Re: [Latest draft of Internet regulation bill]

[Tom Vest <tvest () pch net>]

On Nov 12, 2005, at 8:12 PM, Christian Kuhtz wrote:

> On Nov 12, 2005, at 8:03 PM, Tom Vest wrote:
>
> > On Nov 12, 2005, at 6:48 PM, Christopher L. Morrow wrote:
> >
> > > > Are you suggesting a return to cost-based regulation?  At one  
> > > > time airline
> > > > prices were regulated based on air mile distance.
> > >
> > > No, I'm not, actually I think that the answer to my question was:  
> > > "All
> > > bits cost the same to push inside 'my' network" (where 'my' is  
> > > really any
> > > single entities network, and the cost is for that entity).
> >
> > Is cost-based regulation so bad for critical, non-substitutable  
> > infrastructure? That's how the US market got flat-rate Internet  
> > access.
>
> Are you trolling?
>
> Cost-based regulation is pure evil.  It creates a managed economy  
> with short term benefit and long term pains, because over time the  
> cost of goods should decrease as tooling improves.

Not trolling at all.

> Yet, it doesn't because in a managed economy there are no or very  
> few incentives to improve tooling and pass the results on to the  
> consumer.

That's also true of a monopoly-dominated network economy, which is  
usually what emerges (or persists) in the absence of competitive  
access to non-substitutable critical infrastructure.

> There's no reason why a free market can't produce the same result  
> without gov't regulation.

No doubt you are right in theory. I just don't know of any example in  
telecom history. Can you share some examples?

> Flat rate's an inside joke anyway.  People generally only consume x  
> amount, even if you open the spigot all day long, every day.  Flat  
> rate pricing very much keeps that in mind.  Figure out what x is,  
> price accordingly and voila.

Do you have any experience with what you're talking about? The day  
that the US market went flat rate, demand for Internet access  
basically doubled; then it doubled again in the next couple of weeks.  
Flat-rate affects behavior, makes people willing to explore/ 
experiment (granted, also to be wasteful), which is one of the  
reasons why we had such a profusion/diversity of online content long  
before mp3s, bittorrent, etc. People generally consume differently  
when they're not calculating the marginal cost of every mouse click,  
and this difference is still observable today between metered and  
flat-rate markets.

Of course, if we want to professionalize all content production,  
restore the absolute divide between content producers and passive  
consumers, and turn the Internet into pay-per-view, then ridiculing  
flat rate might a good place to start.

> It's amazing how many people fall for simple marketing devices.   
> But to see people proclaim we need more regulation to get some  
> marketing product...  There is no such thing as a free lunch.

In some places there's no lunch to be had at any price (or the cost  
is 3x dinner), because there's also no such thing as a "market price"  
for a monopoly-controlled, non-substitutable input.

TV