Net Neutrality: A free Lunch For Content Providers, A Higher Cost For Consumers

Well, the FCC has given way to Obama’s stupidity.  Yes, we all need our Netflix downloads and we don’t want slow speeds.  My god, where have I see this before?  How many of you still have land line telephone service?  Twenty years ago the land line was costing almost thirty dollars a month.  Of course about a third of that was tax and special assessments that were for the good of the community.  My land line, yes, I am a luddite, costs me twenty dollars a month.  Yes, that is VOIP over cable and a very good service it is.  I am well aware of DOCSIS, the protocol for VOIP and Internet over CATV.  I used to be an data and voice engineer and was fluent in all three languages of voice PTSN, Data (IP/ISDN/ATM/etc), and CATV.  The world has changed since sine 2001.  I was also conversant in Cellular technology, I worked for a cell phone provided in engineering.  I have spent most of my adult life in telecommunications of one sort or another.  I started out as a lineman and cable splicer.  Then I went into digital switching and from there I ventured forth into date and catv as well as cellular.  I have forgotten more about these technologies than most people in them now.

The original telephone company came about because it is a physical and geographical monopoly.  Pure and simple, the cost of the infrastructure is governed by right of way and the capital needed to provide that infrastructure.  If you wanted to provide competition for telephone, catv, electric, water, and natural gas provider, one would need to run individual facilities for each of those providers.  Imagine, if your neighborhood still had the utility poles that carry electrical, telephone, and catv services just how many different services would be needed to provide at least there competitors for each service.  For one, those utility poles would need to be twice as tall.  The space between there three services must be great enough to preserve the safety of each service.  I can tell you that such an arrangement would be anything but safe.  I’ve been there, working outside, climbing those poles and three services, telephone, catv, and electric is quite enough.  I have come across situation where there was leakage of electric current onto catv and telephone.  Climbing those poles when one has to get to the middle service, usually catv, is dangerous for the lineman/repair person.  On the other hand, buried services must be put in place before the housing tract is build or the downtown block is developed.  Underground utilities are expensive to dig up and replace and god knows I have been there too many times.

So we settle for monopoly services regulated by a public service commission that sets both the rates and the various rules that must be followed.  These rule include the construction of right of way (which must be paid to the owners of the land), utility easements that are assigned by city and county and state planners and legislators, and the working practices by which we maintain equipment and outside plant (utility poles, buried duct work, etc).  All of this costs money and lots of it.  That is why it is called capital investment.  ike that physical building that houses a manufacturing plant, that is capital.  The machinery used to manufacture goods is called capital equipment.  The vehicles used in construction, mining, and other industrial as well as farming enterprises is all capital equipment.  And that cable, whether it is telephone, the old catv, or fiber optics and the associated equipment in those boxes in the neighborhood with all the electronic equipment is capital equipment.  It is all paid for by the enterprise that owns that particular monopoly and is paid up front before they ever collect a dime from the customers.  It costs money, lots of money.

But netflix and other companies that provide content want a free ride.  They cite freedom of the internet and people such as yourselves who want that free lunch fail to realize that someone must pay for the capital equipment and infrastructure.  Think of it this way, if you had to pay for the use of the interstate highway to carry your vehicle then that would defray the capital investment of its construction. The common carriers or trucking firm that brings your freight of goods to the various stores would charge you for the tolls they had to pay.  But let us consider that some shipper such as Amazon wants a free ride.  Who will pay the toll for Amazon?  The common carrier or you?  There ain’t no free lunch on the internet, someone pays the common carrier or provider.  With Netflix you pay them for the content but you expect your service provider to carry that content for free.  Theres a problem here somewhere.  Back to landline service.  The rule was calling party paid for the call.  If the call was local, meaning within the range of a few local exchanges or switching machine, the call was free.  But one you went outside the local service area you incurred additional charges and calling party paid.  With cell phone service, it seems that everyone is charged.  The cell phone user is charged for an incoming call, why should that be?  Well, your cell phone company wants it both ways and you people let them charge you for calls both ways.

So what we have is this idea that somehow freedom of the internet means that those who provide content do not need to pay their way.  You, as a customer, will not be charged for the transmission of you Netflix movies downloaded to your computer.  But it cost money to provide that service and you, the customer, will pay higher fees for access to the internet.,  Why, because it const money to transmit that download to you,  And the other point is that in order to provide the other services that you service provider wants to sell requires the investment in additional capital improvements to give you fiber optic capability to the residence.  In order to keep from blocking service or slowed services, upgrades must be made to the system that provides your service.  That means now lines, new equipment in the neighborhood, more expense for the provider.  And who will pay for that network neutrality decision?  why you, gentle reader.  Your service will increase as much as double what you currently pay.  Not much neutral about that, is there?  So to get your cheap movies you will now pay so much more for access to them.

Now maybe you think that’s not fair.  Let me tell you, with a public utilities commission the law is clear.  when the service provider is required to upgrade the service the provider may raise rate to recoup the cost.  Gentle reader, you are on the hook for some wonderful rate increases.  You can’t get out of it, that is the way the law is written and will be applied.  That Netflix movie download you get for a dollar may end up costing you ten dollars.  There is no free lunch.  There is no net neutrality, only the customer pays more.  Let’s see, if your internet connection now cost fifty dollars and it will increase to one hundred dollars, after all, where will you go, wireless, please. then you would need to down load fifty movies at a buck apiece that that the cost is only two bucks apiece.  Man, that is two movies a night, almost.  The fewer you watch the more they will cost you on the average.  Now do you understand?  You are paying for Netflix’s free lunch.

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