cdixon blog

WSJ’s factually challenged argument against net neutrality

Holman W. Jenkins Jr. has an op ed in the Wall Street Journal today arguing against net neutrality. He positions himself as someone defending innovation and particularly startups against incumbents like Google.  For example, he says:

What if some startup Google sought to achieve the same goal by outsourcing its data management to the telcos, say, by mounting servers in their premises to help deliver Web applications more quickly? This would be a win-win for both parties. Data that travels within a carrier’s system is cheaper to deliver than data that must be handed off between two or more carriers. Would such an arrangement be a violation of net neutrality? Google would likely shriek so.

Huh?   Pretty much every startup I know does host their web apps at telcos.  My company Hunch, for example, hosts at Level 3.  The 20 or so startups I’ve invested in all do as well.  I’ve never heard any net neutrality advocate argue against this practice.  It also sounds like he’s unfamiliar with CDNs like Akamai.  In my experience those only tend to be affordable by large, international companies, so hardly favor startups.

He also seems unaware that there is already metered pricing on the internet today – it’s just paid for on the server side, by Google, Microsoft, my company, etc.

The greatest fear of Microsoft, Amazon, eBay and Yahoo is having to plumb their deep pockets and offer competing payments to broadband carriers to speed their bits to consumers.

I’m happy to show Mr Jenkin’s our Hunch bandwidth bill or he could just go look, for example, at Rackspace’s pricing page.   Apparently he wants websites to pay twice, once to the hosting provider and again to the ISP.  At any rate, I can’t imagine how “the more you pay, the faster your site runs” could possibly favor startups over cash rich incumbents like Google and Microsoft.

On the ISP side, he repeats the common anti-net neutrality assertion that there is genuine competition between ISPs.  Maybe there is where he lives.  Where I live in Brooklyn there is only one viable choice (Time Warner Cable).  Maybe once Verizon FIOS comes to my area this will change but for now I can’t get it.  At my office in Manhattan we couldn’t get T-1 service in our building, the Verizon DSL had atrocious quality of service and we ended up with only one viable choice – Towerstream WiMax beamed from the Empire State Building.

Finally, he argues that Google, Microsoft et al are just looking after their own interests:

But usage-based pricing that would give consumers a reason to think twice before clicking on a Google-sponsored ad? It would be the end of Google’s business model.

I agree this would be the end of Google’s business model.  But it would also be the end of the business models of pretty much every startup that is ad based – the vast majority of consumer internet startups today.

Personally, I tend to think net neutrality legislation is unnecessary as true competition in the ISP space is likely and will prevent any use-based pricing from gaining traction.  I am quite sure, however, that use-based pricing by ISPs would be disastrous for internet innovation, and especially for internet startups.