In Search Of Open Internet Access

Our regular programming, MBA Mondays, is being interrupted this week for a public service announcement.

The net neutrality debate is front and center again. FCC Chairman Julius Genachowski has announced that he will ask the FCC to adopt rules to protect the open Internet at its open meeting on December 21st. We have not seen these rules. Apparently nobody has outside the FCC. But we have been briefed on them. And we think that with one small tweak they will work well. But without that small tweak, they are problematic. My partner Brad has posted our firm's thoughts on the USV blog.

Back in the 80s and 90s, you could start, build, and invest in cable based services. But in order to get your new company distribution on the cable system, you'd have to go to the cable MSOs and give them free equity in your company for distribution. This mafia style shakedown has not existed on the Internet thank god. And the result is literally millions of web services and trillions of dollars of shareholder value.

That's what this debate is all about. The advent of broadband internet access has resulted in a duopoly in most markets. And the companies that provide you broadband internet access want the ability to "manage their networks." We think it is critically important to set some rules on how they can manage their networks to make sure we don't recreate the cable monopoly on the Internet.

We'd love to have an open and unregulated Internet access market. That will take a lot more competition in the last mile than we have now. We need policies that allow the spectrum and fiber to the home to become available and the capital to get invested in making that happen. Until that happens, we need some rules to keep everyone honest in the Internet acccess market.

The FCC's proposed rules prohibit unreasonable discrimination but don't define what that is. We think they need to go that extra mile so that startups don't end up in expensive lawsuits with monoplies with huge bank accounts.

And we are proposing that the FCC adopts the following language:

A non-discrimination rule that bans all application-specific discrimination (i.e. discrimination based on applications or classes of applications), but allows application-agnostic discrimination.

The logic and reasons behind this approach are laid out in our blog post on the USV blog. If you are interested in this debate, and we think you should be, please go read it.

#VC & Technology#Web/Tech

Comments (Archived):

  1. Kevin Morrill

    Fred so glad you’re talking about the longer term goal of tearing down the monopoly. Long term, government needs to get out of the communications market and let people make intelligent decisions about who they want to work with.I couldn’t disagree more about what we need to be doing in the short term though. Giving the FCC, and thus Congress, more power to regulate is a thousand times more likely to cause censorship and destroy nascent markets than anything providers like Comcast will ever do.

    1. fredwilson

      The rules the FCC may adopt are very light and focus on access not the Internet itselfYou are falling into the trap the access providers have laidThey are trying to position this debate as regulating the internet when in fact it is about regulating them

      1. Prokofy

        The Internet is also about them.This pretense that some vast, free utility called “The Internet” is something that creates your own mental trap.The Internet is a series of tubes that companies lay and pay for, and then charge us to get stuff through.

        1. kidmercury

          oh really prokofy? how about the spectrum that enables the connectivity of the internet? who owns that prokofy? hmm?yeah. that’s what i thought prokofy.

          1. Aaron Klein

            Kid returns! We missed you, man ;)As a free market conservative, this is exactly my point. I want telecom providers to make big profits providing internet access. But if they’re going to do it over public spectrum and public right-of-way, then they’re going to do it fairly and give me open non-discriminatory access.Tiered pricing and usage metering are fine. I should pay for what I consume.I really hope an unlimited option is still available to me at a reasonable price, but I’m steadfastly opposed to any government control of pricing.

          2. ShanaC

            I missed you kid – but she is right that the big pipes connect to the towers. The question is more are these pipes like Aqueduct pipes for water to NYC, or are they like private corridors between buildings in Chicago that are underground…

          3. kidmercury

            though i don’t think the internet is just pipes. those pipes are not much value without the spectrum that works in conjunction with pipes to create the internet experience. prokofy is quick to espouse the private nature of pipes, but remains silent on ownership issues pertaining to spectrum. (she’s probably just afraid to comment on that)

          4. paramendra

            Welcome back. Where have you been?

          5. fredwilson

            it took a net neutrality post to get you back?i guess i’ll have to write more about it

          6. kidmercury

            can’t control myself on political topics. and then when i saw prokofy was here……lol

          7. CJ

            Glad to see you back Kid!

      1. baba12

        Painting the FCC or the Government as blocking is not accurate, the FCC is just a body being asked to enforce the rules, those rules are written up by our so called elected representatives. Those elected officials have not really represented the public but represented corporations and the highest courts have stated corporations are equal to individual citizens too.So the only way to change that is a civil non violent disobedience but for that to happen you need a enlightened leadership and a public that is not stupid, two things we don’t have at the moment.I

        1. kidmercury

          lol unfortunately i agree with much of what you are saying. 🙂 if the technologists ever wish true freedom it will be theirs, but if they believe the current government can magically make it happen i think they are mistaken.

        2. Prokofy

          A total misportrayal of what’s happening. Not only is Chairman Genachowski writing the rules to ram through, he’s overstepping executive power. The courts already checked and balanced him, he’s trying to overstep again. He won’t succeed.

    2. baba12

      Your view is probably the same in terms of how could Government do a better job of providing health insurance compared to private providers, even though there is data that shows they do a better job managing Medicare. But I digress, having the fox guard the chicken coop is something only a fox will warrant. If you think Comcast acts in the best interests of the people it serves then you are mistaken, their agenda is to maximize shareholder value by any means, to them having regulations impedes that ability. In the case they are against regulation they rightly fear that they will become dumb pipes and that is not profitable for their shareholders, but if they are smart they would see the glass half full not as they see it half empty…

    3. Andrew Greene

      What kind of censorship do you foresee the FCC proposing in the future?

      1. ShanaC

        No curse words and no skin until after 10 (ok bad cable joke)

  2. Kyle Marler

    Sounds like a great concept, but I’m wondering whether the term ‘application-agnostic’ is not facially obvious as to its intended meaning. For the sake of legislative clarity, it might be best to suggest more explanatory language.

