This morning the Wall Street Journal published a story claiming that Google had approached broadband providers with hopes to secure higher quality content delivery services. A concept anathema to most Network Neutralites, Lawrence Lessig is even cited as “softening” his position on NN to allow for this kind of differentiation.
Lessig responds in a post here in which he appears to reject the characterization of his position:
“While broadband providers should be free, in my view, to price consumer access to the Internet differently — setting a higher price, for example, for faster or greater access — they should not be free to apply discriminatory surcharges to those who make content or applications available on the Internet. As I testified, in my view, such “access tiering” risks creating a strong incentive among Internet providers to favor some companies over others; that incentive in turn tends to support business models that exploit scarcity rather than abundance.”
After reading his post I was left confused over his use of the word “consumer”. The question that he was supposedly responding to had more to do with content producers like Google, Yahoo, and Microsoft than with consumers like you and me. I dug deeper to try to understand the semantics and watched an overview of his testimony to the FCC that he gave at Stanford.
The “consumer” Lessig refers to is the content producer after all. Google and Yahoo consume bandwidth just as you and I do. Lessig’s position is that Google should be able to pay a higher price for delivering video content at faster speeds if they want to, so long as all video content sites are offered the same price/opportunity. Further, a site that delivers only text content may not want such high speeds/bandwidth and may opt out of the higher price. He suggests that a parallel is that we pay more for overnight FedEx than FedEx ground.
I recognize that this model does not choke competition or seem unfair for the likes of Google, Microsoft and Yahoo, but I question whether or not this sort of barrier to entry for video startups, for example, is legitimate. If it costs $15MM for a video startup to deliver content in a competitive way, then I would submit that the differentiated pricing model based on Lessig’s “zero discriminatory surcharge” model is inherently unfair, and while it may avoid monopoly, it does nothing to prevent oligopoly. Finally, there is a vast difference between pure movement services (FedEx/UPS/Mail) and network operators. The analogy is more relevant to email services than to an entire system of markets and consumer interaction.
Then again, is this anything other than saying that the advantages of scale are just that: advantages? The most important point, as Lessig says, is that those advantages of scale are not locked in by preferential treatment. This is a thin line we tread.