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[ NNSquad ] Re: More on Verizon's rejection of AT&T's attitude toward filtering

{Lauren -- I realize that I'm repeating myself but think of it is as
iterating -- as we drill down on these issues again and again the
fundamental dysfunctional pattern keeps reemerging so it's worth sharpening
the point}

The ISPs are not just delivery people -- they are delivery people with their
own private infrastructure and that infrastructure exists only for the
purposes of making deliveries. 

It's not so much that we don't have a competitive market but the
architecture of the market. It is defined in terms of delivery and services.
It is not defined in terms of the raw transport -- there is no concept of
the road in the Regulatorium -- it's treated as another service.

Having a free market is not enough if it's a dysfunctional marketplace. The
problem is in the very idea of value being in the network and in a
provider's services. Today the value comes from how we use the network. The
reason we accept the idea that bytes are expensive is that we think the
network itself is expensive. But once we see networking as something we do
ourselves we can look at the one-time cost of the physical infrastructure --
it's far less than sidewalks, sewers or whatever. We accept this because
today's applications are sufficiently valuable to cover the costs but that's
begging the question - what would be possible if we didn't have a huge tax.

SMS is a great example -- those bits are charged at a very high price. If
there really were a cost associated with an SMS message than we'd want to
minimize the cost but instead you have to send many packets to track the
message so you can bill for it. Those messages would far exceed the actually
SMS message itself. But unlike the SMS message I'm sure that those billing
messages are carefully handled so they don't get lost. 

To go back to the delivery model -- imagine email in this model. The Post
Office stamp 41¢ (?) makes a lot of sense until you notice that they've
replaced their infrastructure and we are sending email. Fortunately we never
confused email with postal mail. Yet we still think there is something such
as a phone call even when it's a bit stream over IP.

Can we afford to have the carriers limit value creation to what servers
their needs while starving an economy that is in desperate need of value?

-----Original Message-----
From: Rahul Tongia [mailto:tongia@cmu.edu] 
Sent: Wednesday, February 06, 2008 19:27
To: Lauren Weinstein
Cc: Vint Cerf; Bob Frankston; nnsquad@nnsquad.org; Rahul Tongia
Subject: Re: [ NNSquad ] Re: More on Verizon's rejection of AT&T's attitude
toward filtering

Yes, but doesn't a *publisher* charge on a fraction of **profits** (or 
revenues, depends on the contract), after taking out costs of printing? 
But there are other costs, such as marketing, advance royalty, etc.  I'm 
not claiming it's a fair, competitive, or an ideal situation (and it 
really fails when we consider Old Media companies), but it's what we 
find acceptable and the norm.

But ISPs are NOT publishers, so I am not sure the nuance of Vint's quote 
is even appropriate (costs-plus vs. up-front profit sharing).

ISPs are delivery people. Sure, UPS, USPS, etc. have overnight vs. 
regular. But the end-users make that decision based on what they want or 
need. The carrier doesn't make that decision after inspecting the 
payload.  Sure, they can air-ship my candy instead of ground trucking it 
if they have empty space on the plane going out. But that rarely happens 
in a well-optimized system.

Taking this argument to the extreme, let's say regular mail was slow 
(Mother's day coming up?), and my expensive candy would melt/spoil. The 
carrier might contact me and offer to get it to me in time by my paying 
an extra fee. How would I feel? Other than my concerns of how they found 
out (maybe the box has to say perishable, food item), at the margin it 
would be worth it. But some part of me would wonder did they purposely 
slow down that piece? Or, allowed "regular" service to degrade so much 
that everyone will pay for premium? Is Venti the new small?

In a free market, companies should be allowed to do that. But we don't 
have a competitive market. I find recent data interesting that despite 
the consistent discount offered by Telcos over cable, they have not 
pressured cablecos to lower prices. Instead, they are themselves raising 
prices, either of direct services or affiliated products (value-added 


Lauren Weinstein wrote:
>> this is like the printer who claims that he should get a share of the  
>> revenues from the book he printed as opposed to profit based on the  
>> cost of printing.
>> v
> Indeed, and this is made worse by the fact that anticompetitive
> factors can creep in through a variety of vectors.  
> The bandwidth caps, tiers, and surcharges now being contemplated by
> various ISPs become especially problematic when viewed in terms of
> ISPs' own provision of data intensive content (e.g. video and movie
> services) that would *not* be subject to the ISP-dictated bandwidth
> constraints placed on external Internet traffic and similar external
> services.
> The potentially anticompetitive aspects of this situation are obvious 
> and dramatic.
> --Lauren--
> NNSquad Moderator