The Internet Economy Took a Shot Yesterday

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

The Internet Economy Took a Shot Yesterday

When the DC Circuit ruled yesterday against the FCC and its rules for open INternet or Net Neutrality, it basically gave the 10 top ISPs even more power than they had.

In 2001, households paid $20 for dial-up access to the Internet, $30 for a phone line and $48 for cable TV. Today, they pay on average $150 for triple-play PLUS at least $58 for a mobile plan. In many cases, much higher.

We have seen data caps on cable and mobile. We have seen metered bandwidth usage plans.

We have seen AT&T offer up a cheaper Gig Internet pipe to your home if it could snoop on your activity. (You might as well take the deal since they will snoop anyway. Even Level3 is doing DPI (deep packet inspection) on the Internet now.)

Google bought Nest, so soon they will know all of your household habits. Microsoft watches you through your Kinect device. The NSA and any hacker watch you through your webcam and smartphone.

But I digress on how far we have come. Let me circle back. Our economy is based on two things really - service (all the stores and food joints along every street in America) and the Internet. some of the biggest companies are attached to the Internet - Apple, Amazon, Google, Facebook.

Think about all that market cap that has been realized.

Now think about what would have happened if Yahoo or AOL had paid the ISP's to be the only search engine in 2000? Both had marketing agreements in place then with the bigger ISPs.

AOL died mainly because the walled garden approach to the content on the Internet was wonky. We have thousands of apps on our cellphones mainly because people are too lazy to type in a URL.

An open Internet allows for innovation. An open Internet is the foundation for the cloud services business. An open Internet is the pipe that provides cheap and niche goods to the masses. An open Internet is what is keeping the masses entertained, so that they don't rise up. Change that open Internet one bit too much and say goodbye to GDP.

And I have to remind the ISPs of something: We pay you handsomely for access to the WHOLE internet, not just the parts that you or the USG want us to see.

And I want to remind Big Business of something: without masses making a living wage, they can't buy your crap and keep your stock afloat.

The Internet is the highway to globalization and global competition for knowledge jobs. Take that away at your own risk.

Even VC's are worried. This from Fred Wilson, "This is Internet 3.0. With yesterday's court ruling saying that the FCC can not implement the net neutrality rules they adopted a while back, this nightmare is a likely reality. Telcos will pick their preferred partners, subsidize the data costs for those apps, and make it much harder for new entrants to compete with the incumbents."

These companies - the Duopoly - already have too much power. And 3 - Comcast, AT&T and Verizon - are too big to fail. If the FCC can't regulate these 3 - note that the other Net Neutrality ruling the FCC lost in 2010 to Comcast - then it might as well close shop. Seriously.

The way I see it: The US is spending too much effort to disrupt something that has delivered so much. It doesn't need any enhancements or entanglements from any ISPs or government. The Internet is working just fine the way it is. leave it alone.

The ISPs should be happy but of course being public they never can be. Revenue cannot grow forever, especially in flat markets, despite what they think -- because eventually the consumers won't have the money to buy. Then what?

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