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Internet Neutrality – Tough Issue

If the telcos have their way, the Internet in the US COULD become as innovation-free as the phone networks and as content-challenged and inflexible as the cable networks.  On the other hand, legislation to prevent these companies from doing what they MAY not be able to do anyway could be a cure that’s worse than the disease.

Unless your livelihood depends on preventing further creative destruction resulting from Internet innovation, it’s almost impossible to be against the principle of Internet neutrality, the principle that underlying networks should treat all packets in the same way regardless of content.

Make no mistake, the future of US telcos, at least in their present form, DOES depend on putting the Internet genie back in the bottle. And their monopoly on lobbying strength now that AT&T and MCI are gone is even more frightening than their share of the local access duopoly.  Not only is VoIP removing any vestige of an excuse for the greatly inflated rates charged for traditional voice traffic while providing richer and more disaster-resistant service; Internet TV (IP TV) obsoletes the telco’s strategy of providing cable-TV like service as a new revenue source.

We aren’t going to buy “channels” or bundles of channels for much longer. IP TV makes it possible for us to obtain our entertainment a show or an episode or a fragment at a time whenever and where ever we want.  That’s a big whoops for telcos which have bet their future and lots of their stockholders’ money on replicating the obsolete business of the cablecos.  Throttling the free use of the Internet in the US would slow down not only VoIP but also slow the growth of IP TV.  While they’re at it, the telcos, whose current business model is broken, would like to insert themselves as toll collectors between you and Google.

Please jump up and down and say “bullshit” loudly any time anyone suggests that Google or anyone else is getting a free ride on Internet pipes.  Google pays for Internet access just like you and I do, only they buy a lot more so they pay a lot more.  And we pay for the access we use to get to Google.

But the main problem with what the telcos want to do to the Internet is NOT that it might siphon some revenue from Google or even that it is doubledipping.  The much more serious problem is that charging according to content or according to the source or destination of a particular packet will BREAK the Internet for both current application AND future applications and that is exactly what our friendly telcos would like to accomplish.

The Internet functions as well and cheaply as it does because the backbone networks know nothing about what is inside packets.  These networks have the crucial but ultimately simple task of delivering most packets to where they’re going at the best possible average transit time.  As David Isenberg explains so well, this “stupid” network architecture means that the network is a suitable carrier for applications which weren’t even dreams at the time the Internet was first designed.

The Internet the telcos would like us to live with here in the United States is “application aware” as well as “source aware”. If you want to build a new application, you can wait in line for major Internet’s owners (these same telcos) to decide to accommodate your packet type.

 

Reality check: why doesn’t your landline phone do most of the things your cellphone does?  It doesn’t have to worry about either battery life or size?  The reason is that it’s attached to the traditional phone network on which innovation simply can’t happen.  Telcos would like to make the Internet a similar innovation-free and profit-safe zone.

OK.  This shouldn’t be allowed to happen.  Proponents of net neutrality legislation say there oughtta be a law.  But plenty of smart people – perhaps represented best by Martin Geddes – argue that a net neutrality law would be counterproductive.  Turns out that neutrality itself is very hard to define.  Should a neutral network be prohibited from blocking packets which attack the network itself?  What about spam – does it have to be treated neutrally?  What if someone invents a special purpose network good for connecting vending machines to something or other; does that network have to provide Google access  in a non-discriminatory manner?

Once neutrality is defined by regulation and enforced by bureaucrats, the requirement itself could become an obstacle to innovation.  Even more scary, given the skill of the telcos in manipulating congress (can you say “campaign contribution”?) and the FCC, could the neutrality requirement end up being enforced only against innovators?  What if there were a five year wait for a “neutrality” permit before a new application could be deployed.  Wouldn’t the telcos love that?  Come to think of it, they have been pretty good lately at getting the FCC and the courts to throw obstacles in the way of VoIP.

Countries with true telecommunications competition – now including most of Western Europe and especially Great Britain – don’t have net neutrality legislation.  Nor do they have a net neutrality problem.  And they have higher speed access than we do with wider availability at lower prices.  Hmm…

So what we need is competition and this is exactly what we ain’t got.  Moreover, we’re moving in the wrong direction.  I don’t like the policies advocated by at&t CEO Ed Whitacre (read Don’t Buy DSL from This Man) but I have to give him full credit for reassembling the Humpty Dumpty that Judge Greene thought he had shattered forever.  Even with today’s still neutral Internet, the telco-cableco duopoly is NOT delivering the quality of broadband access Americans need to be competitive in a flattening world.  We need competition.

