To me, being a communications-startup-entrepreneur-type, the issues around net neutrality and the broadband stimulus strikes right at my soul.

One principal American ideal is that of open markets—of competition and capitalism, and that open markets can solve problems, if given a chance to “compete it out.” Net neutrality on the surface seems like a discussion about fairness and competition. But, I’m quickly getting worried that all the “net neutrality fire” is part of a collective smokescreen to hide a larger and more sinister problem. That problem? More large corporate socialism.

First, for my non-net-neutrality brethren, let me quickly explain the issue of net neutrality.

Fundamentally, net neutrality is a “market competitiveness” problem. Will the market suppliers (via the Internet) have access on an equal footing to the market demanders (consumers) through the infrastructure providers (middle men)?

At the network layer, we’ve seen large carriers play this out time and time again. They LOVE “walled gardens” where traffic can be set by them to certain, different quality levels—subjectively to ensure “fairness”, objectively to limit competitive offerings such as VoIP from running over their network.

And, on the surface this seems reasonable. Shouldn’t they be allowed to ensure that certain services, like their own, have at least equal access to the end-subscriber? After all, the Internet is a big place. We don’t want a file transfer or a YouTube video to mess up IPTV for everyone. It might even be a security issue. (please read sarcasm in the last 2 sentences).

So, the thing is, technically they ALREADY have a walled garden. When you’re the guy that provides access, you’re closer to the customer. Therefore, given how IP works, your connection to the end-user will be lower latency and higher bandwidth. Given this, any regulatory moves by incumbents, while spoken with the words of making it fair for everyone, are purely about making sure that they can legally limit or reduce the quality of other services.

Also, net neutrality is positioned as a “fair and equitable” argument between subscribers. The way Internet services are built, they are inherently statistical, and they rely on over-subscription (sounds a lot like bank leverage, doesn’t it?). If a service provider doesn’t oversubscribe enough, they lose money. If they over oversubscribe, quality goes down and ultimately the whole thing collapses on itself. Given this, their position is that they need to be able to keep people that disproportionately use the network from using all their capacity, so that others can share and enjoy the service.

IMO, the fair and equitable argument is simply BS, and can be handled by telling the subscriber what they’re actually buying. If I sell you a piece of pipe that is supposed to deliver 10 gallons of water a minute, you’d expect to get 10 gallons of water a minute. And, if I sell you a pipe to deliver 10 gallons of water a minute, but I only give you 1 gallon of water a minute because I want to manage shared capacity, the real value of the pipe that you purchased is considerably less. You’d sue. You’d consider it a “bait and switch.”

Carriers counter that your burstable capacity isn’t your sustained capacity. That’s fine. But, what IS our sustained capacity?

Look up your agreement with your carrier and see if you can find an answer. I’ll wait.

No answer, huh? So, now, here’s the kicker. The service you bought was measured in a RATE: Kbps or Mbps. That is kilobits or megabits per second. If I’m buying a 20Mbps (megabit per second) connection that is only designed to sustain 1 Mbps, I think they should be required to tell me. And, they should be required to advertise their sustained rates, not their burstable rates.

And, if they advertised their sustained rates, guess what? No more issue with “fair and equitable” sharing. It’s built for it.

Oh, to have Ted Stevens around again. In this case, it really IS a series of tubes.

But, all this “net neutrality” stuff hides the problem that I worry about—access neutrality.

Any business that completely pays its own way has the right and entitlement to do absolutely whatever you want to the traffic, within legal reasons.  But, if the government is going to pay for broadband to be delivered to someone’s house, shouldn’t the installed pipe be connected to a competitive marketplace for access?

We ran into these hurdles during the last subsidized broadband build-out, with a net result that the only choices I have for Internet access are Verizon (my phone company) and Comcast (my cable company). The early providers of DSL were essentially starved out of the market.

Are we, as a society and investors in our government programs, going to put billions into infrastructure to make the already strong and big get stronger and bigger?

As an open, competitive market person, I don’t personally believe that it’s in America’s interest to create ANOTHER subsidy for large, incumbent providers that gives them competitive advantages. They already have too many. At both the access layer and the content layer, if the government puts billions into broadband infrastructure, especially if the stated purpose is to promote innovation, doesn’t it need to be put in place in a way that creates truly open, equal competitive markets for content AND access?

The foundation for innovation is the small business, the startup. If we are going to regain our place in the world as the leader in innovation, it will begin and end with small business innovation.

As the game is structured now, it’s already lost. Pay no attention to the broadband pipe behind the curtain. Because that pipe that we’re paying billions for, it’s not owned by us anymore, and they will be dispensing beatings with it later.