Originally posted on 12/16/2008
Advocates of free and deregulated market always supported the idea of the level field.
Each player starts at the same mark. The best go on; the others lag and possibly disappear. What is a level field in the Internet digital world?
A level field means access to the resources required to develop the business. Connectivity is the fundamental prerequisite for a business to be online; it is THE resource for the Internet.
Introducing a content based traffic prioritization equals to creating a new commercial dimension, which carriers can take advantage of. Carriers focus will shift from maximizing the bandwidth provided to maximizing the revenues by careful segmentation of the existing bandwidth, slowing the effort to improve the overall network performance and reach. Carriers’ bottom line may improve, but consequences may be unhealthy for the entire system.
First, the same service provided by two companies will compete on network performance too, that is, the small and less rich of the two is inherently disadvantaged.
Second, competitions shifts from doing better, that is providing more value to the public, to pushing back the others, that is to provide the public with value leftovers.
All of these two lead to a less competitive market, maybe not monopoly but oligopoly for sure.
In a deeper detail, something else may occur.
In a mature market, some services suffer from commoditization. What was once difficult now is easy. Those who provide the commoditized service should focus on productivity and service as a key element to grow. If not, something strange and useless could happen.
Screws; they are a real commodity. Let us imagine that, someday, a number of screw makers sign an agreement with the largest screw buyers to reserve all the ultra high stress stainless extra strong production to them, for a premium price. The buyers will be the only one using them, their competitors will struggle, fire people and possibly disappear, the public has less choice and the world becomes a worst place.
Until someone else starts producing ultra high stress stainless extra strong screws and sells them openly. Competition regains strength and the market evolves again toward a more balanced situation. In the meanwhile, the earthquake has produced heavy casualties for a reason that was plainly wrong from the beginning.
If the Net Neutrality will be heavily violated, someone will start providing a neutral service, sooner or later; maybe with means other than the cable. The efforts to squeeze too much money from commodities and to push back the competitors are doomed to failure.
That’s the desert in between that should be the cause of a deep concern for all of us.
The Internet flattened the world; net neutrality violation would bend it again.