Is a pipe still a pipe?

Google, of Do No Evil fame, and Verizon, of wanting to return to Ma Bell monopoly fame, jointly announced yesterday a proposal for “net neutrality” going forward.  Both are for it, except when they aren’t.

Comcast got in, and out of, trouble recently for slowing down transmission of data for some, but not all of its customers.  The FCC said it couldn’t do that.  A federal court said the FCC didn’t have the authority to tell Comcast no.

Since then all the major players have been huddling.  While it is perhaps an unfair characterization, they are trying to figure out how to give the appearance of submitting to government regulation with the purpose of benefiting the public, while having the free reign that the financial industry and BP had with the results you’ve seen over the past couple of years.

Thomas, of Living Next Door to Alice fame (see Recommended sidebar) as is usual, summed up how to think about the internet and how we get to the internet.

Yesterday, I did a quick post on Facebook that pointed out that Word and Blogger want me to spell internet as Internet, which contradicts what I learned from Mr. Wendt in the sixth grade.  Thomas left a comment that said he refuses to capitalize internet for the same reason he doesn’t capitalize “phone line.”

So, with Thomas’ counsel, lets look at the destination and the means of getting there.

What is this destination, the internet?  It’s a place, and yet not a place.  In my very non-expert view, it’s really an electronic compact among all the people that want to be able to communicate with each other digitally rather than by analogue methods.  We all agree (though most people haven’t done so expressly) to allow our “devices,” computers, TV’s, iPods, cell phones and so on, to talk to each other. 

Think of it as an electronic town with a bazaar, a movie theater, a post office and all the other things you need from a community.  Once you’re there, you are free to roam as you will.  If you like the trinket you see in the bazaar, you work a deal to buy it from the vendor (eBay and Amazon and others).  Want to be entertained?  There are some sidewalk performers who serenade you or make you laugh without charging you, while inviting you to throw some money in the in the guitar case or the hat (the late Napster, the Onion, YouTube, most newspapers and magazines) Others want some money up front to watch the movie they are showing (Netflix Streaming, most newspapers and magazines, the Apple Store and Android Market, iTunes and its progeny).  Need to talk with Aunt Sally or your boss?  My how the two cent stamp and party line have changed (Email, Gmail, Yahoo, texting and a host of others).

Sounds great doesn’t it?  How do I get there, is there a price of admission to this great town?  There doesn’t need to be if you’ve got the resources to set up your own gateway; but, most of us don’t.  So we’re willing to pay someone to do it for us:  Enter the internet service provider (ISP).  And there are lots of flavors.  Phone lines, cables, satellites, wireless (3G, 4G, LITE, WiFi, WiMax) and their granddaddy - dial-up.

Some are better, faster, more flexible than others, so they cost more as determined by the marketplace.  Traditionally, everyone pays the same price for the same flavor of pipe.  The marketplace doesn’t discriminate between customers, it’s neutral, the basics of each flavor are fungible.  There’s an implicit “equal access clause” working.

The big boys, who I told you at the start of the post were huddling want to change that.

Put briefly, Google and Verizon want to create different kinds of pipes.  Well, not really create them; rather, they intend to label them as different and then treat them differently.

If you have access to the internet by cable or DSL they promise not to discriminate.  They won’t speed up transmission for people who pay more, they won’t slow it down for anyone, which is pretty much the status quo. 

But if someone comes up with a new use for the internet, they give medical monitoring, education and entertainment/gaming as examples, all bets are off.  They get to choose what they will transmit, what they will charge and who they will allow to play.  They do promise to be transparent about their discrimination.  Thus, they want to, without government interference, control market creation and entry to the internet.  Have an idea for the next Google, YouTube, Facebook?  Want to save lives with a unique web service?  Web education on the tundra?  Pony up to the big boys, or have the internet’s door shut on you.

Get your internet over the air, wirelessly?  You have a new partner.  For you they promise to transparently do whatever they want to do.  Why?  The “nascent” wireless internet access is “more competitive and is changing rapidly.”  Translated, they mean that’s where the money is going and we want a piece.  Put a different way, wired internet access is nearing maturity as a market, wireless access is just beginning to grow and we see it as replacing wired, we want a bigger piece of the new money pie.

So, do you trust them?  Was Ronald Reagan an economic demi-god or the deregulating father of the current recession?  Are Enron, Goldman Sachs, Massey Mining and BP aberrations or concrete lessons on the limitations of free market economics?