Wednesday, March 26, 2014

The Death of Net Neutrality

Timothy B. Lee of the Washington Post writes an excellent article titled, "Comcast’s deal with Netflix makes network neutrality obsolete"

As the article starts off:

"For the past two decades, the Internet has operated as an unregulated, competitive free market. Given the tendency of networked industries to lapse into monopoly—think of AT&T's 70-year hold over telephone service, for example—that's a minor miracle. But recent developments are putting the Internet's decentralized architecture in danger."
 Mr. Lee summarizes the problem as:

In recent months, the nation's largest residential Internet service providers have been demanding payment to deliver Netflix traffic to their own customers. On Sunday, the Wall Street Journal reported that Netflix has agreed to the demands of the nation's largest broadband provider, Comcast. The change represents a fundamental shift in power in the Internet economy that threatens to undermine the competitive market structure that have served Internet users so well for the past two decades.

Below is a very impressive statistic on the Internet and Netflix:
"In this version of the Internet, two big things have changed. First, Netflix is really big. The video streaming site now accounts for about 30 percent of all traffic on the Internet. Second, Verizon acquired the formerly independent backbone provider MCI in 2006, helping to turn itself into a major backbone provider in its own right."
I agree 100% with Mr. Lee's conclusion:
"One clear lesson, though, is that further industry consolidation can only make the situation worse. The more concentrated the broadband market becomes, the more leverage broadband providers like Comcast and Verizon will have over backbone providers like Cogent. That gives the FCC a good reason to be skeptical of Comcast's proposed acquisition of its largest rival, Time Warner Cable. Blocking that transaction could save the agency larger headaches in the future."

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