Debating the Net Neutrality Issue

by: Andrew Schmitt

I like Fred Wilson’s blog. It’s eclectic and good reading for both business and pleasure. He wrote something on Net Neutrality today, and how carriers are discussing charging for incremental tiered services:

I have blogged about this issue before and I will reiterate that this is about jealousy and greed plain and simple.

It’s about business Fred, and finding ways to recover the incremental investments you need to make in order to provide more bandwidth. Unlike software, which you spend a great deal of time with, Telecom involves work in meatspace (digging trenches, going door to door, working around traffic, and paying state troopers for police detail). You don’t get the same non-linear return you get on a software investment. If the previous investment isn’t fully depreciated, you need to charge more to recover the costs of a new one.

If the government lets the carriers get away with this greedy move, I will discontinue Internet service from any carrier who seeks to get paid by the value added services. And I will encourage everyone else I know to do the same.

That’s how a market works and it is your decision to make. My guess is you’ll end up with a cheaper but inferior connection. Why can’t you give the telcos the same freedom of choice to operate their business?

Why don’t we have a 12mb down/3mb up Internet service in NYC? Apparently they have it in France. Why doesn’t Verizon spend money on developing that service? I’d glady pay more for a true high bandwidth service. That’s how the carriers should be looking at things. But instead they are trying to take money from the wrong side of the table. And it’s not going to work.

Pretty simple. The carriers are afraid once they make the investment the government will come in and regulate it. They are trying to determine how much room to manuever exists before they trench more fiber.

Also - Verizon has such a 15 down/2 up service for $45 a month. It’s called FiOS. I have it at home. It rocks.

You are right that in the end this whole thing may not work. But getting the government to step in and establish regulation is the wrong way. Letting the market illustrate the poor business case is better.