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Random thoughts on net neutrality and free markets

This is basically a copy of a comment I made on Fred Wilson’s blog, but I wanted to put it here so that other people (who might possibly pay attention to me) might see it, too.  So here are some random thoughts:

– Wireless technologies (WiFi) have evolved extremely quickly because they are largely “unregulated”. No one really owns the spectrum and every company can make a device that can access that spectrum, so they all compete to offer better performance/features/etc. in that space.

– The only organization that can create a monopoly is a government. Even if one company were to buy up everything and become the sole provider of a service, it still is not a monopoly. Either people will substitute something else in place of that service (walking instead of taking the train, even though it takes a long time), or someone will determine that the barrier to entry, no matter how significant, will ultimately provide a competitive alternative to the existing monopoly.

– Cable and telephone companies have “near” monopoly over internet access, but it is only because they have already eaten the tremendous costs of infrastructure over time, and happened to be able to retrofit this infrastructure for use as a data transport infrastructure.

– Verizon seems to think that, despite the start-up cost, there is competitive benefit to them setting up a new higher-speed data transport infrastructure, as one example. Companies like Clear have decided that, despite the lack of comparable performance to other options today, there is a competitve to their investing in the infrastructure for their wireless data service infrastructure.

– “Net Neutrality” and spectrum auctions will likely serve to neuter the inevitable explosion in over-the-air as an alternative to existing wired data service infrastructures. Instead of net neutrality making the internet and data services better, it will ultimately serve to further reinforce the near monopoly that the cable companies and phone companies already have by eliminating the competitive benefit that the wireless providers can exert over the cable companies by being net neutral. If Comcast were allowed to really really manipulate its network traffic, customers who did not like this would move to services like Clear in favor of a neutral experience as a trade-off to performance. Forcing the net neutrality hand means that this inevitable movement is going to be stifled.