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Net neutrality. (Photo: youtube screen capture)

California Plans to Socialize Wholesale Internet Pricing via Net Neutrality

California is unilaterally trying to set policy about net neutrality for the entire country

By Wayne Lusvardi, August 11, 2020 8:00 am

Net neutrality is a political cartel of internet renters that want to grab a big piece of the market from the landlord cable networks without having to pay for it, and sublet it to others for their economic and political gain.

Since former President Barack Obama left office, California has had an ongoing legal battle with the Trump administration over the unintelligible telecommunications policy called “net neutrality.”  California’s political leaders favor “net neutrality,” and the Trump administration is not.  California is unilaterally trying to set policy about net neutrality for the entire country. Conversely, the Trump administration believes California is encroaching on its authority to regulate interstate commerce. But hardly anyone knows what net neutrality means due to the technical nature of the term.  Instead of trying to define it, let’s first look at a commonsense example.

Baseball Game Analogy

Your family wants to go to a baseball game. The stadium has different prices for different times of the year, for double headers and for championship games.  It also has different prices for adults, adolescents and children in order to encourage the whole family to see a game together.  There may be different pricing for different seating areas as well as group pricing.  Then there is another layer of pricing by competitive sporting events (e.g., football, soccer).

But imagine what would happen if all sporting events had to charge the same price despite the date and time of the game, seating section, age of patrons or competitive sporting events.  Or that even watching TV games had to charge the same price as going to a game ($167).  Moreover, imagine that you must allow a rock concert or a political rally to barge into the stadium at the same time as the baseball game and get free rent.

Net Neutrality is Socialism

Net Neutrality is opposition to paying different prices for internet carriage fees, amount of bandwidth, speed of access, browsing speeds, blocking access, throttling access or prioritization of traffic based on prices charged to internet content providers to the old telephone network grid operators.  It means you get a flat price for everything, you cannot deny better access to anyone especially by a higher price and shifts the cost of your internet rent or charges onto others.

The opposite of net neutrality is called price discrimination in economics as explained in the baseball example above.  The reverse of price discrimination is socialism, meaning cost or price sharing.

Put differently, the intentionally garbled net neutrality conflict is what economists call a “free rider problem”, defined as “the burden on a shared resource that is created by its use or overuse by people who aren’t paying their fair share or aren’t paying anything at all.”  The Trump Council on Economic Advisors even put out an educational paper in 2018 focusing on how government attempts to give out free goods results in unanticipated bad consequences.

Net Neutrality is a Cartel of Net Renters

But now that net neutrality has been un-masked as socialism, who would benefit from net neutrality and who would lose? A sample of those who would gain from net neutrality and who would lose is below:

Wins – Net Neutrality

Newer Internet Service Content Providers

Loses – Net Neutrality

Older telephone & fiber network operators

Apple- Cupertino , CA

Google – Mountain View, CA

Facebook – Menlo Park, CA

Yahoo – Sunnyvale, CA

Amazon – Seattle, WA

Ebay – San Jose, CA

Microsoft – Redmon, WA

Twitter – San Francisco, CA

Mozilla -Firefox – Mountain View, CA

Greenpeace – Amsterdam

ACLU – New York, NY

National Hispanic Media Coalition – Los Angeles   

AT&T – Dallas, TX

Comcast – Philadelphia, PA

Verizon – New Jersey

Charter – Stamford, Connecticut

Net neutrality is an economic and political cartel of internet renters that want to grab a big piece of the market from the landlord cable networks without having to pay for it and sublet it to others for their economic gain and political capital.

As can be seen from the above list, those who would gain from a net neutrality policy would be those internet content providers (e.g., email, messaging, movies, social media, political advocacy, etc.) in California, Washington State, as well as political advocates in New York, Los Angeles and the Netherlands.  Those who would lose from net neutrality would be telecommunications companies in Texas, Pennsylvania, New Jersey and Connecticut who would be banned from charging higher rates for internet fast lanes for designated websites.

However, it is not that President Trump is on the side of the cable network landlords because he removed regulations propping up the profits of internet-service companies in 2017 by overturning the opt-in rule.