  3. christopolis

    Will you also be supporting tweet neutrality and search neutrality? They own the networks. Ownership means the right to use as you see fit assuming that use doesn’t violate anyone else’s rights. You have no right to control the use of other peoples stuff and there is no right to internet. You may be able to achieve this through the force of government but it will never be right or your right.

    1. fredwilson

      The duopolies were given their rights by the governmentGoogle and Twitter earned their market power. And as I said in yesterday’spost, it is fleeting and fragile

  4. Peter Steinberg

    I’m curious — how is a broadband provider supposed to tell the difference between “applications”? How does a bandwidth-hogging 1.5gig rented movie from Apple look any different than a 3meg purchased song? It’s all just bits going from point A to point B, no?

    1. fredwilson

      Deep packet inspectionAll the big providers have deployed it by now

      1. gzino

        Deployed but not able to be used effectively and efficiently for this purpose. Which is part of the concern – even with best intentions (debatable), execution would cost billions if ISPs were to prove to FCC that they are not breaking (even lighly defined) NN and for FCC to have visibility. That money IMO would be better spent opening up access and deleveraging the monopolies.

      2. Prokofy


  5. baba12

    In a country where Regulation is deemed anti business and with a virulent corrupt and vicious business community that owns and operates the so called elected representation we have as citizens, I am doubtful the best interests of society are really going to be protected.If you look at the language used by FCC the idea is to help regulate providers of broadband access, while the lobbying power of the business community has defined and marketed the debate on regulating the “internet”.In a country full of stupid idiots it is very difficult to challenge this lobby. All the energy spent now by the other side is trying to state that it is not regulation of the internet and that energy has not been well spent and often has fallen on stupid deaf ears.I personally believe that just as having free basic education is considered a birth right for every citizen in the U.S., we should have access to broadband internet service should be a basic civil right and if to provide it to everyone requires that the access providers need to be regulated as a public utility is, then we need to make sure the legislation is passed to make it happen.As of now the way I see things unfolding, the ball-less congress will legislate to make sure there is tons of grey areas left for lawyers to make millions of dollars.Deciphering this wishy washy hodge podge of rules to be defined will help USV if they invest in law firms focussed in this area.* :)…If you want course correction then you have to edumacate the electorate about why it is important to have regulations and how it benefits them.Do we have any businesses that are upto the task of doing that willing to take out full page ads in newspapers, magazines, blanket the airwaves, maybe a few but not enough to have a critical mass.Many of the people who read this blog post are libertarian or conservative. They have never had to face civil rights issues as most come from privileged backgrounds, their views are all about letting “free” markets defining the rules and believe regulations stifle their ability to amass wealth.Thus it would be interesting to read how they would participate in your view Mr.Wilson to support your views around this topic…

    1. Prokofy

      This is just a hysterical and tendentious notion of what government is.Government is elected, and it isn’t the corrupt distorted thing you imagine it to be — you are hobbled merely by a worldview dictating extremes.Same for business, which responds to the bottom line dictated by consumers, who are people.Education isn’t free, it’s paid for by taxes. There are only so many socialized goods you can supply in a society without crippling its business which creates wealth and jobs. Sorry that we can’t pay for your lunch and your Lost episodes and WoW downloads.Your notion of “education” is in fact merely re-education and agitprop.Fred can characterize this as a “business” or “capitalist” issue by being a kind of venture capitalist. But he’s self-interested here.

      1. baba12

        Well Im not hobbled by any world view. I see how things work.As for public schools funded by taxes, yes funded by property taxes. What makes one neighborhood have a higher property value than another is merely deemed as “LOCATION, LOCATION and LOCATION”. That is not a fair system.As for how business that creates wealth maybe you can take a look at history in this country and see where without government help a business created wealth.Be it the rail roads (got very subsidized lands to build the tracks) or now the digital highways we call the Internet.No private business has the capacity to take on fundamental research and development that only government can and should do.If wealth then is created of those platforms that benefits all thats great.In the case of the net neutrality argument there are the few who would like to make the access to broadband be dictated through pricing mechanisms that are discriminatory to those not economically well off. They would not like true competition, and would want to legislate to maintain the status quo. If the local governments owned their own broadband infrastructure paid for by the tax payers then there is a possibility of having a fairer level field for all to build upon.In any progressive society they tend to have a more level field.If the role of government is purely to defend and to manage the finance then I would guess you would never have had the creation of many products and services that come from education delivered through State funded universities.As for Mr. Wilson having his self interests possibly true but I am not discussing from that standpoint. I am only looking at it from a standpoint of what is fair and governments role has been corrupted and that needs to change

        1. Prokofy

          Schools are not funded exclusively by property taxes only. Sorry, but I’m not a socialist and I find it a perfectly fair system to have location determine property value — it’s life in the big city, and life in a free and open market not hobbled by socialism.Government programs to promote business will always be needed, but that’s not an excuse for government to run business or control business.You use the same old lame arguments that socialists always make everyone questions their lame ideas of restricting freedom — you lurch wildly around making it seem that any questioning of your collectivist worldview means that the challenger somehow doesn’t appreciate the role of government in a civil society and doesn’t agree that government should supply social goods like welfare, schools, or roads. That’s ridiculous — our country does all those things without being socialized.The Internet is not a local phenomenon. The arguments about the last mile can’t disguise that.Of course it has to be decided by pricing mechanisms as the only fair way, otherwise the cronyism inevitable to any government, particularly socialist government, will dictate it rather than auctions.”Progressives” use this word to describe themselves to imply they are for “progress” and modernity. They aren’t. They are ancient tribalists re-collectivizing property as in the dark ages.I shrug about your silly nostrums about state universities. They are needed, but so are private universities. The idea that some research, but certainly not all of it, comes from government-funded studies is never any reason to socialize even more aspects of society and hobble it.The Soviet Union collapsed with an ideology such as you are pushing. Read history.The corruption of government is never an excuse to add more corruption that always and everywhere comes with communism. Look at the Transparency International corruption index.


