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Summary:

Comcast’s recent deal with Netflix re-ignited a debate on net neutrality and how best to implement it, with venture investor Marc Andreessen arguing that competition is what will solve the problem, not more regulations

marc-andreessen
photo: All Things D

The concept of net neutrality — the idea that cable networks should not give preferential treatment to certain kinds of content — often seems somewhat theoretical, which is why many people latched onto the recent “peering” deal between Comcast and Netflix. They appeared to see it as a tangible sign of how large networks like Comcast could derail that principle, even though a number of experts (including our own Stacey Higginbotham) have argued that the arrangement has very little to do with net neutrality at all.

Despite this, however, the news triggered a heated discussion on Twitter about whether the Comcast deal was evil or not — a debate that included Andreessen Horowitz founder Marc Andreessen, who also held forth on the topic earlier this month. It started with a remark from Matt Yglesias — a former writer with Slate who recently joined Pierre Omidyar’s new First Look Media project:

Andreessen responded by asking whether Comcast should be forced to handle an ever-increasing amount of traffic from Netflix for free, or whether there was some point at which even Yglesias would agree that Comcast should be compensated somehow for that load on its network:

The venture capitalist argued that too much of the discussion about net neutrality assumes that the internet is a static thing, rather than something that is likely to increase exponentially in terms of its demand for bandwidth, and that a strict or dogmatic adherence to net neutrality would likely “kill investment in infrastructure [and] limit the future of what broadband can deliver.”

After Fortune magazine writer Dan Primack argued that Comcast’s monopoly was a big part of the problem, Andreessen responded by comparing Netflix’s demands on the network to the highway traffic system. What if there was a trucking company whose usage of the highway system was growing by 200 or 300 percent every year, the VC asked — at what point would it seem natural to charge that trucking company more for its use of a public resource, even if that might raise prices?

Yglesias argued that the internet was more akin to the sewer system or the electrical network — that is, something which tends to become a “natural monopoly” because of the investment required and therefore needs to be regulated. But Andreessen reiterated his point that the difference with the internet is demand for bandwidth and access is increasing at exponential rates, something that isn’t likely to happen with either sewers or electricity.

As he did in his earlier conversation, which I wrote about and collected as a Storify, Andreessen argued that the best defense against monopolies and the best way to protect the principle of net neutrality is to have more competition. Among other things, he suggested that unlocking more unlicensed spectrum for use by alternative access providers would be helpful, along with helping to encourage local providers to create or license competing networks.

When Jeff Jarvis asked how Andreessen would square the idea of open networks with his views on net neutrality regulations, the VC argued that one thing the regulator could do (since its ability to regulate net neutrality was weakened by a recent court decision) is to prevent networks from discriminating based on specific types of content, but allow them to discriminate based on the amount:

Andreessen argued that creating more regulations around net neutrality would just entrench the existing monopolies and dominant market players, and make it much harder for new competitors to enter the market and provide alternatives. Such laws, he argued, typically favor incumbents and lead to what he called “regulatory capture,” where only those large players who know how to play the regulatory game are allowed onto the field and this creates “crazy high barriers to entry.”

So then what is the answer to the problem of protecting consumer choice and blunting the force of potential monopolies? Andreessen was somewhat less specific about that, saying the answer was likely “some combination of incentives, deregulation and antitrust” and that a “one-time government antitrust strike” tends to be far more pro-consumer than “an ongoing regulatory regime.” Stacey has argued that one thing the FCC could do is to force carriers like Comcast to be more transparent about the deals they are cutting with content companies.

After a commenter below took issue with Andreessen’s trucking/highway analogy, I asked the venture investor about it on Twitter, and he said the comparison was designed to test whether net neutrality advocates could see any scenario in which a content provider would have to (or should have to) pay higher rates. Charging anything is often viewed by net neutrality proponents as “immoral,” he said.

Andreessen said he’s concerned that if regulators continue to enforce existing rules or make them even tougher, then network operators won’t have any incentive to invest the amounts of money required to improve the bandwidth of the internet and provide the future technologies he is looking for — technologies and applications that could require thousands of times the amount of bandwidth we currently have available, such as “true immersive, always on, high-def videoconferencing.”

Anthony De Rosa of Circa argued that the highway analogy suggests bandwidth might be best served by being turned into a public utility, in the same way we have a public infrastructure of roads, etc. subsidized by taxes rather than relying solely on toll roads. But Andreessen said this kind of approach would “kill innovation and progress, and lock us in to current broadband levels forever.”

