Ending Google's Biggest Subsidy -- Net Neutrality
Net Neutrality is gone. Good riddance.
Lost in all of the theoretical debate about how evil ISPs will create a have/have-not divide in Internet access, is the reality that it already exists along with massive subsidies to the biggest bandwidth pigs on the planet – Facebook, Google, Twitter, Netflix and the porn industry.
Under Net Neutrality these platforms flourished along with the rise of the mobile internet, which is now arguably more important than the ‘desktop’ one in your home and office. Google and Apple control the on-ramps to the mobile web in a way that Net Neutrality proponents can only dream the bandwidth providers like Comcast and AT&T could.
Because, in truth, they can’t. Consumers are ultimately the ones who decide how much bandwidth costs, not the ISPs. We decide how much we can afford these creature comforts like streaming Netflix while riding the bus or doing self-indulgent Instagram videos of our standing in line at the movies (if that’s even a thing anymore).
Non-Neutrality Pricing
Net Neutrality took pricing of bandwidth out of the hands of consumers. It handed the profits from it to Google, Facebook and all the crappy advertisers spamming video ads, malware, scams, and the like everywhere.
By mandating ‘equal access’ and equal fee structures the advertisers behind Google and Facebook would spend their budgets without much thought or care. Google and Facebook ad revenue soared under Net Neutrality because advertisers’ needs are not aligned with Google’s bottom line, but with consumers’.
And, because of that, the price paid to deliver the ad, i.e. Google’s cost of goods sold (COGS), thanks to Net Neutrality, was held artificially low. And Google, Facebook and the Porn Industry pocketed the difference.
They grew uncontrollably. In the case of Google and Facebook, uncontrollably powerful.
That difference was never passed onto the ISP who could then, in turn, pass it on to the consumer.
All thanks to Net Neutrality.
![](https://steemitimages.com/DQmTkL55YZ3sN4RXXuiUyGqz6HVEvQjUsNM7oSryAhfEYRD/image.png)
Undercapitalized Growth
With the rise of the mobile web bandwidth should have been getting cheaper and easier to acquire at a much faster rate than it has. But, it couldn’t because of Net Neutrality. It kept rates of return on new bandwidth projects and new technology suppressed.
Money the ISP’s should have been spending laying more fiber, putting up more cell towers, building better radios went to Google to fritter away on endless projects that never see the light of day.
The ISP’s actually suffered under Net Neutrality and so did the consumers.
And therefore, Net Neutrality guaranteed that the infrastructure for new high-speed bandwidth would grow at the slowest possible rate, still governed by the maximum the consumer was willing to pay for bandwidth, rather than what the consumer actually demanded.
And, once obtained that power was then used to punish anyone who held different opinions from the leadership in Silicon Valley.
Think it through, Net Neutrality not only subsidized intrusive advertising, phishing scams and on-demand porn but also the very censorship these powerful companies now feel is their sacred duty to enforce because the government is now controlled by the bad guys.
Getting rid of Net Neutrality will put the costs of delivering all of this worthless content back onto the people serving it. YouTube will become more expensive for Google and all of the other content delivery networks. Facebook video will eat into its bottom line.
The ISP’s can and should throttle them until they ‘pay their fair share,’ which they plainly have not been.
The Net effect of Net Neutrality is that your ISP may charge you more in the short run for Netflix or Hulu. Or, more appropriately, Netflix and Hulu will have to charge you more and we’ll find out what the real cost of delivering 4k streaming content to your iPhone actually costs.
But, those costs will then go to the ISP’s such that they can respond to demand for more bandwidth. Will they try and overcharge us? Of course. AT&T is just as bad as Google and/or Facebook.
But, we have the right to say no. To stop using the services the way Net Neutrality encouraged us to through mispricing of service. If the ISP’s want more customers then they’ll have to bring wire out to the hinterlands.
Inflated Costs, Poor Service
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We don't care, we don't have to care... we're the phone company.
Net Neutrality proponents kept telling us this was the way to help keep the internet available to the poor and the rural. Nonsense. It kept the internet from expanding properly into the hinterlands.
I live just over the county line in rural North Florida. To the south is a town with cable and DSL. Between cable franchise monopolies retarding expansion across county lines and Net Neutrality keeping margins thin, my home was 10 years behind everyone else getting decent bandwidth to keep up with the needs of the modern Internet.
Bandwidth needs artificially inflated, I might add, by the misaligned cost structure engendered by Net Neutrality in the first place.
It took forever for my phone provider to upgrade the bandwidth across the county line. I begged them for a second line for internet service, they wouldn’t even talk to me. Why? The return on that new line wasn’t high enough for them.
If Google was passing some of the profits from Adwords onto the ISPs I’d have multiple choices for high-speed internet versus just one DSL provider.
As always, whenever the political left tries to protect the poor they wind up making things worse for them.
The Ways Forward
The news is good for a variety of reasons. With Net Neutrality gone a major barrier to entry for content delivery networks is gone.
Blockchain companies are building systems which cut the middle man out completely, allowing content creators to be directly tipped for their work versus being supported by advertising no one watches, wants or is swayed by.
Services like Steemit and the distributed application already built and to be built on it point the way to social media cost models which are sustainable and align the incentives properly between producers of content and consumers.
Steem internalizes the bandwidth costs of using the network and pays itself a part of its token reward pool to cover those costs. So, all that’s left is content producer and their fans. Advertisers are simply not needed to maintain the network.
Net Neutrality was a trojan horse designed to replicate the old shout-based advertising model of the golden age of print and TV advertising. It was a way to control the megaphone and promote a particular point of view.
