[NNagain] On "Throttling" behaviors

[rjmcmahon]

Natural monopolies are things with high sunk costs. Things with high 
sunk costs don't necessarily exist (like electrified roads) even though 
they add huge value to society and can help curb climate impacts. A 
natural monopoly exists unrelated to a provider already having an 
infrastructure in place per that monopoly.

Fiber with up gradable optics to hundreds of millions of buildings that 
can leverage the NRE from data centers are natural monopolies and don't 
really exist in most places, even though they are critical to mitigating 
climate impact.

The idea of municipal ownership of access networks in the U.S. was 
pushed in 2000 after the 1996 Telco act. It didn't work out. The primary 
companies that invested in access networks were the cable cos and they 
redid it for HFC in 2000s (along with some roll ups.) They are likely 
the only U.S. companies that will upgrade again (beyond FWA which is 
limited by physics and is energy inefficient, a net negative to climate 
mitigations.)

The U.S. railroads were natural monopolies. They were given massive land 
grants to build out. They ran as private companies for about one 
century. They lost their monopoly position after third generations who 
inherited them used these monopolies to price guoge government during 
WWI and WWII. That's part of the reason most DoT type govt agencies 
today are "roads & airports" vs "roads, rail & airports." Rail has been 
re privatized and under invested - perfect for Warren Buffett but no so 
good for everyone else nor for the climate.

Governments will respond to monopoly abuse after it occurs, not before. 
First, the infrastructure needs massive funding to be installed, however 
that can get done. Municipal revenue bonds & networks sound nice in 
theory but haven't worked over the last two decades. Time to try 
something different.

Bob

https://www.electrichybridvehicletechnology.com/news/charging-technology/us-to-build-its-first-ever-electric-road-that-wirelessly-charges-evs-as-they-drive.html