Technology writer Dan Gillmor suggested something similar — that public investment in infrastructure could be subsidized by taxes, and then companies could innovate on top of that basic infrastructure, an approach Andreessen said he would prefer if there was going to be any government investment at all. However, he said he would prefer if it was left to the private sector, at which point Gillmor noted that this likely would not have worked out that well for the public highway system:

Post and thumbnail images courtesy of All Things Digital

  1. You keep giving a voice to someone like him, what are you Fox News?

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    1. rememberingbob Monday, February 24, 2014

      You don’t think a major investor’s views about internet competition and net neutrality are interesting and/or worth paying attention to?

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      1. Depends who he’s invested in

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      2. No his agenda is to milk you dry he cares about him making money out of it not to mention that he makes no sense and his language shows at what level his intellect is.
        The consumer already pays for the data at a certain advertised speed ,the cost of it goes to the consumer. If the ISP can’t provide that it is free to up prices or lower the speed (speed that it is even speed ,it’s volume).In the case of sewers and electricity the ocean and the lightbulbs are not paying for electricity nor is the solar farm selling that electricity to the power company. Good idea actually, maybe Comcast should pay Netlix for providing the data, without that data all Comcast would have is empty pipes ,lets see how they sell that.As for trucks the road “provider”does try to get payed for the gas used too .
        And that’s before remembering that the US is sow corrupt that Comcast is allowed a (was it 300GB) data cap. They already have that cap no matter how much the Netflix traffic goes up. Media providers are already crippled by it.
        Then lets remember that the US has insane prices , net and adjusted for purchasing power , low speeds and an aging infrastructure. Why? Because there is no competition so hey lets give ISPs more leverage so they can get fatter while providing a terrible service.
        Mister investor might also want to explain how the lack of any competition between internet providers is oh so damn captitalist.
        Since he insist on saying so many crazy things, lets not forget that net neutrality preserves competition between web firms that actually use the pipes.
        And yes the author of this post should maybe rethink what kind of discourse deserves a voice, unless the goal is to be part of the problem.
        So yeah this guy is Fox News worthy.

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        1. “If the ISP can’t provide that it is free to up prices or lower the speed”

          That’s kind of exactly what’s happening. That’s what the outrage is over.

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          1. ISPs should be able to do what they want, and so should the content provider. If they want to raise prices and lower speeds they should be allowed. Everyone is always worried about protecting the consumer. The consumer is allowed to go elsewhere for the content or go without! The government would never step in and say, “Oh no Mr. Consumer, you can’t change your service. You have to order this or that specific service whether you like it or not.” So why should the government tell any business that?!?!

            Net neutrality is a joke and is anti-American. It’s not like its a law that actually protects a consumer physically. If you don’t have your cable content you aren’t going to die or be physically harmed are you? Bottom line is we all have choice, you can switch companies or go without. I’m just waiting for the government to start stepping in and telling Porsche that they have to start offering their cars for the same price as a Ford Focus so that way everyone can have one. The crazy thing is people will probably actually believe that’s a good idea!

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        2. “Mister investor might also want to explain how the lack of any competition between internet providers is oh so damn captitalist.”

          –I can’t recall him ever advocating for there not being competition between ISPs. Last time I checked, at any time, I can cancel my internet service and get another one.

          In fact, ISPs stand in stark contrast to cable companies or old-school telephone companies, which force you to choose from 1 provider – or none at all.

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  2. Andreessen’s arguments ignore the key fact here – paying subscribers are Comcast’s customers, not Netflix.

    As a Comcast customer, I load up Netflix and watch a movie, which presumably counts against the data caps they have in place. It is data I payed for and should be able to use however I see fit, as long as I don’t go over the caps they put in place. Just because a lot of Comcast’s customers happen to use their monthly data allowance watching Netflix does NOT mean that Netflix is using an unfair or inordinate portion of Comcast’s throughput.

    Andreessen’s trucking metaphor is way off. Comcast is not a public highway, it’s more akin to a private road, with private users paying for the ongoing maintenance of that road. If people are paying for the road specifically to allow those trucks to get through to them, then how does it make sense for the company maintaining that road to ALSO charge the trucking company for their use?