So, in the absence of competition, do we need net neutrality legislation?  Is that legislation a risk worth taking?  Can it be passed through a lobbyist-ridden Congress?  If so, would the cure be worth than the disease?

I don’t know.  I’m still thinking.  Sorry to be indecisive.

But there is no question that we need competition.  We need to encourage it from every quarter.  We need to oppose any attempt to expand the power of the existing monopolies.  We ought to oppose any mergers (BellSouth and at&t is next on the agenda) which will further strengthen existing monopolies.  This fight needs to be carried out at the local, state, and federal level as well as the marketplace.

We do need a neutral network.  Competition will guarantee neutrality since a neutral Internet will outsell a crippled one (except for special cases which is fine).  But it’s still an open question whether we can reverse the decline in Internet access competition before the US telcos manage to reverse the benefits of the Internet in the US.

BTW, it is no coincidence that VoIP visionary Jeff Pulver is now an IP TV visionary (See yesterday’s WSJ).  Jeff is more convinced than I am that Internet Neutrality legislation would be helpful and has worked hard for it.  We are in complete agreement on the need for a neutral Internet.

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Comments

Brigette16

First of all, I would like to point out that not only would net neutrality be a bad idea for the general populace, but it would also be an issue of Homeland security/National safety. Net neutrality = Unsafe naval bases, and easy access to information we DON'T want accesible to people who hate America (yes, I know, there's alot.)

Al Collins

TIE,
Just a gut and maybe somewhat simplistic reaction since this is not an area that I have followed closely. If I think of the information superhighway the way I think of highways here in Houston it seems clear to me that there are very real advantages to them not being completely unregulated. For example, I like the fact that there are limits on how large the tractor-trailers can be, on what roads they can travel, and what they can carry. Are these highways "neutral"? In many ways I think you'd agree they are. Clearly in some ways they are not -- e.g., different speed limits for trucks than cars. Do you think it's a bad thing that they are not completely neutral? If so, why?

It seems reasonable to me that there should be regulations. What they should be depends on what objectives we want to achieve. For me, "neutrality" by itself is not the ultimate objective. I think we need to be more clear on WHY we want neutrality -- what it will help us achieve. So, some critical issues would be what are the bigger objectives, who should determine these objectives, and, given the objectives what process should establish the regulations. As with our Houston highways, I would expect some degree of "neutrality", but am not convinced that complete neutrality would be a desirable goal.

It feels a little like you agree there should be regulations but don't trust the regulation process that would likely ensue. I think that's a different, and MUCH larger, issue.

What do you think?

Jake

If the Net changes in such a way, it'll close the world off again and cease to become the world wide web.If it can be done for free now, I wouldn't use it. Stop trying to fix something that isn't broken.

Nancy Kramer

Here is a good definition of Net Neutrality by Dr David Reed of MIT. Possibly it will clear up some stuff on this subject.

"Net Neutrality Definition - In accordance with Internet standards all lawful data packets will be passed through the network without regard to their origin, destination, which application created them, or their content. Only the origin and destination addresses or their authorized, agents may look into the packet to see the content."

REN

"If so, would the cure be worth than the disease?"

[worse] than the disease? yeah, it would be... the cure is in the cause and as many have pointed out, the cause of any disease it may be 'curing' isn't even completely knowable yet...

Richard Bennett

In your piece on wireless, you say: "Moreover, modern technology means that licensing of spectrum (which always means granting at least a franchise if not a monopoly) is no longer necessary. Data can find its own clear path through the ether somewhat like cars do on a road or packets through the Internet."

That's not actually the case.

Tom Evslin

Luci:

Thanks for your comment. Unlicensing of more bandwidth is certainly part of an effective startegy for creating a more competitive environment. Not sure it's sufficient by itself but very helpful.

