Explaining Net Neutrality to My Dad

It’s late Saturday night after an awesome day in Las Vegas with my dad. We are doing our annual father-son weekend, where we head out on Friday somewhere he wants to go and return Sunday afternoon. Don’t ask my why we ended up in Vegas – it’s a mystery to both of us, but we are having fun.

Today we bought some art at the Martin Lawrence Gallery, tried to buy tickets to Rod Stewart but finally gave up, headed down to Downtown Las Vegas, had lunch at The Container Park, hung out with Tony Hsieh for a while at his new Airstream Park, had ice cream twice, dined at Nobu at the Hard Rock, and spent a lot of time talking about the government, health care, and net neutrality.

If you read my dad’s blog Repairing the Healthcare System, you know he’s incredibly passionate about healthcare, the importance of the relationship between the patient and the doctor, and how the current administration is completely bamboozling the public while subsequently nationalizing the healthcare system. Ok – that’s probably too soft – he’s certain that the system is being completely destroyed and a total collapse is imminent.

I’m not in the same headspace on this as him so we have entertaining conversations about it. I try to learn as much as I can by listening to him, challenging his assumptions, and going back and forth – sometimes lightheartedly – with my favorite Battlestar Galactica quotes, including “All this has happened before, and it will happen again.” And, as a classic misdirection on my part, I ask him “What do you think Ben Franklin would think of that.”

We have a lot of fun and learn a ton from each other. So when the conversation turned to Net Neutrality, I felt obligated to separate fact from fiction for my dad while at the same time understanding how someone like him was hearing what was going on. Not surprisingly, his understanding, which is consistent with the “anti-government” message, is to be absolutely appalled that the government is trying to control the Internet. Which, after an hour of talking about it, he started to understand that wasn’t really what was going on, or what the debate about the FCC, net neutrality, and Title II was really about.

Over ice cream (#3 for this trip) I drew him a detailed picture on a napkin of how the Internet actually worked. I rarely do this since I just assume everyone understands it. Bad assumption. It was fascinating to answer his questions, explain the parts he had wrong, and help him understand some nuances around data and how it gets from one place to another. At some point I mentioned John Oliver and Cable Company Fuckery to him.

We talked about a bunch of other things at dinner, forgetting for a while about health care, net neutrality, and the government. After ice cream #4, as we were heading up to our room, he said, “Show me that John Oliver thing on Net Neutrality.” So I did. And, if you haven’t seen it in a while, or have never seen it, it’s worth another 13 minutes of your life.

After he saw it, he said, simply, “I get it, but I’m still suspicious of the government’s intentions here.” So we watched a few more videos including this really good summary on The Verge.

We finished things off with the awesome testimony from Brad Burnham at Union Square Ventures in front of the Judiciary Committee last fall. My dad knows and really respects Brad, so after seeing this he totally got the whole picture.

  • James Mitchell

    Here is a simpler way to think about it. Comcast thinks net neutrality is bad. Therefore, the odds are higher than 99 percent that it is good.

    • Friendly Russian

      Just curious. Comcast thinks that net neutrality is bad, or “communicates” that it thinks … Do you trust the con man with a record?

  • JLM

    .

    Net neutrality, like world peace, is a good idea when the mermaids and the Easter Bunny are discussing it. It is difficult to be against it. I am in favor of it and I rarely discuss things with the Easter Bunny. I do speak with mermaids from time to time.

    The problem is with putting the industry’s neck in the yoke of the government. I love our country, I do not trust our government.

    I was a professional soldier once upon a time. I enjoyed serving our nation. The draft was a little dicey. Good and bad continually co-exist whenever we are in touch with reality. The greatest honor I have ever been afforded was the trust placed in me to command the sons of America’s mothers.

    Still, I learned to distrust the government. They continually mislead us about the nature of wars. Remember, I was a professional soldier and prone to drinking the kool aide. I became cautious.

    Here is what subjecting the Internet to Title II of the Telecommunications Act of 1996 is really going to do.

    First, the 332 pages of regulations are going to be enacted in secret. They will not be shown to the public until after the FCC takes a vote. The mermaids and the Easter Bunny are OK with this — me? No.

    There has never been a body of regulation that has really supported innovation. Regulations always pick winners and create losers. The guy with the best lobbyists is going to be the winner and the rest are going to be losers. The entrenched Old School always tries to kill the scrappy New School. It has always been so. Take a look at how the SEC slow played the JOBS Act.

    This body of regulation was overseen by Chairman Tom Wheeler whose professional career was spent as a lobbyist for telecom. Who do you think will be the big winner in the “secret” rules?

    Regulations always impose costs — think telecom, air travel, gasoline — and this will be no different. The administration is lusting after every opportunity to impose and raise taxes — witness the real estate transfer fee baked into Obamacare.

    Did you know that buying and selling a house was going to be taxed by the Feds as part of healthcare? Now you do.

    BTW, did you realize that current Treasury receipts are the highest in the history of the US. Every year, every quarter. We do not really have a revenue problem.

