Thursday, December 23, 2010

Toll Roads

So, I'm still thinking about the whole question of net neutrality and the new rules of the road issued by the FCC (well, sorta rules -- this is still hand-wavey enough that all sides are claiming victory and defeat at the same time).  But at the same time I'm reading the FT bemoan the downfall of congestion pricing schemes for the kind of traffic that still has wheels.

Most weekdays, slow-moving traffic forms a barricade between the two halves of King's Road, the main thoroughfare through the well-heeled London district of Chelsea. For about 1km from Sloane Square, at the eastern end, taxis, buses and four-wheel-drive cars sit bumper to bumper, engines running, inching towards their destination.

Nonetheless, on Thursday 20 sq km of Chelsea and other parts of west-central London will be removed from the capital's congestion-charging zone – the area drivers must pay to enter during weekday working hours – reducing it to its original 22 sq km. Even Transport for London, the body responsible for the scheme, acknowledges this will worsen jams. Vehicle numbers are expected to rise by 15 to 20 per cent. Congestion – measured by the extra time a journey takes compared with clear road conditions – is poised to worsen by as much as 18 per cent. Emissions of harmful gases will go up sharply.

And it made me realize that there are probably a lot of people whose knee-jerk reaction would be to support congestion pricing on highways, but to simultaneously demand that anybody can drive as big a semi as they want onto the internet, and pay the same price as a Yugo.  Net neutrality gets more complicated the further you dig into it -- technically, economically, and of course politically/philosophically.  But it's hard to see a huge amount of difference between these two cases, which analogy maybe prompts us to rethink both of them.  Some form of congestion pricing may be essential to making this infrastructure function well under heavier loads.


Zantox said...

The obvious difference between the two is that there are viable alternative routes in physical space that might be as fast-or-faster, such as taking the Tube to Covent Garden instead of driving.

On the internet, there are no alternative ways to get to You either use the internet or you don't.

Also, while it is possible (and indeed occurring all the time) to upgrade the infrastructure to the internet (in the form of increased bandwidth), it is not really possible to add roads into Central London. In fact, the only way to really increase throughput into Central London is to add Underground capacity, and to shift car drivers to bus passengers and walkers.

Finally, while you might have to pay a convenience charge to use your own car to get into Central London, you are never actually barred from physically taking your self into Central London (even if they banned ALL cars, you could still get there).

Without net neutrality, this is not necessarily so. Verizon could strike a deal with Google that would all but prevent Verizon users from reaching Yahoo via their wireless devices.

Ultimately, the points of entry are too few and too guarded for Net Neutrality NOT to exist.

Clark said...

Thanks Zantox. I agree that the analogy is a bit superficial, and, in fact, I was this close to throwing a phrase to that effect into the original post. Mostly I wanted to force myself to come back and think about exactly what the differences were, which you've happily done for me.

It seems to me that market pricing in either case comes down to exactly the issues you mentioned. Does some type of variable pricing (by time, day, file type, what have you) either a) encourage people to use another viable alternative or to eliminate low value trips for the traffic or b) encourage people to build more capacity.

I think (and I should think harder about this) this question is related to but separate from the one you bring up of being banned from reaching a certain destination. That seems like a free speech issue, and is why I generally would consider myself a net neutrality supporter. Net neutrality does HAVE to exist in some form. But these two parts of net neutrality are getting debated together, and I worry that in the fight to make sure that the few points of entry remain free in the speech sense, we will shoot ourselves in the foot by requiring that they also be free in the beer sense. To paraphrase some economist I can't remember, if the beer is truly free, there will be overwhelming demand for beer.

The idea would be to make sure that any car can get onto the highway carrying any payload, and that the only difference in price should be related to the size of the payload, not where it's going or who it's coming from. It seems necessary to charge *somebody* by the bit at some point to ensure that we don't have the problem you mention with London. It doesn't matter whether you cannot build more roads, or whether no one can make money building new roads because they get stuck in a tragedy of the commons, either way, we don't get the roads.

Anyhow, I'm going to have to think about this stuff some more before reinserting my foot in my mouth.

Zantox said...

Clark, people already DO pay by the bit -- content providers. Netflix, Google,, you and everyone else that post content already pay for bandwidth. You don't see it because Google subsidizes your blog for you with advertising (since you use their platform), but it is most certainly there.

The reason people are debating the two issues (Priority vs. Access) is that priority quickly turns into access. If you prioritize one type of traffic (say, videos from Netflix at [just a WAG] 6 cents/GB) you can effectively cripple another (such as fetal heart monitoring via the iPhone for doctors by AirStrip at 4 cents/GB).

By responding that AirStrip should be able to pay for prioritization is ignoring the freedom of speech and competition issue by giving a near (if not completely) impossible to overcome advantage to large, entrenched companies. There is no way AirStrip (a young company with only a single major round of investment -- though with huge growth) could out-buy Netflix, just as Netflix couldn't out-buy Microsoft or Google or Comcast. And you and I couldn't even hope to out-buy AirStrip!

What you have left is content monopolies and a major curtailing of freedom of speech. Ultimately, the access providers need to keep the entrance-ramps open and available to all to pay the same price per bit. As you noted in your post, all payloads should be treated equally regardless of content.

Zantox said...

Just saw this site: which talks about some of the other things that Net Neutrality seeks to prevent.

Clark said...

I'm going to write something longer on this in the next little bit because it's interesting from a whole host of angles and I am not making myself clear.

I completely agree with what you've got here. You're certainly right that there's a huge danger in letting the cable guys charge content providers for priority because they will squash any competing video services and because their extortion can raise the entry price for all new services.

Right now, the content providers just pay by the bit to ship stuff, and they pay people like Akamai for what amounts to priority (the right to use their private toll road). This is still fairly open, but could easily tip over into very few content providers able to afford the fast lane, as you say.

When I was asking about pricing per bit, I meant should we force the *end user* to pay for the data, not the content providers. If bits were metered, this would eliminate the danger of the content monopolies, but it would leave us hostage (in 52% of zip codes, or whatever it is) to the cable monopolies. The solution would seem to be to force the cable infrastructure to go wholesale and regulate the return like a utility, as they've done with some success in other parts of the world.

Zantox said...

I understand your comment on the desire to have end users pay for data transfer, but I think that ultimately is wrongheaded for a couple of reasons.

First, as you note, are the cable/DSL monopolies that offer little choice for most areas.

Second, end users really have no idea how to really monitor their usage. How many bits is a Flickr page? The NYTimes home page? Shopping on Amazon? Watching a movie on Netflix or iTunes? How about checking email?

This will end in users avoiding content in order to avoid paying for it, which ultimately curtails business and speech. Imagine paying for television by the minute! It would mean that you would only watch what you knew in advance to be good -- rather than sampling and exploring -- which would lead to more content monopolies.

By having companies pay for their data usage/delivery, their costs scale with their success, which is rather tidy. It allows end users to sample and explorer at no additional costs, which benefits both business and consumer.

Lastly, larger consumers of data can achieve significant economies of scale by purchasing data in bulk OR investing in their own fiber (like Google has done). End users can't really consumer enough quantity to achieve scale, except those businesses that depend on it (like the aforementioned hospitals that use the internet to share high quality images, or movie theaters that use it to stream advertising content).

However, those large consumers CAN up their own content receipt quality by investing in higher bandwidth (such as a less-throttled package from a cable provider or buying one or more T1s, T3s, etc from the phone company).

At the end of the day, I would 100% agree with your suggestion that we regulate the internet as a wholesale utility.