Why net neutrality matters

[OneFootInTheGrave]

yes, this is pretty much spot on ... and for example here in Croatia, a developing country I have 10 mbps uncapped for about 15$/20$ a month... in a town with 8k people in it... if an ISP can pull this off in a country which is relatively sparsely populated and not quite up to speed economically... I am sure that all the Canada/US/other barriers are pure gimmicks designed to screw the customer... basically abusing their near monopoly position in the markets where they play.

[Solomwi]

So, with net neutrality in place, consumers would get a choice between Netflix+overage charges and inferior service+overage charges, instead of between Netflix+overage charges and cap exempt inferior service? Yay, net neutrality.

[OneFootInTheGrave]

no, with net neutrality the companies would be pushed to provide the same coverage for own content services, and other content services... thus creating a market... which in time is sure to provide a better deal to the consumers, comparing to arbitrarily segmented market with artificial barriers in place protecting the ISP and it's own services.

[Solomwi]

So the idea is to get inferior service up to par with Netflix, so that instead of Netflix or inferior service which is competitive on cost, we have a choice between Netflix and other Netflix? How is there more of a market in the second case than in the first? What about consumers who don't want Netflix' extra quality, and are happy paying much less for an inferior service?

[Asher]

because it's much more profitable for the companies to do this kind of thing, so they all do it...

Ding. Also, it's effectively a natural monopoly because there's two data pipes into homes: cable and telephone. And telephone's bandwidth is basically at its limits.

[Asher]

But if one company wants to make a ton of profits, it will be the sole company that DOESN'T do it and all the people that care about it will flock to that company. If not enough people care, then raising prices was the right thing to do.

This is a brilliant idea, HC.

How would you recommend I go about switching my cable company?

[Asher]

So, with net neutrality in place, consumers would get a choice between Netflix+overage charges and inferior service+overage charges, instead of between Netflix+overage charges and cap exempt inferior service? Yay, net neutrality.

This is exactly correct. The ramifications are precisely zero people will sign up for the inferior service, and Netflix would remain in business in Canada. It's already questionable for their viability in Canada due to the smaller market & the legal issues of licensing streaming for every studio in every new country, add in the bandwidth caps and it's quite likely it won't be a profitable operation for Netflix to operate in Canada at all.

By keeping the playing field level, the bandwidth caps would actually increase. Otherwise Shaw would make zero money from their new service.

[OneFootInTheGrave]

move

first people have to move to go to a lower crime neighbourhood,
than they have to move for a better school for kids
next they have to move where there is better local hospital service
and now they have to move for a good cable provider...

no issues as long as you have millions in your bank account and do not mind to exercise you freedom to move across the country

or even better move to western Europe *(excuding UK), where pretty much wherever you settle you have all of the above by default... no neflix though, and you have to learn German, French or an even more obscure language... but when netflix it comes you will have it available

[Asher]

So the idea is to get inferior service up to par with Netflix, so that instead of Netflix or inferior service which is competitive on cost, we have a choice between Netflix and other Netflix? How is there more of a market in the second case than in the first? What about consumers who don't want Netflix' extra quality, and are happy paying much less for an inferior service?

The thing isn't quality, it's quantity. 139 movies with the other.

The other thing to keep in mind that the cable companies, internet companies, and media companies are all the same in Canada. Shaw owns cable, Shaw owns satellite, Shaw owns TV channels, Shaw owns the internet pipes. They have a VERY STRONG interest in completely controlling the entire pipeline. They used to be able to do this by owning both cable/satellite and the media itself, but the internet threw a wrench into the works. They're actively bullying Netflix with stringent, unrealistic data caps and trying to replace it with their own service so they can price gouge once again.

The other context you are missing -- right now the government forces these cable companies to provide access to their infrastructure to third party ISPs, who pay a fee for its use. Some of these third party ISPs had very large bandwidth caps and some were even unlimited. People, of course, began switching to these ISPs in large numbers. Why would you pay more for strict data caps? This alarmed the cable cos -- they are no longer controlling the content pipe. Their solution was to lobby the government and begin placing patently absurd bandwidth charges to these new ISPs, so they can't offer their high cap/unlimited cap plans.

You know the rate they were going to charge? $2 per GB ($3 in Quebec). The actual cost per GB is something in the order of $0.01 to $0.02.

This is what the lack of network neutrality ends up doing.

[Solomwi]

How is the playing field unlevel as it is? Netflix is free to get into the ISP/cable business, no? And why would the caps necessarily increase? It might make more sense for Shaw to simply drop net streaming from its service and keep the caps as they are.

[Asher]

More context: Shaw is controlled by the Shaw family. Their entire business exists because it is a monopoly. It price gouges as a rule.

The Shaw family is notorious for being *******s. The CEO, Jim Shaw, regularly openly berated and insulted investors and reporters on conference calls. He frequently came to them drunk. He decided to retire this year, at the ripe old age of 53, and was rewarded with $6M per year (indexed to inflation) for the rest of his life. And what was his big accomplishment? He inherited the company with a built-in monopoly from his father.

