Ev Ehrlich's Everyday Economics

16Dec/080

But Some Are More Equal than Others

The Wall Street Journal reports that “Google has approached…companies that carry Internet traffic with a proposal to create a fast lane for its own content…”

Well, sure – if you were Google, wouldn’t you want that? What’s the big deal?

The big deal is this:

For several years, Google has led a coalition to “save the Internet” by creating a policy they call “net neutrality.” “Net neutrality” means that all traffic on the Internet would move at the same speed. Google argues that the Internet ought to work the way the phone system did fifty years ago, when all calls moved over the wires at the same speed. Specifically, Google would prohibit every website from going to Internet providers (such as Comcast, Verizon, or others) and paying for the right to reach Internet users with faster speeds and more reliable connections. There will be no Internet “fast lanes.” As in Orwell’s Animal Farm, all the animals will be created equal.

And like Animal Farm, “neutrality” sounds egalitarian, but it’s really a recipe for freezing the Internet and its current winners, starting with Google. The “one speed” phone system Google champions was part of a regulatory regime in which the phone company – Ma Bell, there was only one – provided this “one speed” condition in exchange for a monopoly franchise and profits that were guaranteed by regulation. The Internet of today – unlike the phone system of generations ago – isn’t brought to you by regulated fat-cats who are guaranteed a profit; it’s brought to you by companies that have invested tens of billions of their own dough and compete with each other daily. When Ma Bell provided one-speed “neutrality,” it was a great deal – for Ma Bell. But once we got rid of it, over twenty years ago, we suddenly got cheap phones, competitive rates, cell phones, text messaging, fixed-price plans, 3G, and phones that did the jobs of computers, cameras, bike messengers, radios, and just about everything else you have except your can opener.

But “neutral” sounds good, and Google ran with it, positioning themselves as the friend of competition and the stereotypic “little guy” on the Internet. If all traffic traveled at one “neutral” speed, they argued, the Internet would be “fair” – little companies could challenge the big ones because there would be no advantages. Innovation would flourish, and the full potential of the Internet would be realized.

The fact that this argument came from America’s 15th largest company (just a few notches below IBM and Coca-Cola) – one that has swallowed up innovative competitors such as YouTube for ten-figure sums – should have made some people suspicious, and rightly so. Because, as Orwell would have said, while Google wants all the animals to be equal, some are more equal than others. By prohibiting anybody from buying faster speeds and more reliable connections, Google wants to limit its future competition, because Google already has faster speeds and more reliable connections, and they don’t want anybody messing with their good thing.

Google got those advantages by doing exactly what the Wall Street Journal said they were doing – by buying expensive “caching” services that distribute their content all over the Internet. When you go to Google, its software figures out where you are and finds the “cache” of content nearest you. So while its competitors’ content travels at a “neutral” speed across the Internet’s maze of connections, Google’s material spends as little time in that maze as it can – instead, it travels through Hyperspace, magically appearing at a server near you while its competitors navigate the sidestreets. As Google said itself on its public policy blog: by cutting deals with the broadband providers, it can “improve page load times for videos and Web pages.” In other words, be faster. So Google isn’t in favor of a “one speed” Internet. But they are in favor of an Internet with one speed for everybody else.

But the danger posed by net “neutrality” is about more than preserving Google and other big sites’ current advantages. In the longer term, these arbitrary “one speed” rules could paralyze innovation on the Internet. Imagine real-time medical devices that communicate medical information over the Internet and let patients go home instead of staying in hospitals; or Voice Over Internet Phones that offer a range of different speeds, connection strengths, and prices and let customers exercise their choice; or real-time streaming of the highest definition first-run movies (and, one day, such over-the-top applications as 3-D or hologramic entertainment) directly into the home. None of that stuff can happen unless customers can be guaranteed the fastest downloads and uninterrupted service. That’s innovation! But Google’s vision of “neutrality” wants to make sure that all those applications travel at the same speed as a Facebook friend request or Dirty Joke websites. That’s the real meaning of “neutral” – an Internet stuck in neutral.

But now, Google’s shown its hand. It’s going to use its financial and engineering muscle to speed its content to users, while stopping smaller and newer competitors from using a cheaper, easier way to do the same. On Google’s Internet, all the animals will be created equal, but some will be more equal than others.

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