    The main problem on the way of open Internet and net neutrality is that most of the websites are dependent upon Web hosts and other cloud-based services. This way most of the online publications are at the mercy of the companies managing their websites. The Internet technology will help to go through a complete change (may be something like peer-to-peer) to make it more open and independent. People should be able to decide whether certain information needs to be blocked or not if at all it should be blocked, not governments and businesses.The latest developments are a blessing in disguise as far as the Internet openness is concerned. It has incited a debate. We have experienced that the Internet is not as open as we used to think.

    1. Prokofy

      Here we go with the Darknet conspiracy again.Governments are elected by people, businesses are paid for by people. It’s ok for the people’s elected and paid representatives to decide policies that serve people, their constituents and customers.The idea that some other “People” than the voters or the customers should decide how the Internet should be run is just technocommunism, and a failed idea.

  7. Harry DeMott

    Read Brad’s piece last night and was going to comment – but Dexter came on and that was the night for me – so glad you’ve brought up this issue again.Obviously, there has been a ton of conversation regarding the recent spat between Comcast and Level 3 – centered on Level 3’s recent contract with Netflix. Level 3 has tried to paint it as a net neutrality issue – whereas Comcast is simply saying that we’d be happy to deliver this competing service – but if you are going to burden our network with a ton more traffic – you are going to have to pay.I think Comcast wins out in the end on this one and here’s why:Any eyeball network – or ISP – markets 3 things to its customers at a given price:1. Downstream Speed2. Upstream Speed3. And more frequently some sort of usage capThe ratio between upstream and downstream is generally between 3/1 and 5/1 – with the downstream speed being faster – as information tens to terminate and get consumed by the user of the service.Caps are something new – and probably worth of a separate post – but I believe they are here to stay (particularly when the FCC recently came out essentially for metered broadband)As long as the users of internet service use asymmetric data (use more than they send back up the pipe) – all of the service provider like Google, Netflix, Yahoo, etc… are going to be sending down far more data than they ever get back.Couple this with an inherent desire of the FCC to mandate broadband availability with some service level and what you will ultimately get is the following:1. At a given price the broadband providers will agree to a specific “broadband” service level with an agreed upon cap. Say 15 Mps downstream, 3 Mps upstream with a 250 G cap per month. 2. Broadband providers will agree to treat all bits the same regardless of where they are emanating from – be it Pandora or Netflix3. Anything above the cap – or any desire for faster speeds will be met with metered pricing. You use more – you pay more – just as if you want more cable channels – you end up paying more. Similarly, if you want to ride in the HOV lane – or go on the uncrowded freeway – you will pay an incremental toll. Thus, DOCSIS 3.0 at 100 Mps downstream is going to cost a lot more than DOCSIS 1.0 basic.4. The effect of this will be to raise prices on people who want speedier service or more data intensive applications. Want to cut off your video service and do nothing but watch HD streams from Netflix? That’s going to be fine – but you are going to pay for the privilege – either to the cable company through increased usage fees – or to Netflix – who will have to come to individual peering deals with the ISP’s for delivery of this incremental data to the home.And this gets back to your money quote. No application specific discrimination here – but bandwidth discrimination for sure.ISP customers certainly want the “whole” Internet and aren’t going to stand for the old cable monopoly deals. Let’s face it, when John Malone’s Telecommunications Inc. was doing all of those deals – they were truly monopolies. Satellite TV didn’t really exist – and there were no over builders. So it was a very one way negotiation. And most people never knew if they were missing anything anyway – as all of the channels that got put on were fledgling ventures – completely unknown.Now, everyone knows Netflix, and Hulu, and Google, and Yahoo – and if an ISP tried to block them based on pricing or some sort of strong arm tactics no one would stand for it.Which is why I think Comcast wins int he end. They have not made this an issue around a given service (even if we all know it is) but around a non-discriminatory argument where they claim that Level 3 is simply inundating their network with far more data than they are sending back – and thus charging them for incremental ports. Very smart on their side – and likely shows where things are going in the future.

    1. Mark Essel

      Great comment Harry, much appreciate your perspective on a topic I don’t think much about. Blocking Netflix would translate into me switching services, or worst case encrypting the stream through another channel (aka folks in China visiting regular Google with a vpn). The Internet provides plenty of options for routing around barriers which are perceived as “unfair”.

    2. fredwilson

      i agree that in the specific situation of comcast vs level three, it seems like comcast is taking a fair and reasonable stance

      1. Harry DeMott

        Right – and I think you are doing the right thing trying to insert thatlanguage in the FCC proposals. My guess is that despite all of the noise atthe ISP level – they would tend to agree with the statement – and as long asthey can move toward usage based pricing – they have all the ability theyneed to manage the network.

      2. Prokofy

        If you think that, then you will not be finding this new gambit to push the same old tired “net neutrality” Fred. It’s a utopia. Drop it, and go back to making money the normal way by respecting the laws of nature.

      3. George A.

        Awww, Fred, just when we were starting to get along. Here you go again…my general sense is that this agenda is losing steam and that you too are beginning to see the light.You have historically espoused the notion that the MSO’s should look only to their broadband subscribers for compensation. Yet, your comment here endorses Comcast for violating just such a tenet:Netflix wanted more peering bandwidth to deliver their service. Comcast says: who is going pay for all these boxes?”for it? Level3 says “you are”. Comcast says “make me.” Under several variants of Net Neutrality as you have endorsed it, Comcast would be liable for this bill.I just don’t get where you are coming from. Competition and user demand has ensured that there has never been the type of discrimination that you worry about: Exhibit A: the way…someday Twitter is going to be such an important communication tool that it just won’t be appropriate for one company to manage it. Here comes “twitter-user-portability”.

