by Loki » Fri Jun 23, 2006 5:39 pm
Actually the whole Net Neutrality thing is a complete hodgepodge of misinformation on both sides of the debate. It's got nothing to do with the way information is passed, at least not superficially, and has everything to do with trying to create competition in broadband.
Basically, a lot of people are upset that the big telcos (and cable companies) are able to offer all this high-speed internet access for so cheap when smaller companies have no hope of ever competing with them. Neverminding a few simple facts:
The telcos OWN THE BACKHAULS! Those are the large cables of fiberoptic wire that move the signals around. They are, in essence, the 'Net. So what the whole Net Neutrality debate is hoping to accomplish is to basically charge the telcos more money to use their own services. K'whut?
People are basically saying it's stifling competition and making it impossible for the "little guy" to get into the game and make money. Well here's the dirty secret about the industry: BROADBAND INTERNET DOESN'T MAKE MONEY! It's one of many services that are offered to customers to get them to lease OTHER services that DO make money.
See, the big telcos already pay to use their own services. That was the whole point of splintering big companies like Verizon and at&t. Most cable companies pay at&t to use their backhaul for data. Or they pay one of the other major backhauls (I cannot for the life of me remember their names right now) to carry their data. The little companies also pay for this right. So why can the telcos offer the same services for so much less?
Bulk discounts. Let's say Big Telco A (BTA) has 500,000 customers, while Little Startup B (LSB) has 50,000 customers. Now let's say that the backhaul charges $100 for every 10,000 Gigabytes of data transfered, $800 for every 100,000 GB and $7500 for every 1,000,000 Gigabytes.
Now, let's say that in the average day, BTA's customers use 10,000,000 Gigabytes of bandwidth, while LSB's customers use 999,000. LSB is going to pay the $800 rate, meaning they pay $8100 (9 * $800 for the 100,000 and 9 * $100 for the 99,000) for just shy of 1,000,000 GB of data transfer. While BTA is going to pay $7500 for ten times the usage.
Meaning on a per-customer basis, LSB pays $0.16 per customer to access this data daily while BTA pays $0.15 per customer. LSB screams and throws a fit because they're paying more than BTA, and they see that as unjust. Neverminding the fact that if they went up to 1,000,000 GB of transfer per day, they'd go to the $7500 rate, dropping them $600 a day and taking them to a daily cost of $0.15 per customer.
Now this is a false model, I'll admit, using number that I conjured to support my claim and while I don't claim it's 100% accurate, it gives you a good idea of what the complaint is really all about: smaller companies think that just because they're smaller, the only way to remain competative is to pants the big boys. This is not only faulty logic, but it's faulty mathematics. The only way to take on the big boys is to be a big boy yourself. If they'd just bother to grow themselves a little more, they'd find their discounts are larger. Instead, they've chosen to take the time to spend the money their users have given them to lobby to take down large telcos.
But here's the rub: it doesn't really matter if Net Neutrality is lawfully revoked or not: the telcos control the backhauls and they're going to come out on top either way. It's all just bullsh**.