Transcript Decoding the Network Neutrality Debate in the United States A Presentation at Diverging Electronic Communications Regulatory Trends in EU and US Florence School of.

Decoding the Network
Neutrality Debate in the United States
A Presentation at Diverging Electronic Communications
Regulatory Trends in EU and US
Florence School of Regulation, European University Institute
Florence, Italy
21 June 2010
Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law
Penn State University
email: [email protected]; web site: http://www.personal.psu.edu/faculty/r/m/rmf5
blog site: http://telefrieden.blogspot.com/
Explaining the Concepts—
Network Neutrality

Internet Service Providers (“ISPs”) want to diversify and engage in price and
quality of service discrimination downstream among end users and upstream among
content providers.

Deep Packet Inspection and other innovations make it efficient and economical for
ISPs to operate non-neutral networks offering “better than best efforts” traffic
routing, variable quality of service, Digital Rights Management, and all kinds of
“traffic shaping.”

Advocates for network neutrality want a non-discrimination mandate, but explicit
common carrier regulatory authority does not exist.

Advocates for net neutrality claim ISPs have the incentive and ability to block,
delay, or otherwise thwart the delivery of content in violation of consumers’
reasonable expectation of an open and free Internet.

How this debate plays out will have a major impact on the scope of lawful Internet
regulation as well as the accessibility and affordability of Internet-delivered content.
How does this threat to Internet freedom affect you?
Small businesses—The little guy will be left in the "slow lane" with inferior Internet service, unable to compete.
Innovators with the next big idea—Startups and entrepreneurs will be muscled out of the marketplace by big corporations that pay Internet providers for the top
spots on the Web.
Bloggers—Costs will skyrocket to post and share video and audio clips—silencing citizen journalists and putting more power in the hands of a few corporate-owned
media outlets.
Google users—Another search engine could pay dominant Internet providers like AT&T to guarantee another search engine opens faster than Google on your
computer.
Ipod listeners—A company like Comcast could slow access to iTunes, steering you to a higher-priced music service it owns.
Online shoppers—Companies could pay Internet providers to guarantee their online sales process faster than competitors with lower prices—distorting your choices as
a consumer.
Telecommuters—When Internet companies like AT&T favor their own services, you won't be able to choose more affordable providers for online video,
teleconferencing, Internet phone calls, and software that connects your home computer to your office.
Parents and retirees—Your choices as a consumer could be controlled by your Internet provider, steering you to their preferred services for online banking, health
care information, sending photos, planning vacations, etc.
Political groups—Political organizing could be slowed by a handful of dominant Internet providers who ask advocacy groups to pay "protection money" for their Web
sites and online features to work correctly.
Nonprofits—A charity's website could open at snail-like speeds, and online contributions could grind to a halt if nonprofits don't pay Internet providers for access to
"the fast lane."
What They've Got Planned
The threat to an open internet isn't just speculation -- we've seen what happens when the Internet's gatekeepers get too much control. These companies, even, have
said as much about their plans to discriminate online.
Ed Whitacre of AT&T told BusinessWeek in late 2005:
Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So
there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?
It's Already Happening
Such corporate control of the Web would reduce your choices and stifle the spread of innovative and independent ideas that we've come to expect online. It would
throw the digital revolution into reverse. Internet gatekeepers are already discriminating against Web sites and services they don't like:

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In 2004, North Carolina ISP Madison River blocked their DSL customers from using any rival Web-based phone service.
In 2005, Canada's telephone giant Telus blocked customers from visiting a Web site sympathetic to the Telecommunications Workers Union during a
contentious labor dispute.
Shaw, a major Canadian cable, internet, and telephone service company, intentionally downgrades the "quality and reliability" of competing Internet-phone
services that their customers might choose -- driving customers to their own phone services not through better services, but by rigging the marketplace.
In April, Time Warner's AOL blocked all emails that mentioned www.dearaol.com -- an advocacy campaign opposing the company's pay-to-send e-mail scheme.
This is just the beginning. Cable and telco giants want to eliminate the Internet's open road in favor of a tollway that protects their status quo while stifling
new ideas and innovation. If they get their way, they'll shut down the free flow of information and dictate how you use the Internet.
Stakes and Mistakes

Converging and concentrating information, communications and
entertainment (“ICE”) markets raise questions about the viability of selfregulation and an unfettered marketplace of ideas.

ICE technologies defy compartmentalization, yet mutually exclusive
definitions apply and trigger different regulatory treatment.

Technological and marketplace convergence means that three screens (TV,
computer monitor and wireless device) can display the same content on
demand.

The FCC seems unable to apply more than one model to a single venture
even when it delivers “triple play” services. Creative statutory
interpretation and stretched jurisdiction recently rejected by an appellate
court.

Despite the view that the Internet qualifies for limited regulation, the FCC
has intervened extensively.

