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Bitcoin May Be What Gets Us Real Net Neutrality

The recent net neutrality victory at the FCC is not a silver bullet. This article originally appeared in WIRED.

The recent neutrality victory at the FCC is not a silver bullet. We can expect costly court challenges, complicated enforcement, and the risks that come with entrusting a large government bureaucracy to manage a technological problem. More competition would be a better solution—and that’s where Bitcoin could help.

As Marc Andreessen recently told The Washington Post, “The ultimate answer would be if you had three or four or five broadband providers to every house.” In such a world, Andreessen explained, “net neutrality is a much less central issue, because if you’ve got competition, if one of your providers started to screw with you, you’d just switch to another one of your providers.”

But how do you get more last-mile competitors?

“I think you actually have the potential for that depending on how things play out from here,” Andreessen said. “You can imagine a world in which there are five competitors to every home for broadband: telcos, cable, Google Fiber, mobile carriers and unlicensed spectrum.”

That last one—using unlicensed spectrum—has been a tough nut to crack. This is actually rather strange given that we are awash in internet connectivity over unlicensed spectrum bands. I’m talking about the Wi-Fi routers in every home, apartment, coffee shop, and office across the country that surround us at all times. The problem, of course, is that all of these network on-ramps are locked.

You, your neighbors, and everyone else password-protects otherwise open wireless connections to the internet. Why? The tragedy of the commons and privacy.

A homeowner who pays for broadband doesn’t want her freeloading, torrent-hungry neighbor spoiling a comfy evening with Netflix and boxed wine, especially if she’s got no way to make them share the costs. And a neighbor piggy-backing on the homeowner’s Wi-Fi, freeloading or not, doesn’t want others to see what she’s reading, watching, or Skyping.

Last-mile bandwidth sits largely unused because people perceive only two possibilities: opening the connection to everyone but losing privacy and getting stuck with the check, or locking down the last mile so that only they can use it.

Micropayments and encryption could provide a way out from this trade-off. Efficient micropayments, however, have not been possible before the invention of Bitcoin.

There are three steps to enable this last-mile infrastructure over unlicensed spectrum: First, encrypt the network traffic so that sharing your connection doesn’t mean seeing your neighbor’s activities. Second, charge those who would send traffic through your devices for the privilege using micropayments. Third, program these open routers to seek the fastest connection to the larger internet not only through their own wired hook-up, but through their nearby peers. Knitting all of these consumer devices together gives us a mesh network.

Such a shared infrastructure protects privacy through encryption. Individuals are paid to maintain and even improve their links in the mesh with the micropayments. And software can intelligently direct traffic through intermediate nodes that offer the best connection to an outside resource for the price.

Mesh participants with particularly strong connections to desirable internet destinations will earn more in micropayments as their peers seek connection through their routers. These favored participants can use some of that revenue to pay for larger data plans or even faster access.

Say, for example, you’re the one apartment in the neighborhood with a super-fast connection to Netflix’s servers. Maybe you have a premium subscription from a telecom that hasn’t throttled Netflix, or—even better—maybe you’ve negotiated a wholesale fiber hookup to a Tier 1 network for your business. As the fastest connection to a desired server, you’ll earn more in micropayments from your neighbors.

The money you earn is your revenue for being a valuable part of the mesh. You are free to pocket some bitcoins, and use others to pay for the connection to the wider internet or to invest in an even faster connection and better routing hardware. Eventually, if you’re dealing with a wholesale provider or a particularly progressive telecom, payment for your uplink could also be metered and denominated in bitcoins, and traffic traveling through you from the mesh network could directly pay your provider through an intelligent, Bitcoin-accepting modem.

This scheme writ large is far better than a few neighbors sharing Wi-Fi. It could become a mesh network of hundreds or even thousands in a given area. The mesh network, taken as a whole, reduces granularity in hook-ups: it’s a neighborhood that seeks connections not a bunch of individual customers. This means that an outside infrastructure provider need only bring a pipe to the town square, rather than everyone’s home. Without the costly need to duplicate another provider’s efforts stringing connections to individual homes, we can expect more competitors offering connections to any given mesh. That means more competition and fewer opportunities for discrimination.

Telecoms may balk at this plan; it’s potentially disruptive, moving their revenue model from high-margin consumer entertainment services to low-margin utility provisioning for a neighborhood. Should those companies refuse to connect to mesh networks, however, wholesale Internet providers, previously available only to large enterprise clients, may enthusiastically fill the void. Even for data, it can pay to buy in bulk, and mesh networks combined with micropayments can bring those benefits of scale to each individual peer.

Bitcoin and the low-transaction-costs that automated micropayments can provide are the keys to building these better markets, which will ultimately unlock net neutrality itself.