to worst case conclusion based on a few
  press quotes
• Existing laws more than sufficient
• FCC, FTC, DOJ have authority/mandate to protect
  competition
• FCC has replaced monopolies with competition over
  11 years
• FTC says no one has yet filed complaints or
  explained problem

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II. The Core Assertions are FalseA. The Net is
neutral shouldnt be tiered

• Reality the Net isnt neutral or un-tiered as
  the buzzword Net Neutrality term insinuates
• Net traffic is treated un-equally for variety of
  reasons
• Net backbone has long had 3 different peering
  tiers
• Net access pricing has long been tiered dialup,
  free WiFi, and various price/speed tiers of
  broadband
• Net usage is unequal 5 users use 50 bandwidth
• Net legal treatment of technologies is very
  different

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II. All Core Assertions are FalseB. A
broadband duopoly requires regulation

• Broadband is young, fast-growing and dynamic
  market thats replacing monopoly dialup service
• What matters is the competitive trajectory for
  choice/price/supply
• The facts prove a competitive market
• Choice of broadband providers is expanding
  rapidly per FCC
• Satellite is the most widely available option,
  not DSL/cable modem
• Real bandwidth prices fallen 50 for DSL/cable
  modems over last few years
• Speed offered has doubled bundles/promotions
  lower prices too
• Supply of new broadband competitors is
  increasing
• Satellite broadband wireless broadband of
  Verizon, Sprint, ATT T-Mobile WiFi hot spots
  Clearwire WiMax Muni-WiFi
• BPL is now a feasible future third wire into
  home

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II. All Core Assertions are FalseC. Net
Neutrality would maintain status quo

• Competition No Internet regulation is the
  status quo!
• Bipartisan Telecom Act 1996 replaced monopoly
  with competition and de-regulation
• Monopoly-era copper regulations like net
  neutrality have been made obsolete by the
  emergence of competition
• All non-copper broadband technologies have never
  had net neutrality regulation, e.g.
• 30 million cable modem users
• 210 million wireless users
• Millions of WiFi users and
• The increasing of users of satellite broadband,
  WiMax, or BPL.
• Snowe-Dorgan/Markey bills do not restore/update
  old law because current law says keep net free of
  regulation
• These bills would regulate the Internet for the
  first time

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II. All Core Assertions are FalseD. Net
Neutrality is gaining momentum

• The official actions that matter show clear
  momentum against net neutrality
• In May, the House defeated Markey Bill 269-152
• In June, FCC refused neutrality conditions on
  Adelphia merger
• In July, Senate Commerce Committee defeated
  Snowe-Dorgan 11-11 and passed Stevens Net
  neutrality compromise 15-7
• In August, FTC Chairman stated FTC is skeptical
  saying no one has complained to them or explained
  the supposed problem.
• SavetheInternets touted momentum measures are
  bogus e-petition signers, coalition members
  blogposts they are
• Local stunts designed to get media attention and
• Activist and operative staged, not real
  spontaneous grass-roots.

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III. Driven by Special Interests Not Principle

• Net Neutrality isnt about consumers, principle,
  or policy its about money
• Political fundraising for Moveon.org and the
  mid-term elections
• Commercial negotiating leverage for online giants
  to protect their profits by shifting new video
  distribution costs fully to consumers.
• A cynical few have shamelessly scared the many
  with outrageous and unsubstantiated
  fear-mongering -- for monetary/political gain
• SavetheInternet.org Moveon.orgs front group
  knows
• Theres no better way to energize bloggers/online
  activists than scaring them that bad guys want
  to take away their Internet!
• ItsOurNet.org the front group for Google, eBay,
  Amazon, Microsoft, Yahoo are scaring many with
  unsubstantiated claims
• Small businesseses may not be able to survive,
  online etc.
• They know it doesnt matter if its true, only if
  they can get enough people to fear that it may be
  true

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III. Evidence Highlights Special Interests

• Moveon.org and the online giants are not
• Looking out for the little guy its really
  reverse Robin Hood
• Net neutrality is average pricing where the
  masses, who use the least bandwidth are forced to
  subsidize the few bandwidth hogs and dotcom
  billionaires.
• Protecting free speech or the First Amendment
• The words free speech and First Amendment are
  nowhere to be found in the Senate Snowe-Dorgan
  bill or the House Markey bill.
• They oppose strong free speech protection
  language in the pending Stevens Bill
• Markey bill has a provision, which is effectively
  guilty until proven innocent
• Protecting consumers
• After screaming Congress should not leave
  consumers unprotected, ItsOurNet and
  SavetheInternet both oppose the only pending
  legislation with a chance of passage that would
  codify more consumer protections than exist now
• Supporting competition or consumer
  choiceSnowe-Dorgan Markey Bills
• Would regulate for first time free services, new
  entrants and individual persons
• Those bills have no sunset provisions for when
  competition may replace the need for regulation
  the assumption is competition can never work

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Conclusion Net Neutrality is a Bogus Policy
Issue

• FCC Chairman Kevin J. Martin
• "If you offer different tiers of speeds, a
  consumer chooses the lowest tier, and he wants to
  access content that would require higher speeds
  than he has purchased, hes not being blocked
  from access. He just hasnt purchased the speed
  thats necessary."
• FTC Chairman Deborah Majoras
• let me be clear that if broadband providers
  engage in anti-competitive conduct, we will not
  hesitate to act using our existing authority. But
  I have to say, thus far proponents of net
  neutrality regulation have not come to us to
  explain where the market is failing or what
  anti-competitive conduct we should challenge we
  are open to hearing from them.

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• Chairman Scott Cleland
• NetCompetition.org
• An E-Forum Funded by Broadband Companies
• Supporting evidence for this
• presentation can be found at
• www.NetCompetition.org
• www.precursorblog.com

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