Friday, September 22, 2006

Processor Neutrality

When I hear phrases like "net neutrality," I think of processors. Few people build their computer; most people buy a ready-made one. Any expert will tell you it's better to build your own because it costs less money, you have more customization for what you want the computer to do and you can combine the best parts in a way Dell or Gateway won't. Still, building a computer costs time and requires technical expertise so most people don't do it.

Net neutrality, or legally requiring Internet service providers to treat all data on their networks the same, is much like making a law demanding all computer manufacturers to build the same computer. Dell computers are good for some things but not others; same with Gateways and E-Machines. Similarly, using one provider may make life easy for some websites but not others while another provider will be good for a different mix. Different goods for different people. One could pick and choose all the best parts, like some do with computers, but such a feat is very costly both in time and money.

Yet if government requires net neutrality, they've removed a strong reason to improve their product. There's less profit in the Internet, so there's less incentive to better it. If firms had to use the same item for just one part of their product people would see why the whole good would deterioate. Why few understand this basic idea for net neutrality is beyond me.

AEI has a good article on net neutrality here.


Jacob said...

The important this to remember here is that the internet is not a truck. People think they can just dump all kinds of stuff into it.

I like to think of it more as a series of tubes.

I hope this reaches you in good time. Last week someone sent me an internet, but I didn't get it until this morning! It was probably all clogged up in the tubes, thanks to some jerk and his truck.

Anonymous said...


May I suggest leaving the computer questions to someone who actually knows what he's talking about. Sorry, but you have so much wrong I nearly fell out of my chair when I read it.

"Any expert will tell you it's better to build your own because it costs less money"
This made the office laugh. I built my last two computers and it is NOT cheaper. The first thing I was told by the clerks when I said I wanted to build my own systm both times was, "You know this is going to cost more right?" Building your own is the most expensive option, but you gain a degree of control and freedom.

You have more options, but you're responsible for when things go wrong. Support for franken-puters isn't cheap. Dell et al are cheaper because they get a bulk discount (OEM parts), the process is streamlined, and companies like AOL pay money for advertising on your new computer (click here for 50 free hours of AOL).

"Net neutrality ... is much like making a law demanding all computer manufacturers to build the same computer."
No it isn't. The internet is not a physical product or even a service. It is access to information. If you want to apply a metaphor, try a library card with an access fee. You're not paying for the content on the internet, you're paying for the ability to access it. Your payment to the ISP just covers the part of the internet from your computer to their router. You pay for a reliable access and speed of data transfer. If you want access to specific sites, you pay the site, not your ISP.

Unfortunately, our options are small and too varied for any real compaison. If I don't like Comcast, there is nothing else there with the same speed and reliability. There's no competition. DSL doesn't have the speed and the local phone company can't find their a$$ with two hands and a roadmap. If I want speed, there is only one place to go. No competiton means no reason to improve the product. Once/if DSL becomes comparable to cable internet, then you'll see changes. And that has nothing to do with net neutrality and everything to do with infrastructure.

Your arguement fails when you realize no one owns the whole internet. It's a NETwork of computers with hundreds, if not thousands, of individual institutions managing their own little area of it and working together. Net neutrality means everyone is equal. Not having it invites censorship and defeats the purpose of the internet by hindering the freedom of information exchange.

What would you prefer, a library where you can find every book at the same pace or one where "Huck Finn" takes 4 hours but Stephan King took 4 seconds?


David said...

Jason, let me clarify because there's obvious confusion. "Cheaper" computers can mean a lot of things. I wasn't including tech support, just hardware and basic software. at the same time, if I pay more for the hardware but it does exactly what I want it to do, is it cheaper or more expensive? It's a matter of taste; clearly I was over-zealous when I said building your own computer was always cheaper (that's just what I've heard over and over and it made sense because you do the assembly yourself). Of course, bulk is an important dimension, too so it gets complicated. However, this was not critical to my point.

I never said the internet was a product, though it is like one. More accurately, providers offer a service (you call it "access to the internet" and for some reason you don't think of it as a service).