    Comcast is effectively charging both ends of the data transaction to provide one service, which is why network neutrality needs to be put in place.

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    1. I’m in complete agreement. If it costs more to build up infrastructure, charge the people paying for that infrastructure: i.e. your customers. The capacity increase necessitated by Netflix wouldn’t be necessitated without the input of those customers.

      With that said, Andreessen is correct in other areas. Legislating net neutrality without also legislating/creating competition is simply a means of entrenching Comcast at the top forever. Ma Bell part 2. Ideally, you either separate the backhaul infrastructure from the consumer and then wholesale the bandwidth to new companies (e.g. 1980s AT&T & the baby bells), or you completely take the entire network away using eminent domain. Either way, the ultimate goal must be that a theoretical infinite number of reseller companies should be able to compete at the last door.

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      1. Or even “at the door.”

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        1. Matt Diogenes Hamilton Thursday, February 27, 2014

          I agree as well. I thought the concept of net neutrality was not discriminating based on type of content.

          The concept is regulation forcing companies to compete and also empowering users, so the ISP cannot hold certain content hostage, which is what happens with cable right now. Want National Geographic channel? Too bad, pay us more, and you need a basic package to get it. On the other hand, TV Land comes with most basic packages so there you go.

          Andreesen is saying, force the ISPs and cable cos to function more like Dropbox and Box. Tiers based on volume/storage, not video vs. photos. There are better ways to innovate.

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  3. Marc is shockingly misguided here and appears clueless of the base current that these sorts of deals will ultimately flow towards…

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  4. You know Andreessen is a putz living in some rarefied environment where he has zero clue about the bulk of end consumers and their issues with cable providers.

    They are already monopolies and not only are the monopolies they are so illegally. I live in a MHU apartment in Maryland where a law on the books states I have to have appropriate access to competitive Internet services. Fact is there is Comcast or there is no service.

    Where is competition with that? Comcast if not reigned in by the FCC can bend me over and have their way with me and I have no recourse. So, next time you spout of at the mouth Marc, research what consumers in the real world are working with! Dipsh*t!

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  5. Marius Telemacher Tuesday, February 25, 2014

    “the idea that cable networks should not give preferential treatment to certain kinds of content”

    Interesting phrasing. When Cable does it, it’s anti-Net Neutrality, but when Telecom does it, it’s fine?

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  6. We pay companies like Comcast to access Netflix. The fact that we are all using it doesn’t make a difference. We could all be online on different services, but instead we use Netflix. If truckers were taking up highways that much, then its up to the city to find a way to accommodate them…. because those truckers = money….. you don’t want those truckers, then close them off and lose out on the money…… Then guess what? Then suddenly you have a huge surge of civilian cars, you going to shut them down too? No, its a friggin freeway, you make it function right…..

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  7. The problem is asymmetry. But ISPs like Comcast provide asymmetric services to their customers. So Comcast basically started this by creating the cow-calf or producer-consumer dichotomy.
    http://www.linuxjournal.com/content/way-ranch
    If the big ISPs provided symmetric bandwidth to everybody, more people would be producers and do less consuming. Comcast doesn’t deserve sympathy.

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  8. Net neutrality is an issue that needs to be fought for, and the first step is to keep up with the issue as much as possible. If anyone needs a refresher on the basic issues, here’s a great short mockumentary: http://www.theinternetmustgo.com/

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  9. As usual, GigaOm misses the point of the Comcast/Netflix deal. Comcast has enough capacity to carry Netflix’s traffic to Comcast’s end users; the last mile networks are fine. But Comcast doesn’t enough capacity in the five locations at which Cogent wants to dump that traffic into Comcast’s network. If Cogent (Netlix’ primary transit provider) was willing to connect to Comcast at all of the ~25 public peering centers Comcast uses, Cogent would be able to deliver the traffic to Comcast without any problems. But Cogent isn’t willing, and neither is Netflix. So Netflix is paying Comcast to reconfigure the Comcast network in order to make Netflix’ life easier, simpler, and cheaper.

    And that, friends and neighbors, is a criminal offense to net neutrality fans.

    There’s history behind this: for years, Netflix has been changing CDNs and transit providers every six months to get lower prices. Each of these changes forces operational changes on the ISPs, and at some point they said “enough is enough.” That point came about when Netflix started streaming 4K and radically increased the load it was asking ISPs to bear.

    Can any rational person blame the ISPs?

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