        1. fredwilson

          there is that kind of discrimination everywhere you looki doubt we will ever see things the same way on this one

    3. ShanaC

      I like this comment, but something around my parts realized – the caps and meters are already being semi-enforced on customers without them noticing. And that is a violation ion behalf of the market around here. Truth in advertising should say I get my bandwidth (as advertised and sold to me) not this other form.(also, off topic, I’ve tried to email you recently from the email on your blog and I got a bounceback 🙁 )

      1. Harry DeMott

        I agree. But it is like Apple and their ever changing service levelagreement. You continually subscribe to broadband and they keep changing therules.Sorry about the e-mail.I went in and checked and you are right – I had the wrong address on it -all changed now – but if you want the correct one would [email protected]

        1. ShanaC

          Thanks for the email.I really dislike the terms of service changes. No one reads standard terms. So you end up allowing for continual screwing up the consumers ends.At some point as a consumer, I would pay for stability….

          1. Harry DeMott

            Thanks for letting me know it was wrong!

    4. Prokofy

      Re: ‘we’d be happy to deliver this competing service – but if you are going to burden our network with a ton more traffic – you are going to have to pay.’Yep, that’s what it’s about, and everything you say here sounds reasonable.Comcast isn’t shakedown street, Level3 is shakedown street.

      1. Harry DeMott

        I think it is a commercial dispute.For many years – the shoe was on the other foot – and ISP’s had to do dealsto make sure they had all the content on the web in order to build theirbusiness.Now that the web has evolved – the ISP’s have all the power – and are usingit.

  8. Mark Essel

    Hacking regulations, a dangerous game. FCC vs monopolies works out ok so long as the FCC doesn’t become one big tyrant monopoly. It’s not as simple as applications and data versus last mile providers. It’s a layered debate that ends with the ability of the FCC to enforce policy on the open Internet.The most effective way to break up monopolistic behavior is to invest heavily in healthy competition. To work around FCC policy that means supporting a different network outside of it’s enforcement.The equity cut that cable companies took from small companies is all too similar to the 30% non-negotiable cut platforms like Facebook and Apple take. Yes, there are alternatives to these platforms, but if the vast majority of your customers are primarily reachable via a platform you’re small business must capitulate to compete.

    1. fredwilson

      that’s why i called apple a “cable company” in the talk i did with john doerr at web 2.0

      1. Dave W Baldwin

        Which is why one of the move you made recently was smart…I explained that one to my people last year.

  9. Senith @ MBA tutor

    Fred,We are with you on this. If there is a signature campaign going on or one you can start, we can join in to voice our views online. There are web based campaigns too. If you know of one, please share it here so we can act.Senith

  10. ErikSchwartz

    The easy solution to this is the end of flat rate unlimited pricing. The MSOs don’t want to do that because it’s a marketing problem (taking stuff away from customers is hard). They want to try locking out data types because they figure if they can keep their costs under control.But at the end of the day we will have either tiered pricing or content filters based on data type.

    1. fredwilson

      i agree and we should have tiered pricing because that allows the market to develop unfettered by access provider control

      1. ErikSchwartz

        No argument here.

      2. ShanaC

        I keep getting the feeling there is a type of tiered pricing around, it just isn’t tiered enough/right. My father has optimum boost, not optimum. He gets different bandwidth promises than the just optimum people

        1. Harry DeMott

          I’m in that camp as well – and pay $10 more for the service.Tiered pricing is inevitable – and as ErikSchwartz says here – it is a difficult marketing problem.Talking privately to the cable companies will tell you that they are very worried about the consumer reaction to caps – as they have been crushed int eh press before. They all want to get there, they just want someone else to take the PR beating ahead of time – then slide in quietly. We already pay this way for cellphones for the most part.

          1. ShanaC

            So basiclly we’re stuck because of a marketing problem over the very factthat in some ways, they are very similar to credit cards. (Different rates,different benefits, all essentially provide you some money on demand thatyou have to pay for later) I would say pull an AMEX (services…) and I amalready seeing that with Caeblevision here (why are they offering businessesdiscounts to other things?)I keep thinking they have this huge issue because it’s really hard to comeup and market premium internet, when the internet is a commodity item foundin the library. Maybe they need a “separate” ISP to create that image?

          2. CJ

            Ironically cell phone voice service is once again migrating back to unlimited, data too on some networks.

          3. Harry DeMott

            True enough – but network operators now have years and years of experiencebalancing that load – and understand the dynamics around just how muchpeople use. So voice calls – which are easy to figure out the data load on,can be made unlimited, because you know what the breakpoint is in terms ofpricing. Sure a few cell fanatics will beat you on this deal – but far morewill not.the data situation I have to believe is marketing on the weaker networks -you don’t see it on ATT or Verizon – or anywhere that has a high % ofsmartphones – because the cost just gets too great.

      3. Morgan Warstler

        I’m a big believer, true tiered pricing will quickly lead to ad-subsidized service, which means favoring its own CDN style play inside the head end.

        1. CJ

          That worked really well when it happened back in the late ’90s. /sarcasm 🙂

      4. Steven Kane


  11. ErikSchwartz

    Here’s a really interesting (but longing piece)http://www.innovationpolicy…on some of the peering debates going on.

  12. deancollins

    It will never happen in the USA as it would be seen as big gov/communism but what is happening in Australia with the NBN where “everyone” has access to the last mile seems to be the ultimate model.You want to launch a new VOD service liek netflix not a problem, purchased is based on wholesale sliding scale and you get to deliver your service to an ip address on a router device located “in the home” along with the ability to co-locate your servers from numerous POP’s throughout the country (obviously paying less if you colocate more servers resulting in less long distance carriage.I dont mind Time Warner charging Netflix to deliver content on a service i already paid for….. and as soon as Time Warner is prepared to give up its monopoly in my neighbourhood i’ll support it and the competition by going elsewhere.When you consider that for most homes in New York you have 3 choices;1/ Time Warner HFC cable2/ DSL (and slow dsl as well – none of this fancy smancy high speed bonded dsl)3/ Dial Up….. and this is first world? hmmmm

    1. Dave Pinsen

      I’m starting to mind how the TV screen goes blank for a few minutes half the time I click the guide button on my Time Warner cable remote.