    So, I cannot get comfortable with the imposition of taxes through regulations when all revenue bills are to be initiated in the House. I am particularly uncomfortable with taxes created by regulatory fiat rather than acts of Congress.

    This is the real reason why the FCC and the Obama administration want to jam the Internet under Title II of the 1996 Telecom Act — it already exists and grants taxing authority. They could never get this tax bill through the Republican Congress today.

    This body of regulation will be enacted in secret. It will not be what everyone thinks it will be. It will stifle innovation. The lobbyists will determine who the winners shall be. There will be new taxes.

    Why is it being done in secret?

    I wrote about his here. http://themusingsofthebigredcar.com/net-neutrality-madness/

    It is difficult to see any other outcome. Hope I am wrong.

    JLM
    http://www.themusingsofthebigredcar.com

    • I hope you are wrong also!

      • JLM

        .
        We are kindred spirits as it relates to the policy we both want to emerge and why.

        I am, perhaps, a bit more cynical that things done in private by folks of clear history and motivation are not done secretly for a purpose that does not serve the public.

        We will know the score in a few weeks.

        JLM
        http://www.themusingsofthebigredcar.com

        • Indeed we will. And if it doesn’t serve the public, I’m quite confident the backlash that John Oliver unleashed last time will look modest compared to what will happen.

          • JLM

            .
            I would normally agree with you except for the reality that the opponents are learning organizations.

            They now know what to expect. One of the basic tenets of warfare is to learn what your enemy does and then be prepared to counter it. Legislation and regulation are warfare.

            America loses the first battle of every war we ever fight because we have to learn the enemy’s tendencies. Generals are constantly fighting the last war.

            The telcos are pretty savvy competitors — the FCC rules are not being made public before the vote at their behest.

            They have slapped their lobbyists in the face with their checkbooks and they have learned what the opposition will do.

            In the military they would call it a reconnaissance in force and a movement to contact. You find out where the enemy is and their tendencies and then go engage them.

            Once they are fixed to a spot, you kill them.

            JLM
            http://www.themusingsofthebigredcar.com

      • Friendly Russian
  • I’m with JLM on this. In principle, Net Neutrality sounds a great idea. In reality. we’ll get the Department of the Internet and all that implies. In order to enforce net neutrality does the government not have to get in the business of inspecting packets? (notwithstanding the NSA already doing so 8)).

    The other thing I find odd is that we’re undertaking such a major change with very little evidence of any real harm. Where are the millions of consumers being harmed today? There’s lot of theory around how a telco *could* do nefarious things, but not much evidence of them actually doing it. First, Do No Harm.

    A better approach would be to find a way to stimulate competition between the cable operators.

  • Your father is dead on when it comes to healthcare. I have read his blogposts on it and he is extremely insightful in describing what is going on. Ironically, the data backs him up. M+A activity has skyrocketed since Obamacare was passed. The little guys die, big guys get bigger-prices and lobbying dollars spent go up.

    I am empathetic to your arguments (and other’s) on net neutrality. However, I don’t trust, nor do I think the FCC is anywhere near capable of executing any semblance of the endgame that both of us want. Professor George Stigler mathematically defined how regulatory capture works. Net neutrality and the big Telco’s won’t be any different.

    I agree with others that have said this will eventually be seen as a way to tax, control access and will inhibit innovation rather than do what it’s supposed to do. I don’t think you can point to one instance of government regulating business and increasing competition, while helping the little guy. It’s why the stock prices of the telcos went up on the news.

  • Yup, there is irony in so-called competition when the top 4-5 players are in a monopoly situation instead. Same with Canada’s telco’s- Telus, Bell and Rogers keep blocking serious competition like WIND.

  • The John Oliver act was awesome, not to mention plain hilarious — thanks for sharing, I didn’t know about it.

    And I’d say you’re blessed having family relationships like that.

    More power to you.

  • williamhertling

    I want to see pictures of the napkins.

    • I knew I should have taken a photo of it. I’ll have to recreate it at some point.

      • Philip Smith

        I look forward to seeing the napkin or the digital version thereof.

  • Chris Heivly

    F’n Dads are the best. That’s all I got to say about that.

  • I’m your age, but I think like I’m their age. This has nothing to do with how the bits move around. It has to do with people exerting influence. These additional govt constraints will be exploited in the form of creeping taxation and regulation motivated by politics. The result, supported by many cases in history, will be a slowdown in innovation. I know you and Fred and many other influential VCs have advocated for this but I’ve always been curious why so many who spend their time fostering innovation would cling to a govt solution for problems that could obviously be solved without them. I believe the baby’s really been thrown out with the bathwater on this one. Get ready, Title II sucks.

    • Friendly Russian

      Frank, I wonder why a few libertarian minded successful entrepreneurs have not yet turned up with a prize to a market alternative to Net Neutrality. Then a case can be made to give people a reasonable time, before forcing government solutions.

      • I really don’t know. The underlying root of all this is a silly revenue dispute between Netflix and the carriers. My God people, do we really need to have the govt clamp down on the Internet in order to solve this? The consequences of greed…

        I guess the good news here for the VCs is there will be a whole new swath of startups they’ll be able to pour money into that will be trying to circumvent these new restrictions as they come along.

