Level 3 Communications

Mark Taylor

Part 2– Let’s play Monopoly with the Internet

Published May 27, 2015

In order to understand how the dangers, suggested in part 1 of this series, may affect you we first need to take a step back.

The Internet has leveled the playing field – a truly revolutionary change to the way we can do business and the types of business we do. I have likened it to a new industrial revolution. And, in doing so, I also pointed out that 75 percent of the economic impact from the Internet accrued to traditional and, mostly, small businesses. Not to the huge “Internet” companies we read so much about.

small business in Vermont making jam in a very traditional way can now market their goods not just to the 12,000 people in their hometown, as they did for 30 years, but also to the 320 million people in the United States. And many other companies can sell their goods and services to the 3 billion people worldwide that have access to the Internet.

Millions of companies, non-profits, government agencies and individuals now do this. And they do it by setting up a website or building their application into the infrastructure of the Internet. Sidehill Farm used a small local Web design company to build their website. They, in turn, used storefront software from another company and then hosted the site with a large Web hosting company. That hoster is connected to the Internet through multiple network operators like Level 3.

There are a large number of companies providing all sorts of services that enable other organizations to build a presence on the Internet. This is an extremely competitive, innovative and dynamic environment. Choices to get online exist even in the smallest community. Services available cover a vast array of different capabilities designed to enable any sort of business, from a small farm selling jam to the largest financial institution dealing with millions of customers worldwide. And there are countless “connectivity” options (like Level 3) from which these entities can chose to get their content to Internet consumers who want it.

You can think of all this collectively as the content “side” of the Internet. Putting your business on the Internet allows for unfettered access to 3+ billion eyeballs on the other “side” of the Internet. It is like building your shop on a street where almost half of the world’s population may walk by.

That access to billions of potential customers is why all the value has been created – and created by mostly small organizations. This is the dynamic, innovative environment that gets talked about in relation to the importance of the Internet. You and I get to access everything online from that small farm in Vermont to our bank account operated by a huge global financial institution.

The content side of the Internet is incredibly competitive. But the eyeball side of the Internet isn’t. In the United States, consumers mostly have a single choice of provider for high speed Internet access. And therein lies a big danger for the continued economic value we have already created.

What if the content side of the Internet had to think about the eyeball side of the Internet every time a new business, big or small, went online? What if a large ISP in the United States had a special relationship with a massive food retailer that didn’t stock Sidehill Farm jam? Might that result in Sidehill Farm having to pay extra (either directly or through tolls charged to each of Sidehill’s content distribution partners like Level 3) to get access to that ISP, or access to the Sidehill website becoming much, much slower, or Sidehill simply being barred from those eyeballs altogether?

What if that ISP also created its own banking operation and access to my bank was similarly degraded, blocked or my bank passed on an extra charge to me?

And then what if not just one ISP, but all ISPs operated like this? And did so with different relationships, different payment options and different performance options?

The smaller companies, non-profits, government agencies and individuals simply wouldn’t be able to deal with the added complexity and burden even if they wanted to. They would have no option but to use the most basic access to the eyeballs available. They could be crowded out by the very largest content brands. And, as I suggested at the beginning, that means 75 percent of the value we have created through the development of the Internet may go away.

This is why Net Neutrality is good for businesses worldwide. The Neutrality rules treat the near-monopoly ISPs who provide last mile access to the Internet as common carriers. A definition that means all content should be treated the same and no unreasonable discrimination between different types and sources of content can be made. The ISPs are still completely free to charge their subscribers whatever they want in whatever way they want. They are free to invest, or not, in the products and services they build and sell. They simply now have an additional obligation (one they have mostly been following for the entire existence of the Internet anyway) not to discriminate. This levels the playing field on the eyeball side of the Internet in a way that competition is unable to do; because competition doesn’t exist in that space.

 Don’t miss the first article in this series Let’s play Monopoly with the Internet – Part 1