You note there are few substitutes for Comcast and instantly conclude that's a problem. There's a certain logic in your argument (competition does better the product, that's true) but you have also have to ask yourself the tough question: Why are their so few perfect substitutes for Comcast? No internet provider (hell, no good) is flawless but is Comcast so horrible you're clammering for someone else? Clearly not; you haven't switched or ended your service altogether.

Ok, you say, but there are no good substitutes so there's a monopoly and thus its bad. That's not true. More appropriately, there are no substitutes that do what you want which is not the same thing. (Indeed every firm has a monopoly on something, even if it's as simple as it being the only company in that space or with that address.)

However the levels of difference are greater: Why? Because the entry costs of entering this market are high: connecting all these computers is expensive. Net neutrality makes it Internet infrastructure more expensive because it decreases profit margins and diminishes incentives for companies to expand and maintain Internet capacity.

Let's consider your library card example. Again, you left out the fundamental question of "Why." Why would it take more time to get Twain than King? In this example, it's a two-fold reason: it's expensive to retreive anything fast and customers are clamoring for King more than Twain. (Sure, you might think people should prefer Twain, but that's immaterial and border-line arrogant.) Now I want to make special note as to how you phrased that question: the same unknown rate or two different and explicit rates. Note you didn't say what the same rate would be thus most people assume it's (a) 4 seconds and 4 hours or (b) 4 seconds always. But it could just as easily be 4 hours always. Now which would you rather have?

Demanding net neutrality does two things. First, it means everything to move at an equally slower pace all the time: the lowest common demoninator (the exact manifestation of this differs with exactly which legal version of net neutrality Congress passes, of course). Some applications will move faster, but others will move slower.

Second, it removes the ability for companies to draw additional profit out of this investment. This is great because it naturally encourages additional investment. If you decrease the profitablity of something, society gets less of it. This is an axiom so proven, so obvious, I frankly feel silly pointing it out. But clearly it needs to be restated.

Anonymous said...

For "cheaper" I go strictly monitary. I don't include time because you can trick out a prebuilt computer like you can when you start from scratch. Some warranties even cover minor upgrades. Many computer parts are swapable and are meant to allow for changes. RAM for example; upgrading your DVD burner. On the other hand swapping the CPU or overclocking it would void any decent warranty. But that's also a big job and changes a fundamental way of that computer operates.

I don't consider it a service because the one providing access do not control the content. PPV services of cable buy the rights to sell it to others. That doesn't match up to the internet.

I didn't instantly conclude there was a problem in the lack of substitutes for Comcast. Just that there was no competition. Isn't competition the driving force in economics? Why praise it so often if you're going to dismiss it here? The reason why I haven't left Comcast because there are no substitutes. If I had the ability to create a competitor, I would. But I don't so I can't. An individual consumer has little or no power.

Yes, entry costs into ISP are high but so are the rewards. If it is profitable, then why hasn't another company entered the field?

Comcast does not "connect all those computers" they connect your computer to theirs and theirs to a network node. Period. They have one minor corner of the internet. That is why net neutrality does not make the infrastructure more expensive because it does not decrease profit margins because it does not affect the internet as a whole. You haven't presented anything that demonstrates otherwise.

As for my library example, I didn't say what everyone should want. I said what I want. If two items are equally accessible, then why should one take longer than the other?

Net neutrality does something else too. It absolves companies of responsiblity. If you let them control the flow of the internet, then they control what you see. Take the CEO of Domino's dream of a Catholic-only community in Florida. Do you think if they could they would allow internet access to sites about abortion, homosexuality, other religions, or other things their religion doesn't like? If an ISP came in promising to block (or at least slow to a crawl that no one can reasonably access it) all those things, then society would get less of it so wouldn't that be a bad thing?

Also with control comes responsibility. What would happen when the porn industry says, "I'll pay to have fast access"? What about a kiddie porn site? Then you have the ISP being criminally liable because they are knowingly supporting an illegal industry. On the other hand if everything goes equally fast, nothing is censored, and the hands-off approach absolves the ISP from responsibility.