California ISP may render “Net Neutrality” laws unnecessary

Last week, Santa Rosa-based Internet service provider Sonic.net rolled out a blazing fast new fiber optic network that will provide Sonoma County residents with the fastest residential Internet in the United States at an extremely competitive price. Sonic.net‘s new offering blasts a hole in the arguments of “Net Neutrality” proponents who fear that ISPs will raise prices and limit quality Internet access without government regulation.

Sonic.net‘s fastest service package will be 1Gbps (gigabits per second) at only $70 a month, and will include two phone lines and unlimited long distance calls. It will also offer a 100 megabit per second connection for $40 a month, which will include one phone line and unlimited long distance calling. Technology columnist Nate Anderson marvelled at the price last week, writing:

‘Where I live in Chicago, Comcast’s 105Mbps service goes for a whopping $199.95 (“premium installation” and cable modem not included). Which is why it was so refreshing to see the scrappy California ISP Sonic.net this week roll out its new 1Gbps, fiber-to-the-home service… for $69.99 a month.’

Anderson notes that depending on how you dice it, Sonic.net is offering a connection that is 600x faster for only twice the price of Comcast‘s 1.5Mbps service, which costs $40. Or, for the same price as Comcast‘s offering, customers on Sonic.net‘s new network can get over 60x the speed. With such a dramatic jump in connection speed for consumers’ dollars, worries that an unregulated ISP market will artifically limit connection quality to raise prices seem unfounded. It would appear, as free market proponents have suggested, that competition for customers on a free and unregulated market will keep prices down and quality high: no federal regulators needed.

Of course, “Net Neutrality” opponents will have to wait and see if the new pricing model is financially sustainable before writing off Net Neutrality regulations entirely, but they may not have to wait very long. Within a month, Sonic.net’s new service will be available to 60 residences on Florence Avenue and will expand to 640 more homes by the end of the year. The company is planning to expand into Santa Rosa or San Francisco after that.

If every other standard of performance and quality in the technology industry is any indication, quality will only continue to improve while prices come down, creating ever-widening access to always improving devices, services, and software. If Sonic.net‘s new pricing model is a success, it will drive down competitor’s prices in order for them to keep their customers. In that case, what use would “Net Neutrality” regulations be? The market will have done what would-be regulators are promising to do, making their intervention a “solution looking for a problem.”

Why the new 1Gbps service? Sonic.net CEO Dane Jasper says his company plans to capture market share and grow profits without using artifical limits on quality, saying in an interview last year:

‘The natural model when you have a simple duopoly capturing the majority of the market is segmentation: maximize ARPU [average revenue per user] by artificially limiting service in order to drive additional monthly spending. But fundamentally this is the wrong model for a service provider like us, and we have looked to Europe for inspiration… I believe that removing the artificial limits on speed, and including home phone with the product are both very exciting.’

If Jasper’s vision of the future and business instincts are correct, the Net Neutrality debate may be over very soon.