Is The Internet Capacity Limit A Scam?

We've reported twice about the potential routing bottlenecks that the Internet might face in the near future, usually in the 2-3 years time frame.  We're not the only ones who are worried about this as an Internet overload could have financial repercussions that would make the post-911 economic slump seem like a stroll in the park.

Virtually every part of our daily lives are impacted in some direct or indirect way by the Internet, whether we know it or not.  For example the sheer volume of B2B transactions that rely on the web alone could cause major financial stress to companies who rely on just on time delivery of products.  That would potentially include companies from  giants like Walmart to medical facilities, travel & hospitality, you name it.  Most any business would probably be directly impacted by the loss of the internet.

Of course the rumor isn't necessarily that the Internet is going to be gone in 2 years, but rather that the routing would be overloaded to the point where the results would be unpredictable, but most assuredly negative.

So, how accurate are these claims?  There appears to be some disagreement on that point:

“The study, published by the "independent analysis firm" Nemertes Research Group claimed that up to $137 billion in new investment will be needed to keep Internet data flowing fast, but that the backbone service providers plan to invest less than half that amount. Among other things, it recommended that the US Congress provide tax credits to the broadband providers and eliminate the tax surcharge on telecom services for rural telephone access.

The Daily Kos bogger writes, "When big figures like $137 billion start getting tossed around, it is always worth looking at the vital question... 'Who would benefit?' Sure enough, the article includes part of the answer."

"The study confirms long-time concerns of the Internet Innovation Alliance (IIA)... with members including AT&T, Level 3 Communications, Corning, Americans for Tax Reform...."

The bog entry properly identifies AT&T and Level 3 Communications as Internet backbone providers, and Corning as a major US manufacturer of fibre-optic cables, not surprisingly. But it also looks behind another member of the IIA, that is, the Americans for Tax Reform.

Americans for Tax Reform is the creature of one Grover Norquist, the arch-conservative activist who wants to reduce the size of the US federal government until he can "drown it in the bathtub." The bog diary cites the Wikipedia entry about Americans for Tax Reform:”

It is certainly interesting to see those that would benefit, and raises the question,  if you were a major ISP and owned a significant portion of the Internet's backbone, would you:
  1. Risk raising prices to generate the money needed to effect upgrades and risk customers fleeing to another provider – this would be a case where the last to raise prices would seem to be the big winner.
  2. Do nothing and hope that the government would bail you out before customers started filing class action law suits over services not up to contractual specifications.
  3. Insert your own suggestion in the comments field.
Tags:  Internet, mit, scam, cap, CAM, AC, IM, AP, AM