May 2, 2006

Tim Wu on Net Neutrality in Slate [7:12 pm]

Why you should care about network neutrality

What we’re ultimately asking is a question that Adam Smith struggled with. Is there something special about “carriers” and infrastructure—roads, canals, electric grids, trains, the Internet—that mandates special treatment? Since about the 17th century, there’s been a strong sense that basic transport networks should serve the public interest without discrimination.This might be because so much depends on them: They catalyze entire industries, meaning that gratuitous discrimination can have ripple effects across the nation. By this logic, so long as you think the Internet is more like a highway than a fried-chicken outlet, it should be neutral in what it carries.

This is the basic case for network neutrality—to prevent centralized control over the future of the Internet. But there’s a long-standing rebuttal that goes like this: A broadband company already has incentives to make the network neutral, because it’s a better network that way. If AT&T makes money on an exclusive deal, they’ll lose it somewhere else. Whatever money AT&T earns by prioritizing Google rather than Yahoo!, it will lose by making its product—broadband service—less attractive to consumers. By this logic, regulating the Bells is a waste of time. AT&T and Verizon also say that they must be free to discriminate to justify their investments in building networks. If you don’t let us discriminate, they say, we won’t build.

It’s true that the Bells might make extra cash by discriminating. But AT&T can extract cash in other ways, too, like charging its customers higher prices. I believe that it’s better to have consumers pay more for service than to have AT&T picking and choosing winners on the network. Both are a cost to the economy, but the latter is a double cost. It creates costs that are passed on to consumers anyhow, and it also distorts competition between eBay, Yahoo!, and the like. [...]

Also from the NYTimes editorial page: Editorial: Keeping a Democratic Web

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Virtual? What Do You Mean, Virtual? [6:58 pm]

Entropia Universe Players Can Cash Their Online Earnings at the A.T.M.

When you put your card into an automated teller machine, view your balance on the screen and then receive money from the dispenser, you probably understand that a merely electronic notion — your bank account — is being translated into a physical object with value: greenbacks.

But what if you are at the corner A.T.M. and your net worth is locked up in an imaginary asteroid mining venture?

Until now you would be plumb out of luck. But today the makers of Entropia Universe, a popular online science-fiction game, plan to introduce a real-world A.T.M. card that will allow players instantly to withdraw hard cash automatically converted from their virtual game treasury. So a player with, say, 2,000 spare P.E.D.’s (Project Entropia Dollars) left over after purchasing a new laser rifle in the game could withdraw $200 and take a date to a real-life ballgame.

With around 250,000 players, Entropia is the leader of a small but growing group of online computer games with virtual economies explicitly based on real-world money, and today’s announcement is the most ambitious step yet to meld an in-game economy with the real global financial system.

[...] In most mainstream online games, like the spectacularly popular World of Warcraft, spending real money for virtual items is not only against the rules but also considered the worst sort of louche behavior, like paying for sex. But in Entropia, the entire game system is based on the fact that 10 P.E.D.’s equal a dollar and that the game’s virtual items and assets have real-world value.

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