California SB 822 Wants to Set National Policy

On August 10, the U.S. Department of Justice (DOJ) requested that a federal judge block California’s net neutrality law, arguing that the federal law is paramount over the state’s. This case goes back to 2017 when the Federal Communications Commission (FCC) voted to repeal the Obama administration’s attempts at implementing a net neutrality law.

In response, California passed a new net neutrality law in 2018 (SB 822). SB 822 was supported by 22 Democrat state legislators and passed along a straight party line vote.  California later aligned with the Democrat-controlled states of Vermont, Oregon, Washington, Colorado, Maine and New Jersey to form a cartel in an attempt to make net neutrality nation-wide policy.

The DOJ appeal will be heard in the Eastern District of the Federal Court in Sacramento presided by Judge Kimberly Mueller, an Obama appointee, and a decision is expected in October.

Don’t expect the case to be framed as a regulatory takings issue where renters of the internet can grab bandwidth and access speed from their landlord cable companies and sublet it out for economic gain and political capital.

Don’t expect the case to be framed as a public policy issue as to whether the nation’s economy is to grow along capitalist values, or suffer economic decline under a socialist internet. Instead expect the case to be argued along narrow legal grounds whether a market-driven internet “discriminates” against free speech, civil rights, or is racist.

Why should such a decision as to whether the national economy should be capitalist or socialist be made in a court of law?

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45 thoughts on “California Plans to Socialize Wholesale Internet Pricing via Net Neutrality

  1. The author was a water and policy analyist at Pacific Research Institute which was the parent company of calwatchdog. The research institute’s EIN is 94-2528433 and is considered a 501(c)3 public charity. According to the CADOJ, the last 990 was filed in 2016, so they’re *just a little bit late.* What I want to look for are the funders – and of course, they’re not included (a violation of CA law – charities have to disclose their large funders). But the PRI is filing state tax returns in 33 states – strange. This doesn’t match philantrhopy. So I’m calling the author’s bluff – he’s a PR guy pretending to be a journalist taking corporate money to push their propaganda disguised as nonpartisan public interest journalism. He’s a presstitute. No transparency … no credibility.

    1. Personal attack usually reflects someone who has no valid rebuttal argument. So it is a backhanded compliment to me that I must have hit a home run to get this kind of reaction from you.
      Full disclosure: I’m a free lance writer with no connections to Calwatchdog.com or California Globe. Some of the other writers are full time staff.
      I’m sorry you don’t have something more substantial to discuss.

      1. I’m sorry you have such a poor understanding of network technology and how there’s no difference between bits of data only the size of the data Wayne.

        1. FYI, I am also a public utility appraiser. I value regulated water companies. I also value fiber optic systems and rights of ways.

    2. “So I’m calling the author’s bluff – he’s a PR guy pretending to be a journalist taking corporate money to push their propaganda disguised as nonpartisan public interest journalism. He’s a presstitute. No transparency … no credibility.”

      Can I use this? Brilliant conclusion. Presstitute. I love all of this so much.

    3. Of course he is. That’s all the Globe publishes. I read the Globe so I can follow what California’s right wing is up to.

  2. Great… another Obama sycophant who will decide the case by her and Baal’s politics.. It will have to be appealed all the way up the ladder. Note how these cases always seem to end up in front an Obama judge.. Hmmm.. The outcome is a done deal. They want to control the internet like their comrades in china

    1. Net Neutrality is not hard to understand. Spend 5 minutes to research and you’ll understand the basics.

      The analogy wrongly seems to suggest that it is not possible to do multiple things online at once and that by watching a Rock concert (lets say Netflix), I can’t watch baseball (do a Skype call).

      These ISPs are regional monopolies that make billions in profit and most own significant additional services like Comcast, which owns NBC Universal. They donated to nearly every Democratic presidential candidate, and indiscriminately to nearly all of congress and the Senate. They participate in many questionable practices, like tracking the websites you go to when you do DNS resolutions and inserting additional ads. They have been accused of sabotaging the networks of small competitors to edge out markets. They charge millions in dubious ad on fees and equipment fees. They have some of the lowest customer service ratings of any public companies.

      The “free riding services” are part of the reason why we purchase internet service. No one would purchase internet if there were not services to connect to. Why should we trust greedy corporations to not push us to their services, eg. slowing Netflix so we subscribe to Peacock TV.

