Network Neutrality: Not Negotiable

Someone asked:

I’m curious what the[…] community thinks… what if a company such as Comcast were to offer two plans:

1. $30/mo – The internet as we know it today without any preference to content providers, advertising, etc
2. $15/mo – An internet where some content providers get preference, subsidizing the lower monthly bill.

If companies offered a choice would we still care?

Effectively, it would be no choice at all. It would, in fact, be disastrous.

The effects described in George Akerlof’s 1970 paper, The Market for ‘Lemons’ come into play in such a scenario. In a nutshell, the paper states that certain markets (like used cars) favour the sale of ‘lemons’ over quality. The reason is that it’s easier to simply wax and buff a lemon (and rely on the buyer’s ignorance) than it is to do the right thing and service it properly before re-selling.

The reason this approach works is because buyers can’t see what’s under the hood and, generally speaking, wouldn’t know what to look for even if they could. So instead of paying well for quality, they tend to buy the cheapest item, regardless of its condition. The same is true of Internet service. People just don’t know what’s possible. Worse still, they don’t have the ability to recognise whether they’re getting what they’re supposed to or not.

So if the telcos were to foist a divided offering on their customers, they could rely on ignorance to invoke a market for ‘lemons’. People see no extra value in buying the better service, so they flock en masse to the cheaper one. Telco then discontinues the more expensive one, citing lack of consumer interest.

Minimum operating standards such as Network Neutrality were put into place to protect consumers and the market itself. Absent Net Neutrality, the potential for abuse of control over traffic by carriers is far too great. No compromise is possible in this regard, because degradation of Net Neutrality is a degradation of the market itself.