I posted a little about that here http://blog.tomevslin.com/2006/01/its_time_to_wor_1.html

Luci Sandor

IMHO, the States, so liberal and so right in their liberalism in almost any other aspect of life, got the cables and air waves stuff a bit wrong. Any other regulation, except a strong deregulaton, would hurt. Otherwise, there will always be anomalies like the one I am witnessing here - the Verizon offer for VoIP over their DSL and their wire. All I understand from this offer is that Verizon could lower the long distance prices for every customer, but it's the private monopoly that prevents them from milking the customer.
Regarding the IPTV, I think that the entertainment IPTV is already here, with the advent of the movie download websites, but the early adopter wil be those who actually are looking for live events, who already spend large amounts on pay per view.
IPTV started the wrong way because the owners of the valuable live/real-time media are the old style media companies, those don't have any trust in the intelligence of the customer.
These companies block the access to IPTV, their offers for something loosely called VoIP are ridiculously expensive. Unfortunately all of their failures to get into the new world, born of the failure that allowed them these privilleged positions on the market, are hurting big time the evolution of the market. My hopes regarding a real deregulation of the cables and wavelenghts are very reduced, and I think the only way out of this is the development of unlicensed communications.
I am sure that on the next two World Cups I still won't be able to purchase the online viewing of the second half of a specific game (technologically, it might be done, but at a huge end user cost).

Richard Bennett

Tom, with all due respect the Internet doesn't work the way you think it does. You say:

The Internet functions as well and cheaply as it does because the backbone networks know nothing about what is inside packets.

This is total horseshit. Routers know a lot about the packets they process, and under conditions near overload their knowledge is vital to keeping it from collapsing. There have been many RFCs written about things like Active Queue Management and RED that elaborate on procedures that prevent the network from melting down, and they all depend on examining the content of packets. The Internet mistakenly puts congestion control in TCP, so the routers have to know what kind of packets they're discarding and forwarding or the whole thing falls apart, as it used to do on a regular basis in the mid-80s.

There are also such things as SLAs that require routers to look at packets and determine where the source and destination systems are to compare them to contracts. You'll never understand the Internet if you take your clues from people like David Isenberg who live in world of total fantasy.

The proposed service tiering model that the Telcos would like to offer consumers isn't much different from service tiering models that already exist for commercial Internet contracts. I have a much greater range of service options for my business than I have for my home.

Anybody who wants to regulate the Internet had first better learn how it actually works and what the requirements of next-gen apps like IPTV really are. Then he can construct an appropriate regulatory framework to prevent monopolistic business practices.

The "neutrality" bigots think they can skip the first two steps by force-fitting the Internet and its rich services into the old monopoly telco regulatory model. That's such a ridiculous approach they've had to try and hide it behind a term that nobody understands.

The Internet should be regulated, but according to its own model, not according to crazy Utopian fantasy.

Philip

My $0.02:

$0.01:
"Stockholders and portfolio managers with diverse investments need to see that the telco’s plans will have an impact on future profitability of the companies that they invest in. Many tech funds invest in both content providers and telcos; these investors need to push the telcos to commit to Net Neutrality."

Has anyone considered how much new businesses contribute to GDP? Or quality of life? Or how many people they employ? As I sat listening to debates between new tech innovators in New York, I couldn't help but think: could any of their successes have been achieved if bandwidth weren't neutral?

$0.01:

Imagine if the water company charged different amounts for varying water qualities (assuming home filters didn't exist). You'd pay a low cost for cheap lawn-watering fluid, but very high cost for drinkable water. Does that sound fair? Maybe I shouldn't have said that... wouldn't want to spread the bad ideas!

Tom

You say: So, in the absence of competition, do we need net neutrality legislation? Is that legislation a risk worth taking? Can it be passed through a lobbyist-ridden Congress? If so, would the cure be worth than the disease?
I don’t know. I’m still thinking. Sorry to be indecisive.

I say: Legislation is not the only way to protect Net Neutrality.

There are two other ways that I know of.
1. Press the telcos on Net Neutrality as part of their IPTV cable franchises. Make them commit to Net Neutrality if they want public franchises. ( I have been fighting for this in New Jersey; please visit http://www.redbanktv.org to learn more )
2. Stockholders and portfolio managers with diverse investments need to see that the telco’s plans will have an impact on future profitability of the companies that they invest in. Many tech funds invest in both content providers and telcos; these investors need to push the telcos to commit to Net Neutrality.