      Why should they dictate how we use the service we pay for at all?

      Would we accept the power company telling us what appliances we can use?

    2. You do realize net neutrality is actually less control over the internet right? Saying that no other 0s and 1s are more or less important than other 0s and 1s right?

      1. I think most already have a confused perspective of exactly what net neutrality is and the actual upsides and possible downsides that may exist.
        I think this article provides a thorough perspective of their viewpoint.
        Different sources and times of 0s and 1s really shouldn’t be charged differently, in that way I think it’s very different than baseball tickets. However certainly a larger amount of 0s and 1s should certainly increase cost. As well as unregulated and competitive pricing, meaning that process could go higher but they also can go lower.
        So in conflict, certain content shouldn’t have different costs, net neutrality good.
        Forcing flat rate cost for all access, net neutrality bad. Ie. People that use 10GB+ of whatever content, should be charged more. There is not an magic unlimited amount of electricity, and other resources, that can provide users unlimited free GB. As well users that use less should pay less. I use under 2GB a month and have a great rate on mint mobile. I do not want to pay for or need an unlimited plan.
        A complete flat rate for net access is a horrible idea. Many use these services for education etc. Others run twitter bots, spam campaigns etc. The government is incapable of understanding and setting the rate of net services.

        1. No. People who use more bytes will be charged more, just as people who use more electricity are charged more. No free rides, right?

  3. Good call.
    Simplistic analogies can easily hide more important issues behind the guise of simplicity, and this analogy is weak. The internet is not a baseball game.
    Non-neutrality will benefit only the biggest cronies with the most money to toss around as soon as they can make it a big buddy party, where those without the pull and financial resources will be stifled.
    Google, et al., aren’t complaining because they will suffer–they are championing the underdog in this case.

    1. What nobody seems to understand here is with net neutrality you end up with caps and throttling by politicians who are behind the curtain in control. In Australia, for example, they are given a “block” of so many gigs a month. Once they’re gone “poof” no internet period. This means no entertainment, no phone, no online work, until the next month. No thanks, I’ll like what I have, and I’ll support those who oppose “net neutrality”.

  4. “Net Neutrality is opposition to paying different prices for internet carriage fees, amount of bandwidth, speed of access, browsing speeds, blocking access, throttling access or prioritization of traffic based on prices charged to internet content providers to the old telephone network grid operators. It means you get a flat price for everything, you cannot deny better access to anyone especially by a higher price and shifts the cost of your internet rent or charges onto others.”

    This is so wrong it’s not even funny. Normally I’d just laugh at you and ignore this but some of your readers might actually believe this tripe so here’s what Net Neutrality is by definition:

    Net Neutrality is the idea that your internet provider should give you the full speed and access you pay them for without it being limited for any specific destination.

    Internet providers are still fully free to charge you more or less based on the speed of your connection. They just can’t arbitrarily limit speeds to any one or more destinations based on whether the destination has ALSO paid you or not. You are already paying for them to connect you to the destination. Net Neutrality just states that they can’t slow that traffic down or block it because the destination hasn’t paid you too. That’s it.

    1. Like I said, and validated by what you just wrote, you want the fast speed and want everyone else to pay for it. I rest my case.

      1. False. I want the fast speed and I want to pay for it. I don’t want it limited by what others are willing to pay. You have it exactly backwards. That’s what Net Neutrality is. My deal with the ISP is for them to deliver the content I request from others. It’s their job as my ISP to figure out how to deliver that. It should not at all depend on whether the end point that I’m requesting data from has paid my ISP as well. I ALREADY PAID THAT COST.

      2. I’m going to state this again in yet another way for emphasis. The cost for dealing with interconnects, bandwidth, etc, etc should already be included in the price that the ISP is already charging me. They don’t then get to turn around and charge someone else for that same damn connection or else they won’t deliver the content for me that again I ALREADY PAID FOR.