  • kermit64113

    I was a former President of Sprint’s Wholesale unit which provided Voice over IP services to 14 different cable companies. Phone was an essential element of the triple play offerings that let a lot of growth in the 2005-2009 time period. Sprint had over 3600 rate center points of interconnectivity and over 500 local exchange “trading partners.” We grew the business from 160,000 lines at the end of 2004 to 5.2 million lines mid-2009 when I left Sprint ($700 million in annual revenues with minimal acquisition expenses). We were regulated under the terms of the 1996 Telecommunications Act. Regulation is not fun and most of the reporting we had to do was never used.

    I left the comfortable confines to form a start-up which focused on a better caller ID for mobile devices (Mobile Symmetry). This application had to take the incoming phone number, interrogate data within the smartphone and in the cloud, mediate that data, and deliver relevant contextual information it to the terminating smartphone by the second (or third) ring. I would gladly have paid for a fast lane but none was available. But we made it work as well as we could and sold the company for a good gain in 2011 to Reliance Industries of India where it’s going to be used as their Caller ID mediation platform.

    I realize this is a unique application, but for every starving entrepreneur who is going to have to sit in traffic dominated by YouTube and NetFlix “oversized load” packets, it’s sad to think that the fast lane market opportunity was removed. I wish some VC had the insight to look at this as an addressable market “minus” rather than a gain. – JIm Patterson

  • Friendly Russian

    In the book Startup Nation, then Israeli President Shimon Perez admits knowing nothing about economics. What % of US politicians have even rudimentary understanding of economics? What % knows enough to make decisions based on economics rather than politics?

    Just read an interesting piece with the following insight about recent credit cards regulation(s): ”

    “While generally helpful in making credit card interest rates more transparent to consumers, the Act had the unintended consequence of draining available credit, particularly for anyone in the U.S. with low- to moderate-income and subprime credit scores.’

    ‘Because banks could no longer adjust interest rates on existing balances (as a result of the Act), they began to take fewer lending risks, and granted less credit to consumers with little credit history.”

    http://www.forbes.com/sites/truebridge/2015/01/05/on-the-road-to-economic-recovery-fintech-races-on-while-banks-sleep-at-the-wheel/

    This reminds me about France’s high unemployment among college grads. Because employers cannot fire college grads within 4 years of hiring, French employers simply do not, -or to be precise, highly selectively -, hire college grads …

    The history of regulation is packed with dire unintended consequences. I bet there are plenty of similar to Net Neutrality regulations in this and other countries that produced plenty of unintended and highly undesirable effects.

    This thread is for people with higher than average intelligence. What unintended consequences can people on this thread reasonably expect for Net Neutrality regulation(s) to generate? How about economists with integrity?

  • http://streetwiseprofessor.com/?p=9129 This is a great economic discussion of the net neutrality issue. What’s the most important part of a marketplace? Price. The blogger is a PhD in Economics and understands how to break down a market.

  • The jews/communists are having their buttboys in Congress and the FCC restrict the internet so REAL CHRISTIANS and REAL CONSERVATIVES can no longer tell the truth about jews founding communism (http://ow.ly/eRYm7) and engineering 9/11(http://ow.ly/FR1pp). (Of course, that’s not how they would ever frame their arguments – they’re never forthright.)

    Under the emerging rules, if we continue to expose this synagogue of satan bent on turning America into the next Soviet Union, our IP address will be blocked and we could be arrested.

    You’ll notice none of the mainstream media has even warned us about this. Why not? Because they’re all jew-owned, they don’t want to spill the beans on what their masters are up to. During the last fifty years, our jewish overseers have made it policy to slide major legislation right on by us without saying anything.

    Like electricity, the internet was intended to be accessible by everybody. After all, our taxes paid for its development. Not the jews’ taxes – they don’t pay any.

    It’s bad enough that jews/communists own our economy, our legal system, & our media, we don’t want them to own the internet too. They’d have the same dictatorial control over content that they’ve exercised over conventional media for fifty years. In a nutshell, you’ll be able to criticize anybody else but them.

    “To learn who rules over you find out who you’re not allowed to criticize.” – Voltaire. In America’s case, it’s the jews (communists) we’re not allowed to criticize.

    Many Americans will continue to be taken in by the jew/communist propaganda they see on jew-owned TV – like their counterparts 100 years ago who helped the communists take over Russia – but America’s future is counting on you to be a Real Man and a Real Patriot and stop this bullshit in its tracks.

    Contact the FCC to demand they keep the internet a level playing field. To demand that they don’t give telecommunications corporations the right to decide who’s worthy of service and who isn’t. Too many jews/communists sit on the boards of these companies, and they’ll make sure their critics are not heard.

    You don’t want to sit out this battle then feel like a spineless coward when you look back on it in ten years. Knowing you could have helped America remain a free country but you chose to believe who are really your worst enemies rather than your brothers in arms.

    And if you don’t think the ability to communicate ideas unhindered has a relationship to freedom, then you’re not thinking at all.

    Don’t be a traitor.

    Truthmonger.info