    2. ShanaC

      Actually you have a forth, a friend of mine on the west side has Verizon FIOS

      1. deancollins

        Hi Shana,Do you know why you mention “a” friend, it’s because Fios has such a totally small footprint (oh and they suck because they block ports for residential connections).Fios first promised to roll down my street in Brooklyn heights about 18 months ago….still waiting.Do an adress search on their website i’d be very surprised if more than 1 in 100 can get fios in NY – it’s not really an option.

        1. ShanaC

          Because I happen to be playing Sous Chef for said friend on one of the dayswhere Verizon was doing a massive push in his building. And then Inbetween all the chopping, we were watching TV through VRZ.It was just all sorts of noticble because I had never seen that before. Andmy family also has FIOS….

          1. deancollins

            lol, thats 2 huh.

          2. ShanaC

            They have a small foot print where I am (nassau county) it seems to largely be because it’s a pain to get an install for the cost offered. And my family has had it for going on 6 years I think…And 75 clinton in brooklyn heights has accessibility to FIOS. I suggest if you are interested, talk to VRZ

          3. deancollins

            do you live at 75 clinton? i dont :)no it’s still not available for our area. only dialup, dsl and rebranding of direct tv.

      1. deancollins

        KidMercury, actually you are wrong.The two issues are totally unrelated. Even if you use another ISP not related to the NBN this is still under threat of the cleanfeed issue (which still hasn’t been implemented and isn’ assured of going through).Sorry you need to go back and re-read details NBN has nothing to do with this.

        1. Prokofy

          Yes, it’s also important to explain to all those whipping up hysteria that this is a proposal, not yet a law in Australia and Australia didn’t “shut down Second Life” over this debate.

        2. kidmercury

          my point is that when you ask for a government handout, you get government control. as former US president thomas jefferson said, “A government big enough to supply you with everything you need, is a government big enough to take away everything that you have.” to that end, australian regulators have threatened to fine people for linking to sites on their blacklist:…the FCC is owned by big media and in my opinion is best thought of as an employee or asset of big media. net neutrality is the bait to get people to go along, then comes the censorship over time.

          1. deancollins

            Oops sorry i thought i was talking to someone with a brain.let me know how you go driving on your private roads and your private water and your private fire brigade.feel free to reply with some inane unrelated comment, you obviously cant handle beign told you are wrong.

          2. kidmercury

            hahahhaaha……oh boy…..first i would suggest you review my blog post on how to beef. personal insults are a sure way to lose a beef. as such, i hereby declare myself the victor in this beef. i am the better seem to have interpreted my comments as being anti-government, and then responded emotionally and hatefully, much to your own embarrassment. i am not anti-government, though i am in favor of limited government at the national and international level. more importantly, i am in favor of PRUDENT government. all the government lovers never talk about solutions for deficit spending, solutions for eliminating corruption, and of course, my personal favorite, solutions for 9/11 being an inside job. instead, they ignore that, but are first in line to ask for a government handout. lol. i’d be more sympathetic if those who wanted handouts did work involved in being responsible citizens, so that government could be used constructively without fears of corruption — fears that are, unfortunately, rampant with justification.

      2. Prokofy

        It’s important to explain that this is criminal content — child pornography. You left that part out.

        1. kidmercury

          prokofy, prokofy, prokofy……what are we going to do with you… smart, yet so young……”for the children” is the biggest regulatory scam in the world. anytime you want to make a power grab, just make up some excuse about how you have to do it for the children. that’s why crapple has to be all dictatorial about its crapp store, to protect the children.i’m an old-timer, and the way it worked back in the day was that parents were responsible for protecting their children (and in determing what is appropriate/inappropriate for their children). but now all you kids these days just want government to do parents’ job for them. let me know how that turns out for you.

          1. Prokofy

            Gosh, that was disgusting. I think you aren’t getting it. The issue here about the banned material in Australia isn’t merely barring those who are underage from viewing pornography — which isn’t, btw, something that parents can fully control without hobbling the Internet because they can’t constantly looking over their shoulder — the issue was about child pornography, ie. pornography made by the coercion of children — surely you can grasp why that isn’t something about “parents” because the children can even be trafficked or runaways or their parents may be kept in the dark.There’s nothing wrong with a government blocking child porn. That you think that there is lets me know why it’s not possible to have people like you run governance on the Internet.BTW, as I’ve written many times over on this subject, I personally have the computers in the living room so that I can watch my children on them and discuss with them what their concerns are, and I monitor what they do. Even so, I expect that the government of my state and country will take measures to police and prosecute child pornography which is the normal function of a civil society and doesn’t threaten any “freedoms”.

          2. fredwilson

            thank god prokofy and kid are back at AVCit was getting boring around here

          3. Mark Essel

            Fantastic. My morning news just got better!

          4. kidmercury

            prokofy, prokofy, prokofy. so smart, yet so many history lessons ignored…..i do think there is something wrong with government blocking child porn. you may find my views to be disgusting. i find them to be remarkably beautiful.governments prosecute. private companies block. because if government blocks, then they have to WATCH. what government watches, government CONTROLS.and that’s why people get fined a significant amount of money for hyperlinking to banned sites in australia. and many of those sites are not porn, they are political sites.i hope you are grateful for the education i provided you, prokofy.

