Railroads and the internet
The Federal Communications Commission is expected in its upcoming Dec. 14 meeting to eliminate current rules that provide for the free and open internet as we know it today. Those rules, referred to as “net neutrality,” require that all traffic into and out of the internet are treated equally. In other words, an internet service provider is not allowed to block or throttle legitimate traffic by its type or who is delivering or receiving it.
The creation of these rules during the Obama administration was aimed at two things: curbing unfair competition and protecting the consumer from unfair price gouging for individual service. For example, would big gorillas like Netflix or YouTube purchase priority access for their traffic, and in this way, eliminate competition from smaller players? Today, almost 40 percent of Americans have only a single choice for internet service, according to the FCC’s own latest annual broadband report. Those 40 percent of internet consumers under current net neutrality rules are at least conceptually protected from unfair pricing.
If one analyzes the structure of the internet in the U.S., it becomes apparent why dismantling net neutrality is a very, very bad thing for businesses and consumers alike. The internet “back-
bone” is constructed of long line, high-capacity fiber optic networks that run throughout the country. These networks are owned by private companies commonly called “tier 1 internet service providers,” or “tier 1 ISPs.” Tier 1 ISPs sell their network service to smaller ISPs, data centers and application services that run the likes of Netflix and YouTube. The tier 1 ISPs operate together with cooperating agreements to connect traffic among themselves. They also conglomerate smaller networks to broaden their regional footprints.
Tier 1 ISPs number around seven in the U.S. Not surprisingly, many are “Baby Bells” spun out of AT&T in its mid-90s breakup. AT&T itself is the largest tier 1 ISP operating in the U.S. Others you might recognize are Sprint, Verizon and Century Link.
A map of the Tier 1 ISP networks is eerily similar to railway maps in the second half of the 19th century. In those days, major rail routes were controlled by just a handful of large companies that were the consolidation of many smaller rail companies. Almost every business in the country relied on railroads for their daily business. The railroads, by economy of scale, operated cheaply and efficiently and charged what they would for their services. Soon, the wealth and power of the railroads became immense, with the ability to buy political influence and to control the very commerce and business that relied on their services. Ultimately, the federal government did rein in this unprecedented power with progressive commerce and antitrust legislation, much of which form the foundations on which net neutrality rules rely today.
Our current FCC chairman, Ajit Pai, simply argues that eliminating net neutrality rules will stimulate market growth. I’m going to side with history on this one.
Dave Dannenberg is chief technology officer and founder of Audible Logic, a software company based in Santa Fe, and was previously a technology executive at Intel Corp.