Karl Denninger really explains succinctly about the way this regulation would work using examples of the past. This post really does a good job of succinctly exposing exactly what would happen in an Internet regulated inside of a Title II environment. It quickly boils down what my previous post was explaining from an insider’s perspective.

Because monopolistic practices, including forced connections, are good for customers.

“We are stunned the president would abandon the longstanding, bipartisan policy of lightly regulating the Internet and calling for extreme” regulation, said Michael Powell, president and CEO of the National Cable and Telecommunications Association, the primary lobbying arm of the cable industry.

Obama, in his statement, called for an “explicit ban” on “paid prioritization,” or better, faster service for companies that pay extra. The president said federal regulators should reclassify the Internet as a public utility under Title II of the 1934 Communications Act.

“For almost a century, our law has recognized that companies who connect you to the world have special obligations not to exploit the monopoly they enjoy over access in and out of your home or business,” Obama said in his statement. “That is why a phone call from a customer of one phone company can reliably reach a customer of a different one, and why you will not be penalized solely for calling someone who is using another provider. It is common sense that the same philosophy should guide any service that is based on the transmission of information — whether a phone call, or a packet of data.”

Except that’s a lie.

For a very long time (and probably still today) in Illinois, for example, there were several laws bearing on this and they were are not what Obama claims.

One of them was that a call between two local providers required the payment of money on a per-minute basis from one to the other. Yes, that’s not only forced interconnection it’s forced interconnection with a fee attached.

Now I was able to exploit knowledge of this (greatly!) while I ran my ISP, since calls terminated on my equipment — always. Guess what sort of leverage this gave me with the competitive local exchange carriers, who would (as long as I had a high utilization ratio) make LOTS of money from my customers calling into my modems?

Uh huh.

Here’s the problem with such mandates — they benefit some people and screw others. I benefited. You got screwed. You got screwed hard if you called people between “zones”, which were as little as 7 miles apart! You got charged on a per-minute basis for a local landline call.

So what did we learn with even the not-really-very competitive world of cellphones? I can call across the damn country for no additional charge — while it was (and may still be) a literal nickel a minute to call 10 miles down the road on said regulated landlines run by Ameritech!

What’s going on now is that certain companies such as Netfux have driven you into a frenzy to think that negotiation and shared value is a bad thing, and that force (literally at gunpoint, since prosecution and/or fines are involved) should mandate that your ISP cannot charge Netflix for a one-way benefit — theirs.

You may think this is of benefit to you but it is not. It is not of benefit to you because you may not want to buy Netflix service, but if this mandate is imposed you will be forced to pay for the transport of their bits over your ISPs pipe whether you buy their service or not!

Now you may say “but I want Netflix so I win — and **** you!”


Tomorrow, if this mandate is imposed, I am going to start a 50Mbps 3d-porno service that will serve up virtual pornography to you on demand. It will, of course, require very high quality Internet connections, all of which I can force to be provided over this “open Internet on which there are no tolls and no discrimination” and your bill will be forced higher to pay for my ability to get those bits to anyone who wants it, whether you subscribe to my service or not!

Still think this is a good idea?

PS: No, I’m not kidding and neither are many other people who are likely thinking of similar things. The only gating factor right now is that if I started such a service the odds are very high I’d wind up paying for all the transport to get the bits to your door, one way or another. If this becomes law that will no longer be true and I may well take a crack at making a billion dollars by stealing it from all of you via your broadband charges.

Yes, by the way, I’m completely serious.




Obama Is A Goon — And A Fool in [Market-Ticker].