          5. Prokofy

            Um, no. I’m familiar with the extremist libertarian theories about government, but they have little application to the real world, and extremist libertarian politicians rarely actually get elected or rule. Government and civil society are about balance between liberties and regulations, and not an explicit prescript like the shrill online gold-buyers and 911-insider-jobbers would have you believe.People think there’s something magical about the Internet. There isn’t. It’s just a big pipe, with trucks attached to it. That’s it.The government doesn’t bug all citizens’ phone conversations in order to act on crimes like stalking or death threats made over the telephone line, or false solicitations like fake phone companies slaming your bill. Having the 1st Amendment and a phone line doesn’t guarantee you to some blissful Metaversal experience where you can endlessly do and say what you want and not use that tool to commit crimes.Of course I don’t have to explain that the postal service works the same way, you can’t send explosives and corrosive chemicals and such in boxes around the world.So the Internet — that pipe trucking company that everybody thinks is so magical — isn’t something the government has to pre-clear and moderate and perlustrate like Facebook in order to have a policy that certain content is criminal. Certainly porn made from children trafficked into slavery and coerced would constitute such a thing, and when the government is informed by it.BTW, this is why Eric Helder defends the right of the government to use the sting — they make up fake jihad sites, attract jihadist, and then crack down on them when they seem to be about to strike. Naturally some civil libertarians get exercised about this and that’s their right and they may find that the sting goes too far. But liberal Obama appointee Eric Helder defends this practice because otherwise, what you get are blown up dead people.I don’t buy the Australian baloney about how this government action is going to stop their legitimate adult content or political activity. That’s because I talk to a lot of different Australians about this and I find that it’s only the extreme left and some of the libertarian loons that bang on this, and that the regular liberals and normal people — not conservatives who might have some “moral panic” as the left always tendentiously describes it — are NOT the ones screeching about this — OR screeching about it pre-emptively as if it was achieved already, when it’s a policy debate. When people do that, I lose all respect for them.I’ve been hearing for several years now that “Australia is going to close access to Second Life”. What happened instead is that Telco closed some of its sims because they couldn’t figure out how to make them profitable or justifiable — it was a pity because they had some really cool popular Outback sims with fishing and such. Anyway, Australia didn’t block SL at all and doesn’t seem to have grounds to block it even under this “draconian new law” so I’m saying “Next” and taking my concerns about free speech back to Iran, where they kill people, instead of Australia, where some dopey extremist is refusing to take a moral stance on child porn because he thinks that’s a gateway to blanket suppression of free speech. Call me after you’ve solved the problem of Russian mob child trafficking, then I’ll worry about Australian free speech victims.

          6. kidmercury

            lol, prokofy you do realize if you had taken my advice of purchasing gold you would up now? i trust you are capable of basic math. 1400 is greater than 1100. you can call gold a scam if you’d like, that only reveals your economic ignorance and perhaps difficulty with basic arithmetic. it is quite foolish of you to bring up gold (especially when i did not mention it) because i have been objectively correct on that matter, and thus you are only aiding me in this is my second favorite subject, only because it is the best investment out there (well, perhaps silver is better) and it is vital to the restoration of economic freedom. but my favorite topic is of course 9/11. as your comment reveals, you know nothing about 9/11, and thus it would behoove you to avoid mentioning it, as you lack both the courage and the education to comment on the matter. unlike me, you simply are not brave enough.when you understand 9/11, then perhaps you will be mature and brave enough to have a conversation about politics.i suggest you begin your education by going to you should also spend some time watching 9/11 truth movies on the internet, before the government steps in and bans it. after all, it could be used to conceal child porn, and so government is justified in banning it. its for the children.

          7. Mark Essel

            Glad to see you back Kid

          8. kidmercury

            i forgot how much fun fredland could be! really wish there were gameplay dynamics here. disqus, counting on you.

          9. Prokofy

            Answer: the reason you don’t see the flag waving as such is because there is no atmosphere on the moon.…Your score: 0Thanks for playing!

          10. kidmercury

            i don’t know what your point is, or if you even have one. what i do know, though, is that you cite nasa as a source, and seem to believe its public face is credible and authoritative. this is not surprising, for as we have established repeatedly in this thread, you are quite young. fear not, though for in due time, when you are mature enough to accept the truth, you will gain wisdom.

    3. fredwilson


  13. Matt A. Myers

    It’s shocking that these kinds of things aren’t already in place. It’s common sense to me.I’m glad there’s someone like you and USV who actively advocate and work on this issue on behalf of everyone.Big kudos to everyone involved.

  14. lushfun

    My sincere feeling is that internet access will eventually be totally free, once wi-fi gets strong enough and the people simply begin using it in a similar way to bit-torrents.There are already low hertz bandwidth that are available for public use but the reality if they could commercialize them, they would. {Ergo low baud modems are able to connect through those frequencies} If there is a compression or something new that could make them viable and free it will kill big phone companies in this area. Then we get total independent free internet, with absolutely no limits other set by each individual user.Now that would be something.

  15. Jack We have a great local utility that has not only gotten us gigabit service all over a 600 square mile rural service area, but they are open, have reasonable pricing and awesome service (I was backing up from my home to my parents at full speed last night). Interestingly we have service here in a small town in TN that absolutely no content or application provider even knows what to do with it. And because of this, Comcast, ATT and Verizon have all put more effort into network buildout and marketing (unfortunately more of the latter than the former). It’s up to communities to decide for themselves that they don’t want to be shaken down by the Comcast’s of the world.

    1. baba12

      Your township is a island in TN. Overall having the local municipality build out the service be it for broadband or for water and electricity etc goes against the grain of many business capitalists.The telecom companies will use all sorts of tactics to make sure municipalities don’t get into the game of providing the services as they know they can’t reap double digit profit margins.But as a Chattanooga resident and say a shareholder in At&T or Verizon etc feel that you are not getting value from your stocks and therefore feel like you would exercise your vote to protect their interests through your elected representatives. Thats the catch 22 situation that many folks find themselves in as on one hand they like social capitalism but on the other hand it contradicts their libertarian pro business values. This is not like quantum mechanics and thus can’t have two positions that are diabolically opposite exist at the same time and sustain itself.I am passionate about this and sorry if I am expressing a opinion that is disliked.