The FCC has issued a consultative document that outlines a proposal to
establish enforceable rule designed to promote nondiscrimination and
consumer freedom.
The Convergence Quandary

ISPs combine conduit and content.

ISPs have speaker rights, but the First Amendment and other
legislated free speech rights do not cleave solely between ISPs and
their subscribers.

In the U.S. ISPs gladly abandon editorial control to qualify for “safe
harbor” exemption from tort and copyright infringement liability,
but they also use such control to create “walled gardens” of content.

Current media models, such as print, cable television and telephony,
do not fully work for the Internet.

Network neutrality seeks to preserve and open and free marketplace
of ideas, but how can ISPs lawfully manage their networks and
afford to make costly upgrades?
The FCC’s 4 +2 Network Freedoms/Proposed Rules
In 2005 the FCC articulated four Internet “principles”:

(1) consumers are entitled to access the lawful Internet content of their
choice;

(2) consumers are entitled to run applications and services of their choice,
subject to the needs of law enforcement;

(3) consumers are entitled to connect their choice of legal devices that do
not harm the network; and

(4) consumers are entitled to competition among network providers,
application and service providers, and content providers.

In November, 2009 the FCC proposed to codify as rules the 4 Network
Freedoms plus require Nondiscrimination and Transparency for both wired
and wireless networks.
Can the FCC Lawfully Regulate Internet Service?
The FCC uses service definitions that create a dichotomy between
regulated telephone services and largely unregulated information
services.
Despite a regulatory safe harbor for information services, the FCC
has invoked ancillary jurisdiction to impose burdens on ISPs, e.g.,
providers of Internet-delivered telephone calls must contribute to
universal service funding and comply with several telephone
company regulations.
The FCC rejected Comcast’s claim of a right to thwart, delay and
degrade certain bitstreams as legitimate “network management”
even when congestion did not exist.
An appellate court reversed the FCC’s assertion of jurisdiction
calling into question what enforceable rules, if any, the FCC can
establish.
Impact of Net Neutrality on Content Providers
Positive Impact
A nondiscrimination requirement attempts to maintain a level competitive playing field in the
marketplace for content against the incentive and ability of ISPs to favor affiliates and protect
revenue streams, Comcast’s pay per view/video on demand vs. IPTV and P2P file transfers.
If Enron employees could create artificial bottlenecks and congestion in the switching and
routing of electrons, then ISPs can achieve similar outcomes for Internet packets. Net
neutrality could prevent, or penalize “dirty tricks.”
“Walled Gardens” of easily accessed content not likely to support struggling new artists.
Negative Impact
Both users and content providers might want (and be willing to pay for) “better than best
efforts” routing delivered to computer desktop monitors; faster delivery of “mission critical”
bits.
Likely to trigger regulatory uncertainty, litigation and claims that government involvement
creates disincentives for private investment. The Internet has thrived with government
incubation and early privatization.
Exclusive access arrangements can serve lawful promotion and marketing goals.
Net Bias Versus Reasonable Price and Service
Discrimination
Impermissible Net Bias
Permissible Network Bias
Deliberate Packet Loss
Variable Bandwidth and Throughput
Creating Artificial Congestion, e.g., 99/1
partition of premium and regular bit delivery.
Bandwidth Partitioning
Targeting Large Volume Content
Generators for Punishment or Extortion
Metered Service
Most Types of Port Blocking (but not to
control spam and denial of service attacks)
Unilaterally Imposing Upstream and
Downstream Rules That Violate Existing
Service Level Agreements
Better Than Best Efforts Routing
Akamai-type Enhanced Traffic Routing and
Management
Special or Exclusive Content Deals
Affiliate Favoritism That Violates SLAs, Fair
Trade and Antitrust Laws
Fees for Overriding Firewalls and Filters
Conclusions and Recommendations

The next generation Internet will not offer a one size fits all
“network of networks.” Flexibility in pricing, service provisioning
and quality of service options can make economic sense.

However, deliberate blocking, or degrading traffic violate many
nations’ communications laws and possibly non sector specific
consumer protection law and competition policy.

Better than best efforts is not a contradiction, nor does it always
constitute unlawful discrimination.

ISPs should fully disclose terms and conditions as well as report on
network usage. Requiring transparency does not foreclose net
flexibility, but it can prevent Enron-type gaming and induced
congestion.
Additional Research Questions

Is Net Neutrality a solution in search of a problem? What potential
exists for anticompetitive practices in switching and routing content?
Does a bottleneck, or market failure exist in first or last mile access to
the Internet, or farther upstream?
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Would Google have any problems finding alternative ISPs to carry its
traffic if AT&T refused? Would start-up ventures have the same
opportunities?
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Would net neutrality rules create disincentives for investment in next
generation networks?

Can non-sector specific regulators and the courts remedy any actual
abuses in lieu of ex ante regulation?

What is the scope of permissible jurisdiction over ISPs that fits within
existing legislative authority and does not violate freedom of speech
rights?