  5. Wow, I am impressed. That is the most distorted view of net neutrality I read yet. Lot of BS in there too.

  6. Net Neutrality is a regulatory taking. As stated by the Competitive Enterprise Institute:

    “This applies in the net neutrality context. Instead of allowing broadband providers to dictate terms of service and variable pricing models based on demand, the providers would be forced to allow content creators unlimited access to their networks. In essence, “content providers would receive the equivalent of a virtual easement to traverse broadband providers’ networks.” If it’s a compensable taking for the government to require cable lines to be installed, it’s also a taking for the government to require that those cable lines carry certain content”.
    LINK- https://cei.org/blog/give-take-fifth-amendment-complicates-net-neutrality

    1. Wait I’m this article you complain that it’s going to be a fine text legal battle, but your defence of ISPs double dipping every time I click YouTube is a fine text legal argument? And how will this improve what I pay? All I’m seeing is “get YouTube at the speed your already paying us for, just $5.99/month” ads playing on tv. Best case scenario, ISPs are too scared of the backlash to pull this with big sites, worst case Xfinity can say I’m not aloud to stream any Republican/Dem (whoever it is they don’t like atm) leaning news sites. They can’t deny me access, but they can give me 2kb/sec speeds if they want.

    2. Normally I would say you simply have no idea what the fuck you’re talking, like not even the weakest possible grasp of how computer networking functions, but the far more likely combination is this is just a paid piece, funded by some ISP consortium. So which is it? Are you a fucking idiot who wouldn’t know the difference between digital and analog transmission or are you a paid shill? Maybe both- someone so fucking clueless they accepted money to write about a topic they don’t understand?

  7. This is a sad excuse for an analogy of net neutrality that misses some major points. The author doesn’t even note the huge volume of money spent by the federal government to ISPs for expanding their networks and then ISPs straight up not doing that and it shows in this new age of work from home.

    A better example of your pricing tiers would be, how many different sports do you want to watch at once (this is your down/up bandwidth) except there’s nothing different about the sports with the exception of where the 0s and 1s come from and there’s more in some than others. Nothing changes because I already pay for the speed of access I want. Adding an additional fee to go to X service over Y is just a blatant cash grab. ISPs want to not have to deal with the greater effects of this new digital age we’re in they need to evolve and be better.

    1. You want the entire internet to be like the US Postal Service – snail mail.
      You do not want the options of faster service such as Fed Ex or UPS.

  8. As Jason Hayes correctly mentions above in all his replies to this. This honestly needs to be under opinion piece if the author is not a subject matter expert in Information Technology.

  9. For the moderator, interesting how when there’s more people providing more information and feedback on just how incorrectly the author is on this topic, you seem to be deleting and censoring those posts.

  10. I wish I knew how 0s and 1s could be different than other 0s and 1s but I don’t so I wrote an opinion piece here.

    1. Yes. What Net Neutrality does is obscure the real market price. Without a price signal, internet access rates will rise to the sky just as public education has.

  11. What nobody seems to understand here is with net neutrality you end up with caps and throttling by politicians who are behind the curtain in control. In Australia, for example, they are given a “block” of so many gigs a month. Once they’re gone “poof” no internet period. This means no entertainment, no phone, no online work, until the next month. No thanks, I’ll like what I have, and I’ll support those who oppose “net neutrality”.

  12. Wow what a bs article. The author clearly doesn’t have a technical background and uses really bad analogies to relate to something that’s not related. As another commentor stated, I pay my isp to deliver me the internet, no matter what content I fetch, they need to give me my advertised speeds. They need to negotiate proper peering contracts that help me, not their already full pockets. Blocking this bs news from my feed.

  13. The thing I don’t like about any of this legislation is that it’s horribly written.
    Combining legislation that wants to not charge more for a higher cost of resources, ie. more bandwidth, faster speeds 2G vs 5G etc. is crazy.
    Combined along with charging higher or lower rates for certain content, or timing ie. Netflix on surge time like Thanksgiving is crazy.
    I can’t deny or support either side of this legislation the way it’s written, and instead will just boycott whichever horrible company decides to deploy surge pricing etc.
    Also very important for the government not to overstep and force the market into an irrational flat rate state with BS legislation.
    There are many different ISPs you should be able to choose any of them you’d like, that’s great market, we do not need any legislation.
    If the company wants customers then they should avoid nonsense like surge pricing for specific sites. They can, go for it, but be ready to lose alot of clients.