    2. Gregg Smith

      If you have access to a Gig service in Chattanooga, would you run a speed test for me? I’d like to understand how they can seriously offer a Gig of Internet backbone outside of the local Chattanooga network. Buying a Gig of backbone from a tier 1 provider (Level3, ATT, Verizon) is between $5,000 and $10,000 per month.Thanks

    3. fredwilson

      my partner and I have spent countless hours in city hall trying to get NYC to do the same thingif we had more of this, we would not need rules

  16. Chris M

    Sounds good; in the UK the governments pretty much signed off on screwing us all, there will be no debate, the backhanders are larger than the public will.

  17. ShanaC

    I keep thinking in the back of my head that this should be a legislation issue, not a agency issue. It’s beyond reclassifying data and internet -as time goes on and other categories seem to fail (mobile phones as phones, cable tv) then what are ISPs? I think some new open ended guidance might be helpful on this case. Unfortunately, I think sometimes the legislators are too much in the hands of others pockets.

    1. fredwilson

      then you’ll be right where the carriers want you, in the hands of politicians they own and have paid for with your egregious cable bills

      1. Morgan Warstler

        Then you better be a Republican ASAP, because they are definitely the ones exerting the most control on the FCC – past ten years, next ten years, the VC community needs to figure out right quick, we only let Democrats be President when it is deficit cutting time.

        1. fredwilson

          it is going to be deficit cutting time for the next couple decades

  18. Andrew Greene

    Fred’s post and the USV blog post are mainly based upon the research done by Barbara van Schewick –… I went to her lecture at NYU about a month ago, and I realized I was completely clueless about network neutrality. At the end of the lecture, she responded to some very smart critical questions from, I’m guessing, NYU economists. They discussed innovators might respond to discrimination pricing in 2-sided monopolies, which, to be honest, I didn’t totally understand. (After a bit of searching, it is this guy:… and his paper is here:… But much simpler was the argument that if network providers cannot discriminate based upon applications or classes of applications, then they would highly focus broadband capacity to cities and restrict the delivery of high-speed internet access to rural areas. This is an oversimplification of the argument. If anyone understands it better, please elaborate.I also think it’s very timely that the NBC Universal and Comcast merger is being discussed. One issue I see is that network providers don’t want to be network providers. They want to be network and application and content providers. In other words, they don’t want to be utility companies but media companies. I’m not sure if regulating network providers as utilities is the best solution, but it is an option.

    1. Prokofy

      Yes, the ideology comes from van Schewick, the necessity for Fred comes from being in the app shipping business. They’re heavy, and he needs free roads.

    2. fredwilson

      yup, we are big fans of her worki’ve blogged about Barbara here at AVC in the past

  19. Prokofy

    Sounds like you’ve found a new gimmick to keep waging the same old war to essentially nationalize the Internet as a government utility, Fred, to make free work tools for your businesses. I’m sorry, but the taxpayer isn’t interested in subsidizing your business.Trying to describe this as “shakedown street” sounds very compelling, but the motivations that went into that original set-up sounds to me like it could well have been in fact a bid to keep the public enlisted in cable companies that might have monopolized.And it may be that you had to get that cable in your business with “cable based services” invested because…they had to absorb costs to distribute your service and maybe needed to recoup it by having equity — I don’t know. We need a second opinion here, and not from you, who are self interested.There’s plenty of competition already, maybe just not in San Francisco where this gambit originates.Net Neutrality is a concocted campaign created by a collectivist academic whose extremist cause was seized by Google to create more free space for its AdSense. Even Google, after whipsawing all its fanboyz like EFF with a fake “free speech” campaign gave it up and made a deal with Verizon.Executive agencies should not be making law under the guise of “rules”. Congress should make law. Executive agencies should not be overstepping their mandates to nationalize property and force “progressive” agendas even beyond the already liberal Obama agenda. The FCC Bolshevism will have to be reined in by Congress and business, that will all be a good thing.There is no such thing as “Net Neutrality” so to concoct it as an artificial state of being or a desirable state of being is to ignore the laws of nature. Bandwidth is a scarce resource. It has to be paid for. And not by us.You’re boosting this as a fake public service because your investments are in businesses that need right-of-way for their apps and need the Internet to say they are all “neutral,” even if some have more usage than others. It’s not about content. It’s about congestion.http://3dblogger.typepad.co

    1. fredwilson

      defending corrupt mafia style business people isn’t becoming of you

      1. Steven Kane

        prokofy’s rhetoric is way overheatedbut, “corrupt mafia style businesses”?

        1. fredwilson

          i’m not naming names but the cable companies pulled all kinds of shiton startups

          1. Morgan Warstler

            Man, I think you have to name names. If there’s behavior not being spoken about out of fear of retribution, we can’t analyze what’s going on.

          2. kidmercury

            agree with morgan here, name dropping could help. besides, leaks are all the rage these days. fredleaks!

      2. Prokofy

        Er, corrupt mafia style businesses? Where? I don’t know, Fred, you won’t say. So like I said, I need a second opinion.Otherwise, it looks like you’re just serving your own business interests. That’s ok — your partners and investors and customers would expect nothing less of you! But the general public doesn’t have to buy your line. You’re saying “What’s good for Union Square Ventures [and by extension all Silicon Valley ventures with the California Business Model] is good for the country”. And sorry, as I see all these widgets and gadgets and platforms evolve and destroy the music and news business and now the government business (WikiLeaks), I’m less than impressed.Well, I beg to different. The California Business Model, BTW, is the lawyers’ term for the way you folks do things. First flood in the content, not caring whether it is stolen, violatory, porn, defamatory, blah blah — your TOS is there and if people don’t follow it, see step two. Second, AFTER you’ve had a jillion clicks on all your links and ads and gotten your revenue go to step three. Third, wait for any abuse reports. Wait. Wait some more. Oh, there’s one, from some individual crank. Ignore. Go to step four. Fourth, wait for some serious DMCA takedown or C&D letter from something serious, weigh whether that Something Serious is a significant business or lobby with press access, then go to step five. Fifth, remove content, laughing all the way to the bank.Now, you seem to imply that there was some arm-twisting in how these businesss were set up. I wouldn’t doubt it. The sausage-making of capitalism can sometimes not be pretty, Fred, as I’ve often noted, those $35 bank charges from JP Morgan Chase that bang on your account if you happen to debit-card a Starbuck’s before your paycheck clears really hurt, and still hurt, and that’s how you made your millions.Even so, banks have to make a living, and I wish they’d just call this $35 thing “A PayDay Loan Service Like the Loan Sharks Have For Your Convenience” and mark it as a monthly extortionist but explicit fee for the privilege of having a paycheck clear in under 5 or even 11 days. I’m good with that.So I don’t know what went down with the cables but I do know that what is REAAAALYLY happening with the gang to the left of you (and I know it seems like to the left of you there is only the wall) is that they do indeed want to re-nationalize the Internet.You weren’t at the InternIntern as I’ve called it (the new Comintern of the Internet) last Saturday, but if you were, you might have injected more sense in to it. People like Winer and Rushkoff and Zandt were all calling to get rid of corporations on the Internet, essentially, and let this sort of ecstatic People’s Darknet have the right away. I guess they hope that other California Business Model works — the one where they give stuff away for free but still charge for consulting and lecture fees.

