North American Network Operators Group

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Re: [Latest draft of Internet regulation bill]

  • From: Tom Vest
  • Date: Sat Nov 12 20:40:18 2005

On Nov 12, 2005, at 8:12 PM, Christian Kuhtz wrote:

On Nov 12, 2005, at 8:03 PM, Tom Vest wrote:

On Nov 12, 2005, at 6:48 PM, Christopher L. Morrow wrote:

Are you suggesting a return to cost-based regulation? At one time airline
prices were regulated based on air mile distance.
No, I'm not, actually I think that the answer to my question was: "All
bits cost the same to push inside 'my' network" (where 'my' is really any
single entities network, and the cost is for that entity).
Is cost-based regulation so bad for critical, non-substitutable infrastructure? That's how the US market got flat-rate Internet access.
Are you trolling?

Cost-based regulation is pure evil. It creates a managed economy with short term benefit and long term pains, because over time the cost of goods should decrease as tooling improves.
Not trolling at all.

Yet, it doesn't because in a managed economy there are no or very few incentives to improve tooling and pass the results on to the consumer.
That's also true of a monopoly-dominated network economy, which is usually what emerges (or persists) in the absence of competitive access to non-substitutable critical infrastructure.

There's no reason why a free market can't produce the same result without gov't regulation.
No doubt you are right in theory. I just don't know of any example in telecom history. Can you share some examples?

Flat rate's an inside joke anyway. People generally only consume x amount, even if you open the spigot all day long, every day. Flat rate pricing very much keeps that in mind. Figure out what x is, price accordingly and voila.
Do you have any experience with what you're talking about? The day that the US market went flat rate, demand for Internet access basically doubled; then it doubled again in the next couple of weeks. Flat-rate affects behavior, makes people willing to explore/ experiment (granted, also to be wasteful), which is one of the reasons why we had such a profusion/diversity of online content long before mp3s, bittorrent, etc. People generally consume differently when they're not calculating the marginal cost of every mouse click, and this difference is still observable today between metered and flat-rate markets.

Of course, if we want to professionalize all content production, restore the absolute divide between content producers and passive consumers, and turn the Internet into pay-per-view, then ridiculing flat rate might a good place to start.

It's amazing how many people fall for simple marketing devices. But to see people proclaim we need more regulation to get some marketing product... There is no such thing as a free lunch.
In some places there's no lunch to be had at any price (or the cost is 3x dinner), because there's also no such thing as a "market price" for a monopoly-controlled, non-substitutable input.