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Directive Blogs

Directive has been serving the Oneonta area since 1993, providing IT Support such as technical helpdesk support, computer support, and consulting to small and medium-sized businesses.

The Monopoly of ISPs

The Monopoly of ISPs

Many of those in favor to end net neutrality focused not on the issues of technology, but on the principles of the 'invisible hand,' otherwise known as the free market. Their argument, as espoused by Ajit Pai, is that regulation - particularly that of net neutrality - stifled innovation, and it’s that lack of variation which is the cause of so many of us being stuck with crummy internet options. In fact, Mr. Pai has a valid point, states and countries with multiple ISP services, do seem to have better outcomes for their customers. The problem is most of us don’t live in those places and don’t have many, if any, choices but one or two.

The ugly truth is in most of the United States; customers have access to only one or two ISPs and more often than not, they keep their services and prices inline with each other. Competition doesn't work unless there’s real competitors, not two businesses with a ‘gentleman’s agreement’, not to ‘compete’ against each other. This means particularly in rural, semi-rural and suburban locations, there is little to no competition and therefore no true free market.

In a perfect world, we all could have the ability to choose between a variety of ISP vendors and services. This in turn due to market pressures, force them to work for our business or we can choose to take our business elsewhere. The free-market in action! The thing about having choices is that if you can only choose between a substandard product or no product at all, then you don't have a reasonable choice.

Ask yourself this: are you happy with your ISP, or do you tolerate them? Think about this, what do you do when you’re not satisfied with a service? If you are able, you change for something else. That’s how the free market is supposed to work: if Ford’s making lemons, you switch to Chevy. Your plumber doesn’t turn up; you call another. Your ISP increases your rates, you...? Your internet is unstable or slow, you...?

You do nothing, because you can’t do anything - except cancel and do without, and that isn’t possible for most of us.

So why don't you change your ISP, why are they still in business? Undoubtedly other people must be dissatisfied with them as well, right? Just search and read the myriad of consumer pages. They remain in business and continue the same practices which fill so many customers with grrrr. Shouldn't the free-market force them to listen to their consumers or go out of business? The invisible hand doesn’t choose winners or losers, the best and brightest thrive, while those who aren’t nimble enough fail.

They don't because they are immune to pressures of the market. The only business entities immune from market pressures are those that operate as a monopoly, even if it’s a de facto one. A monopoly is inherently in opposition to the free-market and removing the protections afforded by net neutrality, under the guise of supporting the free-market, is an insult.

Many of us run businesses; we know how hard it is to compete against larger firms with much more resources than we have. However, for the most part, we compete on our terms because we know that if we produce a superior product, provide superior customer service, attempt to connect with our customers and strive to innovate, we will be able to grow our business.

The larger ISPs who will benefit the most from net neutrality ending, don't, won't and haven't had to compete for some time now. As a monopoly, they don't have to, and ending net neutrality won't change this; despite the assurances that it will. All it will do is give them more power and less reason to innovate, as there is no natural market pressure to motivate them and no rules to hold them in check.

The question is what happens now that they are free from what little controls they had placed on them? There are two thoughts on this. One is the obvious practice of prioritizing content they have a stake in monetizing. In other words, throttling ‘unauthorized’ content, unless you either sign up for a service or pay for a higher tier. Of course, they could just charge the content provider additional fees, but those fees will just be passed on to the consumer.

The second one (and the one I think will be more likely) is that they will monetize your data. Think about how valuable your data ‘fresh off the vine’ so to speak would be to advertisers. No pesky Google to go through or pay, no ad blockers to avoid, just sweet, sweet data straight from the source. A good way to protect your data is with a VPN which ‘hides’ your information, making it difficult if not impossible for your data to be accessed.

Net neutrality provided some protections to keep at least some of your data secure. Now that it’s gone, your ISP can share more of your data for advertisers to use to sell to you. In six months from now, all privacy advocates may find they are longing for the days of Facebook and Cambridge Analytica...

What do you think? Do you think this change will last very long, or do you feel there will be a rebirth of neutrality once the consequences become apparent? Leave your thoughts in the comments section.

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Wednesday, July 18 2018
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