A Reply to "Comcasticular Cancer"

What I've written below isn't really a rebuttal to Jake's post - Comcasticular Cancer - even though it reads a bit like one. Think of the two article as one "choose-your-own-adventure" story. ("choose-your-own-adventure" = "choose-how-the-Telecoms-will-abuse-their-market-concentration")

(1a) "Where does metering end up?" - Jake.

Currently ISPs have no way of making more money for providing more of that delicious internet stuff. Add metering and they will have an incentive to invest in abundance and compete to deliver more of the good for less of the green... like every other commodity business.

(1b) "At that cost, it's easy to imagine media such as music and video will once again be primarily obtained in physical form." - Jake.

I'm going to go out on a limb and assume that the cost of putting together a book and getting it on a shelf - the printing, the shipping, the staffing, the tatoo-removal for the staffing... is much more expense per unit of physical media, than for virtual media. Yet the difference between the cost that Joe Consumer will pay fom Harry Potter and that Scary-Bald-Guy-Who-Always-Dies-At-The-End-And-The-Returns-In-The-Next-Book On Tape at Borders, and the price I will pay for that recording on iTunes is pretty much the same. Thus, it's likely that content providers and purveyors of copyrighted material will pay the ISP to go fast and not cost you more - i.e. making one-on-one deals with the ISPs to make their downloads cheaper for internet users.

Needless to say... that's horrible. That's like the worst thing that could conceivably happen. Stephen King - the master of horror himself - sipping wholesome chamomile tea on his favorite floral pattern love-seat in his picturesque Bangor, Maine estate - couldn't think of a worse thing to have happen. This outcome would grant the Telecos the ability to...

(a) extract rents from all the businesses that use high-speed internet to serve their customers
and...
(b) choose winners in those downstream markets. (i.e. You get the service that ponies up the most cash to ATT, rather than the service that could have provided the best product.)

(2-6) The question is 'Is there effective competition or competition regulation in the ISP market?'

If the answer is no on both accounts, then Jacob's completely right; collaboration is going to get prohibitively expensive - or their will be a "Google-Docs" style solution for very large pieces of data. If the Federal Trade Commission does its job - preventing collusion and structuring the industry so that it achieves dynamic efficiency - then that won't happen. The price of internet services will fall and ISPs will rush to provide more bandwidth.

Conclusion

Competition... well... I don't want to say it's never going to happen, but how much do you trust the FCC and FTC to do the right thing?

Not much?

Me neither.

So we can't count on competition (due to the past behavior of both the regulators and the companies themselves.) And there's no other way - that I can see - to make the Telecos invest in internet infrastructure as quickly as would be best (i.e. keep us competitive with the rest of the world) while maintaining a situation wherein the internet's potential for collaboration and economic democratization is nurtured.

So what do we do?

(1) Treat the internet as critical national infrastructure and have the US taxpayer fund the deployment of big old fat lines to every house in America.
(2) See #1...