> Hi Colin,
> 
>> On Oct 2, 2023, at 22:34, Colin_Higbie via Nnagain 
>> <nnagain at lists.bufferbloat.net> wrote:
>> 
>> While product and service innovation often originates from pure R&D or 
>> work performed in academic labs, in virtually all cases, converting 
>> that into commercially viable products and services is the result of 
>> profit incentives. A company won’t invest in doing something new with 
>> attendant risks unless they can expect a return on that investment 
>> greater than the alternatives (or they believe it will provide 
>> strategic support to some other product or service). For that reason, 
>> we want to be extremely careful about regulating how companies can 
>> implement innovations, including the use of potentially distasteful 
>> business practices. None of us who want to see the Internet become 
>> better over time and more accessible should want anything resembling 
>> NN regulation.
> 
> 	[SM] At its core NN regulations really just say that who is selling
> internet access services is supposed to do exactly that and not try to
> act as gate-keeper picking winners and losers. I might be
> insufficiently creative here, but I do not think a simple "do not
> discriminate" directive really restricts the space of potential
> innovations in any meaningful way.
> 
> 
>> The regulatory side of this is largely not a technical discussion 
>> because future innovation, by definition, may exceed technical 
>> considerations we can conceive of today.
> 
> 	[SM] Indded, prediction is hard, especially predictions about the 
> future ;)
> 
> 
>> It's easy to conceive of examples where an ISP wants to prioritize or 
>> penalize certain kinds of traffic. And while that may seem 
>> superficially bad, it’s an important part of the very competition that 
>> drives innovation and cost reductions over time. E.g., recall when 
>> Google Fiber had been willing to install Gbps fiber in places at a 
>> time when most of the rest of the country was struggling to get 20Mbps 
>> connections. If Google had wanted to limit that to Google services, 
>> that still might have been a boon to those customers.
> 
> 	[SM] I respectfully disagree, that would not have been meaningful
> internet access. An unrestricted 20M internet access link has more
> general utility that even a 10G gate-keeper only link (who that
> gate-keeper is is irrelevant). (I am not saying the 20M would be
> without issues)
> 
> 
>> Further, it could have shown the uses and values of what was then 
>> considered limitless bandwidth for a home or small business user.
> 
> 	[SM] Yeah, on that question we are still waiting even though >= 1
> Gbps services are not all that rare anymore. As far as I can see it we
> still lack use-cases that strictly require fast links that go above
> simple "more parallel" or "faster".
> 
> 
>> Even though this would clearly have been in violation of the tenets of 
>> NN, it would have provided important data that might have spawned 
>> significant investment by others and advanced the state of 
>> connectivity across the board.
> 
> 	[SM] This is purely speculative though, it might as well had shown
> nothing of that kind by the sheer fact that google fiber roll-out was
> so small as to be not representative of anything, no?
> 
>> 
>> I know the counter argument to this is that local ISP monopolies 
>> already break innovation, and those companies, especially the big 
>> cable companies, therefore have no incentive to provide a good 
>> service. I largely agree with that (there is still some small 
>> incentive, in that if they are too terrible, customer outcry will turn 
>> to voter outcry and demand breaking those monopolies, and they don’t 
>> want to risk that).
>> 
>> Therefore, the legal issue to address is NOT how they treat or 
>> prioritize data, whether by content or protocol – which they should be 
>> allowed to do, EVEN WHEN IT’S BAD FOR CUSTOMERS – but, at least 
>> referring to the U.S. specifically with our federal/state system, to 
>> put federal limits on durations of regional monopoly durations. I 
>> believe this is within the scope of what FCC can mandate (some would 
>> debate this and it may take the courts to sort it out). These need not 
>> be purely # of years, they can be a function of time to recoup 
>> deployment costs. If a company negotiated a local monopoly as part of 
>> covering their deployment costs, I would personally say that they 
>> should be given an opportunity to recoup those, but then after that, 
>> they need to open up their lines for use by competing firms, similar 
>> to what happened with the RBOCs and the old telephone lines.
> 
> 	[SM] The problem is that access networks often are not legal
> monopolies, but natural monopolies where if company A has a high-speed
> capable network deployed it becomes economically unattractive for
> other companies to deploy their own network (the competitor can
> torpedo such a deployment by lowering prices such that too few
> customers change to make the whole thing stay in the "loss" region for
> a long time). So leaving the access network to market players will
> always result in the incentive to monetize the gate-keeper role that
> is inherent in the network's structure.
> One solution to this problem (not the only one) is to put the access
> network into the public hands, like other important infrastructure.
> The idea would then be like in Amsterdam, Zuerich and a few other
> places to have a local access network provider that in turn
> "concentrates" access links in COs local IXs where interested ISPs con
> connect to and then offer all end-users in that access network
> internet access services. That still leaves the natural monopoly of
> the access network untouched, but puts it under management of en
> entity that is not likely to exploit this (as fully as private
> entities are).
> 	This is however pretty orthogonal to direct NN concerns, and I am
> sure not a generally accepted model. (Say if I would be operating a
> small ISP and would differentiate myself by how well I manage my
> access network, I likely would detest such ideas, and if I would
> operate a big ISP I would detest them for other reasons ;) so this is
> ver end-user centric and also relies on some modicum of faith in local
> government)
> 
> 
>> This is also the legal logic behind patents: give a company a 20 year 
>> monopoly on the invention in exchange for making it public to everyone 
>> and showing them how to do it (the patent must provide clear 
>> instructions). We deem the temporary monopoly worthwhile to incent the 
>> innovation, provided the inventor makes it public. This is the right 
>> philosophy to consider for something like bandwidth innovation, 
>> investment, and access.
>> 
>> In short, with ISP’s the open-ended government protected monopolies 
>> are the problem,
> 
> 	[SM] Again these often are not legal monopolies where nobody else is
> permitted to build a competing network, but natural monopolies where
> the expected return of investment falls with the number of already
> existing networks, while the cost stays constant. AND the number of
> ISPs tgat might actually bite the bullet and set diggers in motion is
> still so small that in the end, we might change from a monopoly to an
> oligopoly situation, bith are regimes in which the free market does
> not really deliver on its promises.
> 
> 
>> not the providers’ ability to overcharge customers or prioritize some 
>> data over others. Competition will fix that over time, as long as 
>> competition is allowed to occur. And while it may be faster to force 
>> it through regulation, that has dangerous long-term consequences with 
>> respect to future innovation.
> 
> 	[SM] Yes, meaningful competition could help, but IMHO an oligopoly
> likely would not result in meaningful enough competition. This is
> where the access network in public hand ideas comes in, it makes the
> cost to enter a market for ISPs relatively cheap, they really only
> need to pull/rent fibers to the local IX and maybe deploy
> OLTs/DSLAMs/CMTSs there (depending) on the local network tech, and can
> start offer services, without having to deal with the access network.
> 
>> Starlink is one example of innovation. FTTH is another. Cellular-based 
>> Internet is another.
> 
> 	[SM] All of which are orthogonal to NN regulations, neither depended
> on violating the "do not discriminate" rule, no?
> 
> 
>> Simply buying bulk access on existing lines and repackaging it under 
>> different terms could be yet another. Those all seem obvious, because 
>> they’re the ones we know. The real danger in unforeseen consequences 
>> is the dampening effect NN-style regulations have on yet-to-be-seen 
>> innovations, the innovations that never come to fruition because of 
>> the regulations.
> 
> 	[SM] I claim that rules and regulations always set the stage for
> which business decisions are acceptable/profitable and which are not,
> that is true whether we add the NN mandates to the mix or not, so I
> really do not see how these will have a meaningful influence on future
> expected innovation (unless that innovation really is all about active
> discrimination, but in that case I see no real loss).
> 
> Side-note: The thing is "discrimination" is still permitted under most
> NN rules, as long as it is under active control of the end-users, not
> the ISP. So I am sure some end-users would appreciate an "prioritize
> vide conferencing and VoIP over video streaming and gaming under load"
> option offered by their ISP and might even be willing to pay a little,
> as long as the end user can toggle this option at will it will not be
> subject to NN regulations as far as I understand. This clearly leaves
> some innovation space available even for active discrimination.
> 
> Regards
> 	Sebastian
> 
> 
>> 
>> Cheers,
>> Colin Higbie
>> 
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