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End of the Net Neut Fetish

Holman W. Jenkins, Jr.: End of the Net Neut Fetish – WSJ.com.

Jenkins nails it on the head. The know-nothings running around like spoiled brats demanding “net neutrality” for the past three years are finally seeing some adult competition. Among the notable religious conversions is Google. Hey, this is business, after all.

Google’s epiphany is that Verizon and AT&T, the major Internet carriers in the U.S., are not afraid to change the up until now “all the buffet you can eat for a fixed price” model of Internet bandwidth. AT&T’s new iPhone 4 data pricing in June eliminated the unlimited data plan for new customers. That was the thrown gauntlet that led Google to its religious conversion from leading net neutrality advocate to a posture that is more agreeable with the company’s long-term bottom line.

The argument for net neutrality is that all traffic should be treated equally under all conditions. Sounds fair on the face of it, and that’s why egalitarian types at the Federal Communications Commission (and a bunch of Congressmen) embraced the idea. A bad idea at that.

The reality of Internet traffic is simple to understand. Bandwidth is fixed and requires large capital expenses. It doesn’t take many college students in my neighborhood swapping pirated digital movies to slow down everybody else’s e-mail, web surfing, stock quotes and other Internet applications.  Basically, net neutrality as the Internet exists today allows bandwidth hogs to degrade the service of everybody else. How fair is that?

While fixed Internet bandwidth from cable or fiber degrades slowly, wireless bandwidth is and will always be a finite commodity. What’s become obvious to the FCC and Google is that a wireless free lunch is a sure way to bog down access for everyone to unacceptable levels.  Just ask AT&T iPhone customers in San Francisco and New York. And capacity caps on wireless data shreds Google’s business plans to make lots of revenue growth from serving wireless advertising.

As Jenkins puts it, “Suddenly, those net neut advocates who live in the real world (e.g., Google) had to face where their advocacy was leading—to usage-based pricing for mobile Web users, a dagger aimed at the heart of their own business models. After all, who would click on a banner ad if it meant paying to do so?”

Once users understand that they can continue to get good rates for decent Internet access and bandwidth, they’ll spurn the principled but unworkable business model of the net neuts. After all, the comparison is already available in Europe, where wireless data costs about ten euros per megabyte. In the past two months at European rates, I would have racked up $4,000 in data fees versus the roughly $100 I actually spent with AT&T here. I don’t watch movies or stream music on my iPhone, so I’m not a hog myself. And note there’s no way my employer or I would pay $2,000 a month for walk-around data access like we already have here for much less.

So, after three years of net neut nonsense, the major businesses effected by a net-neutral Internet are finally waking up to the bad-for-business world they were about to create. Now, Google and partners will have to do more than a press-conference about-face. They’ll need to lobby Washington to change its net neutrality views as well.

Good luck at that. Killing the fallacies of net neutrality will take years of effort, Google. But maybe Google actually has come around to seeing how evil net neutrality could be for its own business as well as for average consumers lining up for digital gadgets.


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