Look no further than the main proponents of it. George Soros and the Ford Foundation are two of the biggest lobbyists for Net Neutrality. Only the political left and its Marxian fantasies of evil middle men creating monopolies fell for the lies, as they were supposed to.
The rest of us were like, “Really? This is not a problem.” And it wasn’t until you looked under the hood and realized all they stood to gain by it.
Now, with Net Neutrality gone the underlying problem can be addressed; franchise monopolies of cable and phone companies in geographic areas. These laws are still in effect. They still hang like a spectre over the entire industry. Like Net Neutrality, these laws concentrate capital into the hands of the few providers big enough to keep out the competition.
So, instead of championing the end of franchise monopolies, which county governments love because they get a sizable cut of the revenue to fund non-essential programs, the Left made things worse by championing Net Neutrality.
That also needs to end. Even if you believe that franchise monopolies were, at one point, necessary. They are not now. IP-based communication is now fundamentally different than copper wire for discrete services like phone and cable. Let people run all the copper and fiber they want. There’s plenty of room in the conduit running under our sidewalks and streets.
Let a thousand flowers bloom, as the great Lew Rockwell once told me.
Then and only then will the Internet be free.
This kinda what I though. Short term bad, long term good. But you the corporate media is going to have field day promoting the short term bad to make Trump look bad and government look good. Upvoted and resteemed. Thanks again for another top notch article.
thanks for the feedback, as always.
Great post. The outcry from the NN supporters is ridiculous, considering we're not in uncharted territory w/o the regulations. Sure, ISPs can try and abuse the system. But the markets can sort that out. More than anything else, these ISPs care about their bottom line.
Unfortunately, NN supporters are correct, to some extent, when they say that some ISPs have close to a monopoly in some areas (though, they exaggerate). However, many of those monopolies were enabled through collusion with the government. Either they were subsidized, or competition was stifled. I don't think more government control solves the problem.
As an aside, the video Ajit Pai put out was ridiculous, and had to be him trolling.
Also, I despise the term "Net Neutrality". It's reminiscent of 1984 terminology, like the ministry of truth, or today's parallels like "The Patriot Act" or "Affordable Care Act".
NN was sold to dumb people tilting at hobgoblins all of them imaginary. Instead of mandating cheap bandwidth, do away with franchise monopolies and FCC control of the cell frequencies. That's where the true market imbalances lie.
Wow. I just had no idea about most of this. Your analysis here is requiring such a perspective shift for me - I need to give this stuff some thought. I trust your reasoning because, well, you have been so spot on about so many other things over the past few years.
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I can't help but draw a parallel between net neutrality and what I've seen here on Steemit, i.e.:
Maybe the end of net neutrality can partially explain the recent climb in SBD/USD ratio and I have admittedly been spending less and less time here so I don't know if there's anything being done to address the circle jerking and bot-armies but I still see the same fundamental problems you described regarding net neutrality.
Part of Steemit's problem is the initial token distribution. Capital was concentrated artificially in too few people to get the network off the ground but that is actually improving. The distribution is flattening out, albeit slowly.
The bot-army thing is something that can only be address by bandwidth limitations and the like. I quit @minnowsupport because I wasn't getting any return on my investment for the bandwidth it was costing me, for example.
All the bot and upvote schemes have a limited lifespan before they lose their effectiveness, I've found.
There is always a difference between the specification of a problem (building a network that pays for its bandwidth usage internally) and the implementation of a solution. Just because Steemit has flaws does not mean that a system can't be built that doesn't.
I think the rise of the SBD/USD ratio has more to do with a shortage from hoarding into a new bull phase. This is making STEEM worth a freaking ton.
Have you noticed that the post estimations don't match the real world value? Because the steemit front-end is calculating your reward based on the SBD = $1USD when it's actually worth $11.50? That means that posts worth $1 are actually worth 6 to 7 times that.
I've been racking up STEEM at an astounding rate given this 5:1 STEEM/SBD ratio by trading immediately on the market. Then converting STEEM to BitShares and trading them up on Openledger. Working beautifully to help get my work properly remunerated.
I'm glad you're getting decent compensation for the work you put into your posts.
I quit at-minnowsupport for other reasons.
Wow! Awesome post. Perhaps the very best perspective communicated in near perfect writing making a case that smacks in the face of our ugly media sources. They are crying because their bottle is about to run dry.
Thank you for the excellent article.
upvoted. resteemed.
You are welcome.
Net neutrality was internet freedom manifest. Thankfully it is not actually gone yet, and there is a lot of legal process to come.
Without net neutrality in place, your ISP can dictate what you can and cannot view, and decide what to charge you for it. They can monetarily sensor your entire experience of the internet. Does that not concern you?
I addressed all of those things in the article.. did you actually read it?
And if you did you didn't understand the real economics. Google is now censoring you because of its immense power to leverage shitty advertiser revenue without the ISP's getting any of the money...
But, whatever, stay ignorant.
Yes, Comcast and Verizon totally controlling the public forum is a good thing - pay no attention to the man behind the curtain!
That is not what I said. But, better that we have the ability to hold their feet to the fire. We have no such control over Google or Facebook and their massive subsidies.. Let them negotiate on an even playing field. You realize the you are blogging on a platform that exists because of the issues created by the censorship engaged by Facebook, Reddit and Twitter right?
That was only possible thanks to Net Neutrality.
Wow. Thank you for the great post. I have heard so many arguments pro and con that it was difficult to really see the issue. You did a fantastic job of breaking down the players and the effect of Net Neutrality on their bottom line that I feel much more informed about this situation. I appreciate your wisdom.