Shortly after announcing this pension, the ISPs started whining about how the internet was not going to be profitable anymore with all of the "bandwidth hogs" downloading absurd amounts of content, like 50GB per month!! Thus, the $2-3 per GB surcharge.

[Asher]

How is the playing field unlevel as it is? Netflix is free to get into the ISP/cable business, no?

Correct. No. This is a highly political area and it's completely impractical for someone like Netflix to start placing fibre to every home in Canada.

And why would the caps necessarily increase? It might make more sense for Shaw to simply drop net streaming from its service and keep the caps as they are.

Without network neutrality, this is completely their prerogative. Which is why it is VERY BAD.

Without network neutrality, the ISPs like Shaw are going to charge third party ISPs $2-3 per GB for using their internet pipes, effectively killing their business. Consumers do have a choice with network neutrality now, because I can switch to small third-party ISPs like TekSavvy that offer unlimited bandwidth plans. Lack of network neutrality means Shaw can selectively choose to charge obscene amounts for the rights of TekSavvy to use their pipes. Which means the lack of network neutrality means Shaw can ensure no one else in the area can offer reasonable internet plans.

Network neutrality, in this case, means a free market. The lack of network neutrality means Shaw can selectively kill their competition because they have an effective natural monopoly on the data pipes.

[OneFootInTheGrave]

So the idea is to get inferior service up to par with Netflix, so that instead of Netflix or inferior service which is competitive on cost, we have a choice between Netflix and other Netflix? How is there more of a market in the second case than in the first? What about consumers who don't want Netflix' extra quality, and are happy paying much less for an inferior service?

one has a barrier, the other case does not have one - how hard is it to grasp that context? Do you think that arbitrary market barriers are good for consumers in general?

In the case without a barrier, whoever wants to use the inferior service still can, but while in the "barrier" case one service is subsidized by another business which just happens to be it's parent company... thus not creating a fair market between the competitors.

That it itself will bring the prices up, and you will have to pay more for the same comparing to the situation where you had "net neutrality" in place, this type of behaviour is in effect abusing the monopoly market position to make more money.

[Asher]

one has a barrier, the other case does not have one - how hard is it to grasp that context? Do you think that arbitrary market barriers are good for consumers in general?

In the case without a barrier, whoever wants to use the inferior service still can, but while in the "barrier" case one service is subsidized by another business which just happens to be it's parent company... thus not creating a fair market between the competitors.

That it itself will bring the prices up, and you will have to pay more for the same comparing to the situation where you had "net neutrality" in place, this type of behaviour is in effect abusing the monopoly market position to make more money.

Exactly.

There's a handful of companies that control the data infrastructure across Canada: Telus, Bell, Rogers, Shaw (and Videotron in Quebec). They are all very careful not to rock the boat. You can't switch to a company offering better deals, because they all offer the same deal. This is why in Canada, we have 3 year cell phone contracts while everyone else has 2 or less. This is why we pay the most out of any modern country for cellphones in general, as well as cable and internet.

Every home has either telephone (Bell/Telus) and cable (Shaw/Rogers). And in every region, the cable and telcos are careful not to rock the boat in pricing or bandwidth caps.

The network neutrality play comes in because the government wants competition, so it forces the cable/telcos to permit other third party providers to use their infrastructure for a fee (to ensure profitability for the cable/telcos). These third party ISPs started offering the same speeds with unlimited bandwidth caps for lower prices.

But we don't have network neutrality in Canada. So to keep the profit margins obscene, all they had to do was charge these third party ISPs obscene amounts of money per GB ($2-3). That kills the unlimited, high cap plan outright. Obscene profits restored.

In the case of Netflix, Shaw/Rogers are terrified of losing their cable & television station gravy train. They want Netflix to be killed in Canada. This is why, the very day Netflix announced its arrival in Canada, Rogers retroactively lowered the bandwidth caps for its consumers (to as low as 2GB per month -- NO JOKE). Then they launched "Rogers on Demand", for much higher prices, which...surprise...does not count towards your new cap.

[Asher]

Engadget has picked this up:

Shaw Cable's Netflix competitor bypasses bandwidth caps on its way to the TV

While US residents seethe over increases in Netflix's pricing, our neighbors in Canada are upset by the competing Movie Club package Shaw Cable is offering. The $12 per month service offers unlimited access to "hundreds of the best Hollywood moves" and plans to have high definition feeds later this summer for an additional $5 (cable companies in the US have a similar scheme under the name Vutopia.) Causing the issue are promises that "the only limit is the number of hours in your day" unlike bandwidth capped streaming from unnamed services like Netflix. While Movie Club viewing over the internet on a PC, tablet or other device is capped just like any other service, access via the cable box is not metered. That distinction doesn't sit well with subscribers and consumer groups arguing for net neutrality, particularly as the CRTC is in the midst of hearings over usage-based internet billing. While that case hasn't been decided, our own ruling is already in and is firmly against Shaw, or anyone else, advertising based on advantages that exist only due to policies it created in the first place.

Note that there's still confusion here. Engadget says the internet-based viewing is "metered", Shaw's President has explicitly stated otherwise several times.