  14. Here’s a better analogy… Net neutrality = I buy a car and pay my taxes and I have the freedom to drive where I want.

    Non-net neutrality = I buy a car and pay my taxes but I can only go places where my destination had paid a monopoly ISP organization, aka the mob to allow me to pass.

    This article is the most contrived bs I’ve ever read. I pay my ISP different fees for a set speed. What I do with that speed is up to me. Destroying net neutrality puts in a toll for start-ups and stifles innovation and restricts our freedom.

  15. Imagine you’re driving down a road. You want to get groceries because food makes our tummies happy. Food is important so you’re allowed to drive 100mph to get there. The grocery store will cover the extra insurance cost. After you get groceries though, you want to go to a little pub downtown. The little pub is not important and will not cover your insurance. So when driving to the pub you have to go 5mph. Soon, you stop going to the pub. You see the problem here? The roads have different limits from capability already. Why would we also limit the speed by destination?

  16. This is the poorest researched article on net neutrality I’ve ever read disguised behind economics 101. The author of this article clearly is technically incompetent as anyone in the technical industry recognizes the importance of net neutrality (regardless of your political leanings). Net neutrality protects the people from big ISPs who want to charge different prices to prioritize different types of content being served. If you get rid of net neutrality then ISPs are very much allowed to give you a censored internet as they can dedicate zero bandwidth to policies and web pages they don’t like. In this sense net neutrality is essentially equivalent to free speech on the internet.

    1. The net neutrality debate: Why price discrimination can be good thing
      Bronwyn Howell
      May 1, 2014

      Amongst all of the brouhaha circulating following the FCC’s net neutrality announcement, some of the most puzzling comments concern the purported ‘evils of price discrimination’ that will inevitably emerge if – heaven forbid – a network operator dares to charge one person a different price to move traffic over the internet than another person. The mere fact that discrimination could occur is deemed sufficient cause by many to justify its legislative prohibition.
      The ‘evils of price discrimination’ are almost always voiced by individuals fervently advocating for the necessity of universal and uncapped internet access tariffs – often to the extent that metered internet access should be legislated out of existence, so that the digital world can flourish unbounded and ‘free’, just as its instigators intended. If one digs a little deeper, one would probably find that the vast majority of these ardent advocates currently purchase their (uncapped) fixed internet connection in a ‘triple play bundle’ alongside their cable or IPTV subscription and some form of voice telephony service.
      Do these advocates realize the double standard they exhibit when calling for the prohibition of one form of price discrimination while at the same time benefiting from price discrimination that underpins the entire business case of their digital experiences? Because ‘flat rate’ internet access and triple play bundles are simply other forms of price discrimination. If price discrimination is illegal then surely these too must be banned?
      Take flat-rate pricing plans. Suppose A and B both purchase a flat-rate internet connection for $30 per month. In one month, A uses 100 Gb and B 1Gb. A’s usage is more costly than B’s, simply because it causes more congestion on the network. B pays $30 per Gb for traffic moved, but A pays only 30c per Gb. This is clearly price discrimination, as each pays a different price for the same service. It is strictly regressive – the less resource consumed to serve demand, the higher the price paid. The low-volume users subsidize the high volume ones, who generate more traffic and contribute to higher levels of congestion that further disadvantage low volume consumers when all must pay a higher price for flat-rate connections to finance more capacious pipes that must be installed to cope with the increased traffic volumes. This is hardly an equitable outcome – rather, it is a modern day ‘tragedy of the commons’. The solution is, unsurprisingly, metered Internet connections (also known as usage-based pricing) – Just like road tolls and other usage-based charges are used to ameliorate congestion and fund new routes.
      Now turning to bundling. Suppose that a retailer offers stand-alone fixed line voice and internet connections at $30 each. Suppose B values his 1 Gb internet usage sufficiently to pay up to $35 per month for it, but values a fixed line voice connection at only $15. On the other hand, C values voice at $35 and potential internet usage of 1 Gb per month at $20. Under separate pricing, B would buy only internet at $30 (leaving a surplus of $5) as his valuation of voice ($15) is less than the price ($30). Likewise, C will buy only voice (surplus $5) but not internet. Suppose now that the retailer offers a bundle of voice and internet at $49, in addition to the stand-alone offers. If B buys the bundle, his benefit is $35 + $15 = $50, less the price of $49, leaving a surplus of $1. This is less surplus in total than buying the internet connection alone ($5), so he does not buy the bundle – he purchases only internet. He still pays $30 per Gb of internet access. On the other hand, if C buys the bundle, his benefit is $35 + $20 = $55 less price paid $49, leaving a surplus of $6. This exceeds the surplus from buying the voice connection alone ($5), so be buys the bundle. The marginal (extra) price paid for internet over the price paid for voice alone) is $19. So he pays $19 per Gb of internet access. Once again, this is price discrimination – the price paid by C for exactly the same service as received by B is lower. Ergo, bundling enables price discrimination to take place.
      Indeed, bundling plans have enabled many lower-valuing individuals to purchase internet (and voice and cable tv) connections that would never have been purchased under stand-alone pricing. Consider D, who values 1 Gb of internet at $25 and voice at $25. Under stand-alone pricing, neither would be purchased, but under bundling, both are (surplus $1). Network operators have always used price discrimination of this form to increase the total number of connections sold, in order to capitalize on the scale economies that follow from the fact that networks have very high fixed (and sunk) costs, but low variable costs. Price discrimination is absolutely standard in all other forms of transportation – such as senior citizens paying discounted prices on off-peak bus travel, or large discounts for multi-trip tickets relative to the single ticket price – for precisely the same reasons as it is used in communications networks. Often, it can make the difference between being able to make a commercial return on a network/bus route or not, and can bring forward the time at which a network is made available, relative to non-discriminatory (and stand-alone) pricing.
      So is price discrimination really an ‘evil’ that must be eliminated if the ‘net’ is to be truly ‘open’? If it was, then the internet would be a much smaller, more exclusive and less valuable resource than the one that has emerged as a consequence of a raft of highly discriminatory pricing strategies. The good news is that the FCC’s Net Neutrality announcement suggests that “good”(i.e. welfare-enhancing) discrimination will still be possible. So maybe there is a legitimate case for taxing content distributors for the congestion costs that their traffic causes non-consumers in a world of un-metered internet access pricing. Indeed, it may just be the final frontier for internet ‘fairness’ for all – in the same manner as taxing polluters for the costs they cause to the economy or levying tolls to discourage costly road congestion.

