The Jeff Pulver Blog: Net Neutrality Issue of the Day: Craigslist is being blocked by Cox Interactive!

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June 08, 2006

Net Neutrality Issue of the Day: Craigslist is being blocked by Cox Interactive!

Silicon Valley Watcher: Craigslist is being blocked by Cox Interactive - is this a net neutrality issue?

Just the kind of scenario we were hoping never to see in practice.

Even if the intentions are not malice but simply technology incompetence due to Cox's implementation of some security software, the effects are the same.

Tags: Craigs List, Net Neutrality, Cox Interactive, Jeff Pulver

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Posted by jeff on June 8, 2006 08:45 AM | Permalink

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Posted by: miroppe at January 16, 2007 06:35 AM

Joe Internet, there are many points to be debated in your note. However, the fundamental problem in your argument is that you say "there is nothing new about network owners charging for access on either end of the pipe." In a sense this is true, but this is not true to the fundamental nature of the Internet. It makes it not the Internet anymore.

The key to internet-based innovation and the wealth that it has generated is IP standards and ubiquitous access based on those standards. It means any inventor can imagine and construct services which anyone can access from anywhere. There is no Internet Company deciding which services shall see the light of day. No central entity decides whether a given application is too threatening, too trivial, or too unworthy to be offered to customers. The marketplace decides that. If you can write code, afford to pay for a connection to the internet so potential customers can get to it, your idea may be "the next big thing".

Letting the telco become the gatekeeper ends what makes the Internet what it is, what made it succeed and produce so much wealth for so many (including the telcos that are now griping about it). In the traditional telco space, third-party innovations are non-existant. They are possible only in the unlikely event the phone company agrees. And of course the chance of that is absolutely zero -- it doesn't happen. And now you suggest that they be given that same role in the Internet landscape, deciding what applications are good and bad, which should see the light of day and which should not. This is a death blow to wealth creation. Even the telcos actually lose in this scenario, they just don't appreciate it yet.

Posted by: David Beckemeyer at June 9, 2006 02:20 AM

People are confused about "net neutrality". From the FCC's perspective, the term refers to the "neutrality" in interconnection among Tier I and Tier II Internet backbones... somehow, today, people think it has to do with a regulation on the scope of business models that network owners can implement with thier capital (i.e. network).

The reasoning for this slight of hand (change in interpretation) is clear... There are business interests in the "Internet" community every bit as much as there are big business interests in the Telecom and Cable worlds. Let's face it, companies like Micorsoft and Intel, who are both proponents of the newer interpretation of "net neutrality", hardly cover themselves in glory when it comes to fostering competition...

The bottom line is that there are two myths that need to be addressed in this arguement. The first is that telephone and cable companies are "evil" and have an unhealthy degree of market power... Since the Telecom Act in 1996, compeition in the local loop has increased. Today, the HHI index for broadband is lower than the HHI index for computer operating systems or processors in personal computers... Not to mention the market concentration that Google and Yahoo are enjoying in Search and Internet Ad spending... So, to myth one you have to conceed that there is not more market concentration in the access play than there is on the Internet.

Second, you have to address the myth that network owners don't need to earn a competitive return on capital to have an incentive to invest in the very networks that enable the very Internet applications that we all crave. Telephone companies in particular have show zero capacity to impose market power in terms of higher prices. The price of "everything" telecom has come down, year-over-year, every year since 1996. Calbe companies have enjoyed more pricing power - in fact increasing rates for services since 1996 - but this will reverse itself naturally as Congress removes the rediculous local franchising barriers to compeition on TV services... Consumers in Kheller, TX have already seen 24% price declines for all TV packages since Verizon entered the market there as the fourth TV player (if you count DTV and DISH as two and Charter as one).

So, basically, competition is increasing in an industry that is already delivering price reductions steadily (especially if only Broadband is considered). TV competition is increasing, too.

The bottom line is that the infrastructure guys have to be able to be compensated for their services and it is not unreasonable for them to derive revenues from third parties (other than the end customer). In fact, this is a business model that Google lives by. Think of it. Why aren't we complaining that Google charges advertisers for our use of Google's products? We aren't because it would be rediculous for us to do so. We enjoy "free" product from Google and Google charges other companies... In the case of network access charges, network owners recoup investment by charging application and content providers for access to... you guessed it, you... basically a similar principle to the way Google organizes its business.

Lastly, we should realize that there is nothing new about the idea of charging for carriage. Any of you who think you can broadcast a TV program over a cable channel without paying for the favor, just call your local cable MSO and ask them to let you broadcast... There is nothing new about network owners charging for access on either end of the pipe, the supplier of content or the buyer of content. The equilibrium between the two in a growing competitive environment will ensure a balance between innovation and content availability and returns on invested capital to network owners and low prices to consumers.

Posted by: Joe Internet at June 8, 2006 10:16 AM

June 08, 2006

Net Neutrality Issue of the Day: Craigslist is being blocked by Cox Interactive!

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