Britain’s Virgin Media CEO colorfully opposes the corporate welfare of Net Neutrality

Neil Berkett, CEO of Virgin Media, Britain’s second-largest broadband provider, “called the principle of network neutrality—all content being delivered equally to all users—"a load of bollocks" per eWeek’s article: “Virgin Media may ignore network neutrality.”

• “Berkett said Virgin is considering a fee-based system for content providers wishing to have their traffic moved faster than others.”

After looking up the definition of “bollocks,” it is clear that his comments colorfully echo some of the same sentiments in America that prompted Google to work with Moveon.org to organize SaveTheInternet and ItsOurNet (the predecessor to the Open Internet Coalition) and manufacture the net neutrality issue out of whole cloth.

The comments and the article are a powerful reminder of the fantasy corporate welfare economics of net neutrality, where users are expected to bear all the costs of video distribution for companies like Google and Amazon.

• At core, the Google-led corporate interest behind net neutrality is to prevent the emergence of a two sided marketplace, like newspapers, magazines, credit cards, and cable TV, which is a free market’s way to lower the cost to users by collecting revenue from producers/advertisers too.

• Google and Amazon, who enjoy their user-subsidized video distribution via the Internet, are leaders in distributing video over the Internet, and their businesses are a leading cause of a huge multi-ten-billion upgrade to add massive video capacity to the Internet’s infrastructure.

• Don’t be fooled when Google claims net neutrality is about openness, innovation or freedom of speech -- Net neutrality is really a big cost-shifting and profit issue for Google.
  • Google’s YouTube property alone uses more Internet capacity today than everyone in the world used in 2000
  • If the primary cost-causers of new video traffic like Google, can shift the
    entire multi-ten-billion dollar bill of upgrading the Internet for
    video -- onto the backs of American consumers -- Google avoids this
    normal and customary business distribution expense and further pads its
    already 90% gross margins (per Morgan Stanley analyst Mary Meeker’s
    estimates) -- with windfall profits at the expense of the consumer.

• It is stunning how many people have fallen for Google’s cynical misdirection, and missed the fact that Internet companies like Google, who use and profit from Internet distribution the most, are the least willing to pay their fair share of the cost to upgrade the Internet to carry the traffic that their new video distribution ventures like YouTube cause.
  • In other words, Google et al, has the unmitigated gall to ask Congress to pass a law that effectively mandates Google’s users have to subsidize Google’s 90% gross margins!
  • The sense of “Googlentitlement” to Americans wallets, would make even the most notorious corporate welfare queens blush.