Net Neutrality – A Dialog (Part 3)

Nato: if you do some analysis on the market

and you say that the lost traffic and revenue

amount to about 3 billion dollars a year

(say)

then you can afford to spend (say) 2 billion dollars on setting up a new net-neutral network

and still make a billion in profit

annually

your first year

or you could spend 5 billion

and make no money your first year

and make a billion your second year

either way

if there is a market like that

where net-neutral traffic is better than non-neutral traffic

there is a lot of money to be made

and the US is full of investors

and network techs

and visionaries.

Jason: see you gotta look from the other half of the market… let’s say you know you’ll lose 3 billion in traffic if your tier works way X… and you know someone can set up a network for that… then you set up your tier to work way Y which only loses 1 billion which is not sustainable.

then you get to keep the money from your tiering… prevent others from coming to market… and all your users get a sucker internet

but you’ve saved the bottom line… good going machiavelli

that’s what I mean… average amount of shit… corporations aren’t stupid they just have to make sure not to push it too far… but they’ll still push as far as they can… which you say is good

I think it’s bad

Nato: if your tiering only costs you a billion

then you’re pretty good at meeting the demands of the market

but wouldn’t a more efficient solution be to create a tiering that costs you zero?

Jason: nope because you make money for teiring

any little bit you can do makes you money

so there’s a balance…

Nato: okay… but it’s on the margin

right

there is a balance

Jason: how much tiering can you do

Nato: if there’s only a hundred million to be made a year

then that means that you’re really not obstructing traffic much

and that means that any solutions

will necessarily be smaller

patches

the market will solve the problem

but larger problems

attract larger solutions

smaller problems will attract smaller solutions

if there’s a million bucks to be made there

then someone is going to want that money

Jason: the market will create a minimal solution… I want something closer to maximal solution

Nato: it is damn hard to create a company that meets customer needs

think about how much work we’re talking about doing on dendrite

to make it so it’ll actually meet the needs of the customers

then imagine throwing away some big chunk of that

to our competitors

by dropping functionality

we’re capitalists

we’re trying to make a solution that captures the maximum market share

with the minimum of expense

it’s a trade.

we’ll have less functionality initially

sure

but if we don’t pick up the ball

somone else will

the same way that we’re picking up the ball that others have dropped

Jason: your analogy isn’t complex enough… there are two markets

the selling internet… and selling access to other’s sites

you need to find what will get you the most amount of money

that’s what your maximizing.

to make money on the “site access” side you have to create a tier

you have to have a way to get money from them

Nato: that’s one solution

Jason: doing that will make your other market a little more sad

but not enough to offset the net gain

Nato: is there another solution?

if we can find another solution

that doesn’t upset our current customers

then we get to have our cake and eat it too

Jason: there is no other market solution… the market goes to the average right look at a supply and demand curve… the average is where you go

Nato: I’m not talking about a market solution

Jason: there’s no other optimal solution… for making money

Nato: I’m talking about a technological solution

some way for traffic to get from point A to point B

without intervening point C

having to absorb any of the costs

of transport

Jason: dude even if there was it works out the same… setting up the transport will cost something… and that’s where it starts

then you want more… because your optimizing money not happienes

so you tier

and then we’re back where we started

Nato: the problem is

that right now we’re in a prisoners dillema

as long as everyone just absorbs those costs

then we’re all happy

but as soon as someone decides that they don’t want to absorb the costs

then they get the benefit

to the detriment to everyone else

so our current system is inherently unstable.

Jason: nah.. it’s easily balanced using market forces

the market just sucks

Nato: is it?

Jason: yeah… they found a new market

and they’re gonna capitalize on it

Nato: what do you mean?

what new market?

Jason: that market has negative pressure on their other market

the one for providing access to sites

Nato: I’m totally confused

Jason: that market is new

because before the internet was neutral

you couldn’t control the packets (because you couldn’t read them)

technology has advanced so that you can

Nato: ah

Jason: so there’s a new market… that has negative pressure on an old market, but the new market is more profitable so…

Nato: well

Jason: there will be a shifting… making a shittier market for us

Nato: it may be profitable in the short term

yeah

Jason: my point is in that way the market sucks

Nato: well

a market exists

it sucks that the only apparent resolution is a solution that costs us all

but it will mean that those people who cause internet congestion

will be the ones who bear the costs

Jason: but that’s common… that markets cost us all… look at the automobile market… it’s not in their interest to put out EVs so they won’t

costing everyone

Nato: spammers who send out billions of emails

will suddenly find themselves hammered with bills

or their spam won’t get delivered

Jason: no way… spammers use other people’s internet

people will just get better at policing their networks

Nato: those people will certainly have an incentive to lock it down then wont they

yeah

Jason: which will lessen slightly but deffinitely not stop spam

Nato: well

there’s a tipping point

I’d wager

where once it gets to be too hard to hack the network

and the spam filters get too good

then the costs associated with spamming

get higher than the financial reqards.

for more and more spammers.

Of course it’ll be on the margin

and there will always be unwanted emails

but this will actually cause spam quantities to drop.

(non neutral networks, I mean)

not to mention viruses

and other crap traffic

Jason: yeah… who really cares about all that other legitimate traffic ;) j/k

Nato: Is the hardware that reads packets any more expensive than the other hardware?

I imagine it costs something more

maybe 10%?

Jason: nah… it’s the software only and that’s a one time expense

Nato: aha!

I figured it out

okay:

the actual costs of operating the networks are not getting any higher

so if they start charging for throughput…

tiered services…

they’ll find that they have to drop their hosting and service prices

your regular dsl service will get cheaper

and your hosting fees will get cheaper

because the costs that were previously being borne by those services

are instead actually going to be borne by the agents causing them.

and competition will take care of the rest.

Jason: ahh… then it turns into a healthcare problem

right now I’m willing to pay extra so that we can get a large swath of content

but if we go to individual paying that large swath will disappear… just like healthcare, because people won’t pay for other people

I see it now

huh.. I wasn’t on this side during the healtcare debate

it’s different… gives me another perspective

Nato: it suddenly actually makes network providing a much more sophisticated complicated system

adds another variable into the pricing mix.

lets them drop prices on certain services to attract new customers

Jason: I still don’t want it to happen… but I see why you advocate it… I’m forcing everybody to pay for the crapton of content

instead only rich (as in full of money) content will be available… just like with healthcare only the rich can get it

or the average I guess you’d say

cause that’s where the market goes… to the average…

Nato: I’d disagree, but that’s for another chat, I think.