Net Neutrality, part 2: how does it work today.
I operate under an assumption: the assumption that when I pay for a service, I will get a "best effort" attempt at delivery of that service, within the constraints of the service level I purchase. This applies no less to the services I pay for that are deployed on the Internet. I understand that if I pay more for a service, I get better quality service... the price difference should reflect the enhanced performance.
As such, I pay extra for my home office's Internet connection. I could try to scrape by on a standard connection, but I pay four times as much to my ISP for the premium business connection. Likewise, I don't host my companies servers at a low budget hosting firm. Instead, I pay for the premium service that Rackspace provides. (My personal blog here is in fact budget hosted, but that is only appropriate given the level of reliability I need for personal hosting).
When I'm working, I expect the Internet between my servers and my home office to give that "best effort" service. One may wonder how the links between these points are paid for so they can provide this effort. It turns out that these costs are paid for by connection fees. Part of my server hosting billing and part of my ISPs billing for my home office are going to the "upstream" providers for the connections to the "backbone" providers. Backbone providers in turn take a portion of the fees they collect and pay for "peering" between themselves. If two organizations are passing nearly equal amounts of traffic, they would pay nearly equal amounts and thus usually waive the fees. On the other hand, when the traffic is unequal, the balance due by the organization with the smaller amount of traffic carried is paid as a connection fee.
In this way every bit of the connection between my home office and the servers is paid for. In this interview with Business Week, Edward Whitacre from SBC seems to be suggesting that the current situation is one of charity:
Business Week: How concerned are you about Internet upstarts like Google (GOOG ), MSN, Vonage, and others?
Edward Whitacre: How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?
The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! (YHOO ) or Vonage or anybody to expect to use these pipes [for] free is nuts!
The idea that anyone is using "these pipes free" is the idea that is nuts... every shred of bandwidth between two points is accounted for via the process already described. Edward Whitacre of course knows this, but a company that operates parts of the backbone are in a unique position to discriminate against some providers while allowing access to "approved partners". What is appalling here is that the fees suggested here are not providing any new services; they are simply new fees imposed because it has dawned upon the telecommunications industry that some of these services out in the cloud are becoming popular, and these services are in the unfortunate situation of being carried by effectively random providers in any given situation.