re: Obama's plan to save the internet draws bold reactions

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to evolve into an extortion racket

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I understand the fear but I don't like it when we write laws out of fear when the actions haven't developed. No one starting a business out of their garage has anything to worry about. If that becomes an issue, I'd look for a law to fix it. Right now, it just seems we are blowing this way out of proportion.

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However, I'm curious what it means for small, local ISPs. Like the one that I work at. If they are treated as a utility, what kind of regulations would we see? How much harm or good would come from the government regulating the small guys? Would it give them an advantage, or would it stymy their growth? etc.

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Well, since we are a long way from agreeing on any specifics, it's really hard to say. But basically, the goal of treating ISPs as utilities is to create intense competition among ISPs. The government wouldn't take ownership of anybody's lines or equipment. Instead, I would imagine wholesale rates would be set and infrastructure owners would be required to lease bandwidth to any other ISP. It would be a lot easier for small ISPs to expand their territory, but there would be a lot more competition in doing so.

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Is there any way to disallow fast lanes yet not regulate broadband as a public utility? It seems like pro net neutrality crowd is adamantly opposed to throttling by ISP's and the anti crowd is opposed to the title II common carrier status. Are both things possible?

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Yes, but it would do nothing to address the problem of lack of competition among ISPs.

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can you elaborate on that? People on both sides keep saying we need more competition but I haven't seen any proposals that would actually promote competition. There already is a serious lack of competition and regulating as a public utility wouldn't seem to help.

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OK, let's start with why we have public utilities in many places rather than private competition. It's because redundancy of infrastructure is wasteful, since every bit of it has to be paid for by consumers over time. So if there were extreme private competition for things like water and electricity, you would have 5 or 6 sets of cables on every pole, and 5 or 6 independent water pipes through every neighborhood. And obviously, on average, that splits the revenue for supplying a neighborhood 5 or 6 ways, but the infrastructure cost for each company would be roughly the same as if they were the only one there, so the rates for consumers would be much higher, and it would still take longer to recoup the capital costs. So what naturally happens is deals and agreements are made, or companies get bought out or consolidate, to avoid this situation, and local monopolies arise organically. Competing at a level that results in unnecessary redundancy of very expensive infrastructure doesn't make much sense for anyone.

The alternative is sidestepping this whole monopolistic song and dance and just creating public utilities where it makes sense, with private contractors competing for specific parts of the process. Ideally, if we were creating a new city from scratch today, we would run fiber down each and every street along with the water, sewer, and power lines. The city would own, maintain, and upgrade it as necessary, and possibly even run the whole operation down to customer service and billing as a typical utility. Or, the city could lease bandwidth to any company that wants to service the area to handle customer acquisition, customer service, billing, value-add services, etc. In this way, a dozen companies could come in and compete on price and service over the public internet infrastructure.

But as it stands now, most of this infrastructure is in the hands of private enterprise. Regulating them as public utilities and forcing them to lease bandwidth would allow other ISPs to compete using these privately-owned lines. It is a heavy-handed approach, no doubt, but where monopolies are inevitable, so is regulation. This is a side-effect of our strong desire as a nation to privatize everything possible.

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Yes, but it would do nothing to address the problem of lack of competition among ISPs.

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Why can't we break up the regional monopolies and have Verizon/AT&T/Time Warner/Cox/Comcast/etc. all competing in the same markets? It took a while for collusion to turn to competition in the wireless market, but look at what we're seeing in that industry since the government told the them they had to compete rather than consolidate.

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Why can't we break up the regional monopolies and have Verizon/AT&T/Time Warner/Cox/Comcast/etc. all competing in the same markets?

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That's what classifying them as utilities would hope to accomplish. It should also encourage a lot of new ISPs to spring up and start leasing bandwidth and competing.

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But as it stands now, most of this infrastructure is in the hands of private enterprise. Regulating them as public utilities and forcing them to lease bandwidth would allow other ISPs to compete using these privately-owned lines. It is a heavy-handed approach, no doubt, but where monopolies are inevitable, so is regulation. This is a side-effect of our strong desire as a nation to privatize everything possible.

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So are you saying any company should be able to use the Fiber/Coax that Cox built all over said city?

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So are you saying any company should be able to use the Fiber/Coax that Cox built all over said city?

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Yes, Cox would be forced to lease their infrastructure at reasonable rates, basically.

Sure, it may not seem fair to the companies who have invested in the infrastructure. But infrastructure like this is a unique situation that has to be looked at differently than most other markets. You really have only a few ways to handle this type of problem:

1. The company that comes in and lays the infrastructure first will own a complete monopoly on business in that area. Don't like their practices? Deal with it. You have pretty much no choice.
2. Multiple companies come in and lay completely redundant infrastructure, crowding poles with tons of lines or ripping up the ground over and over again for each and every company that wants to compete. The barrier to entry in the market is extremely high as all that infrastructure has to be built and unlike the monopoly company in scenario 1 that gets 100% market share, in this scenario each company building the redundant infrastructure is only getting a fraction of the market share as they are competing, which means the return on the investment isn't even guaranteed to be worth it. The big picture is that it's extremely wasteful to have multiple private groups building redundant infrastructure over and over and over again.
3. Force companies to lease their infrastructure to one another. In this model, the company who builds the infrastructure still makes a return on their investment through leasing payments if competitors decide to enter the market, and if competitors don't enter the market then they still get to enjoy the large market share. As network demands increase and upgrades are needed, there is still incentive for private investment in infrastructure as whoever lays the upgraded infrastructure gets to collect the leasing fees. The barrier to entry into this market is low, which spurs competition and gives consumers choice. The competition in the market spurs innovation.

So which of these scenarios would you choose to apply to the ISP problem?

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If the current ISPs are so horrible, new companies should not be worried about building infrastructure and return on it.

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That's short-sighted, because of course, the current ISP monopoly company would upgrade/improve their service as necessary to prevent the new companies from capturing too much market share. Competitor 1 already has infrastructure to 100 homes, now competitors #2 and #3 now build infrastructure to those same homes, now you have total 300 homes worth of infrastructure investment dollars but on average each company can only have 33.3 subscribers. If a competitor #4 enters the market, then you have 400 homes worth of infrastructure investment for an average of 25 subscribers per company. Thus it doesn't make sense for new competitors to arise.

On top of that, what's the incentive for these companies to not collude and agree to keep off of each others' territory? Competitor 1 builds 25 homes worth of infrastructure and has a monopoly on those 25, Competitor 2 builds 25 homes worth of infrastructure and has a monopoly on those 25, etc. etc. That way you don't all invest redundantly and you keep the same amount of subscribers.

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This is not cheap and upgrades have to happen in every cox market out to their level 1 provider, not just upgrading Baton Rouge

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First half of your post the money to roll out brand new infrastructure redundantly shouldn't worry companies, and second half of your post multiple companies upgrading infrastructure singularly in areas is "not cheap."

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The solution to this issue is not as easy as some are making it out to be.

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Nobody's saying it's easy. It's definitely a "lesser of evils" scenario here... and everyone is acknowledging that...

Big difference is that the internet can travel over the air. 5G will likely be standard in a few years. Not sure what type of speeds it will produce. I think 4G is close to 1gbit/s. WIFI mesh networks expansion. Etc.