      1. With net neutrality, there will be plenty of price discrimination by providers of content. Such as different prices to view baseball games in different parts of the season, games between local rivals, etc. Such as the Netflix, Amazon and MegaHertz streaming channels. Such as Formula One and MotoGP races. Plenty of opportunity for profits and price wars.

        One of the commenters here said there will still be different prices for different speeds. I hope that’s not true; I thought it would be barred.

  17. Bruh what is this shit? That’s not what net neutrality is. Net neutrality is blocking ISPs from throttling specific WEBSITES AND SERVERS!! It’s an issue of freedom of speech.

    Show me the people trying to put price controls based on speeds and I’ll have pitchforks up alongside with you.

  18. This is funny and so sad the same time.Wayne,what you want is the same what China did to their residents – you want to build “Great Chinese Walls”around every ISP inside of the US!Tell you what,I’m from Germany and always had seen the US as a “high tech country”-but since I’m here I found out-this is gone.Your ISPs are all crap.The people you need to call sometimes have no idea and only follow written scripts.Technician have no clue…and for that you are paying the nearly highest prices in the World!Over at Europe I had to pay to my last ISP just 50.-EUR for 100mb down\30mb or so up.Could call everyone in whole Europe with no additional cost and call my son at USA,talking whole day – nothing to pay extra.100 tv channels included.Was a “small company”-because t-online got nearly the same worse like your ISPs – no clue,no good service anymore + higher price.They also try to kill the Internet like it was build and meant to be,like your ISPs.It is lost here,that your employee is your first customer and that you should treat your customer with respect.Now it’s ONLY about share holders and the CEO have no idea about their business(that’s why companies get cracked),but know how to fill their pockets.

    1. Please do not put words into my mouth or article I did not write. The practice of psychological projection is typical of radical Leftists. I never wrote to put walls around the internet. You did.

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