  20. Morgan Warstler

    Fred, could you please expand on your position on Akamai / Level 3 in the Comcast case?Akamai had both the foresight and money to go in early (late 90’s) and get their cache system inside the head-ends.So there is a long time history, as long as the modern Internet, of content companies paying pipe owners for faster delivery.How does your idea fit into that reality?

    1. fredwilson

      the peering agreements are complex beastsprobably better suited for a long post

      1. Morgan Warstler

        I think the more interesting side than the pipe, is the caching servers inside the head ends, Akamai gets the data there, they contract and pay their bills. The peering is a discussion of in/out, but the economics of short tail consumption (even with Netlfix), means to me most of the Internet only needs to make it over the transom one time… and there is a quantifiable space limit.So the the economics seem to suggest Comcast has an interest in popular files only coming in once (for costs and customer satisfaction), but Publishers have an interest in having their stuff there no matter what, mainly for their user satisfaction.Limited space + competing wants = price discovery.Which means higher costs for premium publishers, which means NN is a bit of a farce. I can’t see how what you are after isn’t the nationalization of Akamai.

        1. fredwilson

          i think you should write the post, not me!

          1. Morgan Warstler

            Tell me when!

          2. Steven Kane

            I dont agree NN is a farce. i think most NN advocates have thought thru NN only superficially — a point i think mr warstler makes par excellencetaken to its logical conclusion, NN is government regulation to make the internet a regulated public utility. no more, no less.i’m in favor. but i am confounded by the argument that NN is simply tying comcast’s hands (as well as comcast’s “peers” hands) without also regulating the other “pinch points”. seems too much like self-serving pork-barrel politics

  21. CheetahDeals Blog

    I like it. It reminds me of the Veil of Ignorance idea.

  22. Steven Kane

    I agreeBut then, shouldn’t net neutrality also deal with this? –

    1. fredwilson

      google wasn’t given a local monopoly

      1. Steven Kane

        truebut isn’t that pretty ancient history?how many of the ISPs today still have local monopolies?in my market, eastern Mass, comcast, verizon, and several others competeagain, i support net neutrality. but i dont understand why the movement only wants to regulate only traditionally-defined ISPs?

        1. fredwilson

          then we don’t need net neutrality in your market because you havesufficient competition in the local loop

      2. Morgan Warstler

        wait Fred, no one was “given” a local monopoly. They paid for it. What I call “local wealth” investors paid the cable pullers, they innovated before anyone even knew what the heck it was.

        1. CJ

          Not true, cable companies were granted a location monopoly and subsidies (taxpayer money) to fund those cable networks.

  23. Leonid S. Knyshov

    I e-mailed the commissioners from the perspective of a startup that relies on mobile video.

  24. paramendra

    Defending net neutrality is not enough. Competition has to be introduced into that last mile so speeds go up and prices go down.

  25. Ed


  26. Dave W Baldwin

    It is wise to set which side of politics this and that is…reality is the GOP has the House. So someone may want to force those in leadership to put together a proposal/statement that is backed up by real numbers.The amount of traffic going over the DSL/Broadband/whichever is going to increase big time with the internet being promoted for television. So it comes down to a big fight where there are just as many trying to influence the gov to get the best deal for them (on all sides), those that wait to see where they can get the hand out afterward (on all sides) and those that take advantage of opportunity the end result offers.It is a matter of being able to do more with less. For those that send stay antique and send things too big, then you are waiting for the freeway to be expanded…those that anticipate the need to offer delivery in a more effecient manner will win in the long run.I’ll leave it there so I’m not placed in the Sci-Fi box, but that is the way to look at it…thinking of the next 10.

  27. rshockey101

    Fred you have to be very very careful here .. the case FOR packet discrimination in certain applications equally compelling. Think VoIP Telepresence ES911 Home Health Monitoring, Energy Management etc. You cant make MPLS illegal and some corporations rely on strict SLA for certain kinds of mission critical applications. Its just not that simple. FP and PK just wont listen to some of us in the engineering community. We certainly need sound principals that the FCC could use on a case by case basis but we may actually want some packet discrimination in unique application environments. The bit caps are much more dangerous to the over all health of innovation.

  28. Vasudev Ram

    Hi Fred,Thanks for writing this post. I think it is quite an important topic for the public at large, though probably many may not realize it at first look.I support it, and blogged saying so, here:…And BTW, I like the starting sentence of your post :)Thanks,Vasudev

  29. CJ

    Why does it matter? If not Netflix, then someone else or a combination of somebodies. It shouldn’t matter who sends what traffic, as an internet provider the job is simply to move data fast and efficiently from point to point. The type of data is irrelevant IMHO. The issue at hand is that the ISP doesn’t want to just be a dumb pipe, in which case I say “Yahoo is for sale.”