Why the big carriers won't build out their networks

Congestion on the Web means more profits for providers -- and less bandwidth and higher prices for us

The big ISPs and wireless carriers keep promising to build out their networks, which we all want. But while they make those promises with one side of their mouths, they talk to Congress and the regulators in Washington, D.C., with the other, pushing for policies that discourage more investment in their networks.

Yeah, you've heard some of this before. But before you tune out, consider this: The less money the carriers and ISPs invest, the more congestion users at home and at work will experience. That's the risk we face.

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You're already facing data caps and data throttling when you fire up your smartphone or tablet. On the wired broadband side, few people have more than a couple of choices of providers, and the backbone is controlled by a handful of companies with the potential to decide what type of content can move across their networks. Telecommunications policy can be snore-inducing, but it affects us all in what we do every day.

What prompts me to give this little lecture is a research paper by profs at the University of Florida and Notre Dame offering solid proof that when providers are allowed to favor one type of content over another -- the opposite of Net neutrality -- they have little incentive to invest.

"ISPs would profit from a congested Internet in which some content providers will be more than willing to pay an additional fee for faster delivery to users," say the authors, Hsing Cheng and Subhajyoti Bandyopadhyay of the University of Florida, and Hong Guo of Notre Dame.

More congestion equals more profits

To understand their logic, consider this thought experiment: Imagine that you own a freeway -- say, Highway 101 through Silicon Valley -- and you had the power to pluck a car from a traffic jam with a helicopter and deposit it on a clear stretch of the road. Naturally, drivers who could afford the service would be happy to sign up.

"That highway is like the Internet, and the individual cars are the packets of data. The ISP is essentially the gatekeeper that controls the flow of cars on the highway. If the ISP is allowed to snatch any car from the back of a very long line and put it in front of everybody else when the driver of the car pays a priority delivery fee, would the ISP have an incentive to keep the road congested or to expand the road capacity?" they wrote.

The answer is pretty obvious: If you can make more money by keeping your network congested, why would you invest money to make it less crowded?

How the researchers prove their conclusion is complex. In essence they built an economic model based on game theory that compared industry returns under two conditions: one in which Net neutrality is mandated and the other when it is not. That may sound abstract, but game theory has become a well-accepted tool of researchers in economics and business.

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