Content providers pay for their bandwidth. Say it with me, slowly: content providers pay for their bandwidth. Sound it out delicately, like you’re holding a robin’s egg on your tongue. Focus on the sound of each phoneme. Write it a million times in Dnealian your editorial notebook: “Mrs. Content Providers Pay For Their Bandwidth” (you may draw a heart around it, if you think it would help). Ask Judy Miller whether she can tat you up with it if you can find her a Bic pen, a needle and some wine you brewed in the toilet.
The fact that the content providers pay for bandwidth means that a market exists. A market that will drive innovation and the development of infrastructure as necessary, if the economists are to be believed.
So true! And remember yesterday, when we learned about the poor, suffering telecom companies that don’t have the money to build a better network? Let’s look a little further at the situation:
That’s funny. I always thought that the phone companies were suffering because fiber networks were massively overbuilt during the late 90s, and because the digital revolution is drastically reducing the margins available in the phone business. And I thought that Asia and Europe had better internet services because of higher population density and large government subsidies, not superior market conditions. And I thought that utility stocks, with their emphasis on reliably high dividends rather than potential for gains in share price, weren’t generally supposed to have higher P/E ratios than high-tech companies that went public less than two years ago. Shows what I know.
I’m glad that Tom was able to put all that together for me, because it was all stuff I did know, but was too lazy to research myself. Well, maybe not the stuff about P/E ratios.
Meanwhile, Matt makes the same argument I did:
Here’s a quick-and-dirty experiment that can prove the point to readers. Try to start a website. Go do it now.
Give it a shot, and you’ll see soon enough that to start a website you need to pay someone to host it and for the bandwidth it uses. Right now, my website is a TypePad site. To start one, you need to pay Six Apart a monthly fee. As you’ll see here, for $4.95 a month you get two gigabytes per month of bandwidth, whereas $8.95 a month will get you (among other things) five gigabytes per months of bandwidth. It costs money. As it should. Bandwidth is a valuable commodity, so if you want it — either from a user end or from the content provider end — you’re obviously going to need to pay for it. Which you do. This is a total red herring as far as the neutrality issue is concerned.