Jae Rune

Brilliant. When I was explaining it to my friends, I basically said "Imagine you have a length of garden hose. Now imagine you were pouring marbles down it at a continuous rate. The marbles more or less get to the other end of the hose at the same time. Now imagine if you stopped to sort every blue marble out and send those first. They're not going down that pipe any faster, but while you're sorting them, you're doing a fine job of hanging up the other marbles. Now why not just go ahead and send the other marbles down while you sort and then send the blues at once? Well, then you're slowing down the blue marbles, aren't ya?"

It's not a "stupid" network. It's a neutral network: it could give two shits what your data is, it only cares that it needs to get there. Besides which, the slow-down is in the hubs/routers/switches/servers, not the pipe-line itself.

Tom Evslin

Randall:

Interesting idea. I'd be more confident if there were more competitors. I don't think it would be practical for Google to punish everyone who gets their Internet acess from at&t but this is a very good thought experiment.

Tom Evslin

Rajesh:

My guess is that most billing will continue to be on a subscription basis – unlimited use of limited bandwidth. Users actually pay a premium forsimplicity and predictability and, in most cases, abuse is not as abusive as it may appear since networks have to be sized for peak load.

Hope to blog about this soon and certainly appreciate your comment.

Tom Evslin

Christian:

Very good point. Usually networks pay for content and not the other way around. I did post about Verizon paying for content on its newest network here http://blog.tomevslin.com/2006/03/verizon_pays_co.html

Tom Evslin

Luci:

Sorry if I seem to be ahead of myself. VoIP is real and here and available and making cheaper telephony available to everyone – even subscribers to traditional technology. IP TV is coming but not here yet in the same sense. I believe it will be just as disruptive, however, and that fear of this disruption motivates telcos to want to slow it down just as they have tried – sometimes successfully – to slow VoIP.

Tim Swanson

I just came across your post on the topic (from TechDirt) and wanted to point out that nearly everyone is missing the bigger picture: that State intervention caused this problem in the first place and shouldn't be counted on to fix it (and as you say, Martin Geddes does point this out).

More here: http://blog.mises.org/archives/005177.asp

Cheers.

Christian Cadeo

The more I think about this, the more I think this is all backward. Put simpley shouldn't the telecoms be PAYING all the internet companies? Without all the stuff that these companies created, those pipes would be worthless. Sheesh we really do need all the GYMs to buy all the dark fiber and layer it with Wi-Max and bring some competition to the telcos (yes i know goog is already doing this, but it does not look like it was meant for external usage).

Rajesh Raut

We definitely don't need legislation right now. Eventually, we will figure out the right model for usage-based billing for internet services and any legislation written now will be as bad a joke as the 1996 Telecommunications Act.
Unlimited internet access is a myth. The broadband provider don't tell you (and may not know themselves) what the limits are. But at some point, people will hit that limit and then the debate over how to pay for expanding capacity will begin.
The current proposal is unworkable. How much of the internet video traffic is from Google and how much comes from MySpace? With-out infrastructure that tracks usage metrics and enforces limits, any usage based billing will be an exercise in begging for charity.

Luci Sandor

My feelings are divided. It's either I am not aware of the Internet TV, as I am not aware of so many stuff here in the US, or your talk is SF. I am paying to RealNetworks, using my European billing address, two times more than the basic cable package, and I get 3 (THREE) channels that I am interested in (Euronews, and the European versions of BBC World and CNN International) and some other stuff that I coulnd't care less, so I fail to see what are you talking about. I should add that Yahoo!, one of the biggest Internet companies, bought the exclusive rights for the Football World Cup and refuses to broadcast the games live, either free, ad-supported or pay-per-view. But then, if you know something more, give me a tip on how to watch BBC America or the American CNN.

Randall

I think telcos who want to throttle bandwidth and inhibit innovation should be required to subscribe to that model and not be able to deviate from it once set.

Competitors would then be free to create a neutral offering that would walk all over the telcos'. In addition, as proof that content is king, the leading providers like Google, Yahoo and Microsoft should block access to their sites from non-neutral providers further hampering this asinine business model.

Tom Evslin

Charlie:

Thanks for your help. All jumping appreciated.

Tom

Charlie

BULLSHIT [Jumps up and down]

Great post.

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