Net Neutrality

Let's start a post on net neutrality a little differently: What kind of shameless econo-political whore do you have to claim with a straight face that net neutrality is a government attempt to limit internet freedom through regulation? I guess you could be a Republican, a conservative pundit, or Fox News, all of whom railed against government intrusion into the internet.

Either these people don't know a thing about net neutrality, or they don't know a thing about free markets. I am guessing it is a little both. Net neutrality is regulation of big business to ensure the free flow of information -- at its core it prohibits a telecommunications company from preferring one type of content over another. The network must be neutral to the bits flowing across its lines. Comcast could make a lot of money making sure that YouTube videos got preferred bandwidth while startup video providers were stuck in with rest of the data.

Lest you think that big companies dealing for bandwidth is a pie-in-the-sky proposition, none other than Google has tried to pen such deals - using ISP servers to cache its searches and proposing the construction of Google server farms next to ISPs with dedicated lines. There is a business logic to this: there are a lot of Google users and this would help them access Google faster. Thing is, it also gives a big player in the market an unfair advantage in the medium of communication.

This is not unlike the vertical monopoly Rockefeller created with Standard Oil. By owning every stage of production, from the oil derrick to the railroad, JDR both lowered his own cost and, more importantly, prevented others from using the same means to produce competing goods. That type of monopoly has since been heavily regulated.

The truth in a free market is that not everything is free. Rather, a free market functions most effectively when information flows freely. Any attempt to limit or alter the flow of information -- insider trading, collusion, etc. -- creates an inefficient market and represents an attempt to stifle competition. That reality gets interesting when one talks about telecoms. The lines are all run and maintained by private entities - in particular those providing the fiber that carries data signals. While we want enough competition to spur innovation in that area, we don't want these companies crossing the outer lining of their own wires and meddling with the substance of the data itself. The only thing that can come of that is to prefer one type of content over another.

Rather, these companies should put effort into making the whole system run faster for everyone. But won't that just reduce the cost of the service? Yes, and we'll use more. But what motivation will telecoms have to lay more cable if service is cheaper? Well, the federal government pitches in for that. Wait, there's federal money underlying all of this? Yes - now don't you feel a little better about ensuring that we all get equal access to the cable we helped fund?


David said...

I come at the discussion from a technical perspective, and I have found that both my approach and my conclusions are wildly different from the various political discussions. (I am, as you know, a Republican, but that is orthogonal to the discussion at hand, other than that I am generally in favor of a lighter regulatory hand rather than stronger, but that's not a hard-and-fast rule).

The existing status quo of network, broadcast, and telecom regulation is a bizarre quilt which makes arbitrary distinctions between similar things and lumps many dissimilar things together.

why is television service delivery regulated in a different way than telephone service or internet service? (a: historical reasons)

Does a company need a license to deliver telephone or television service to customers? (a: yes)

Does a company need a license to deliver internet service to a customer? (a: no) What if the company provides access to telephone or television service over that Internet access? (a: still no)

Why are coaxial cable, fiber-optic cable, and twisted-pair copper regulated differently with regard to service delivery to end customers?

Is the company which provisions the above mentioned access types considered a regulated monopoly (i.e. utility), or ate they considered a for-profit enterprise which must compete with other for-profit enterprises?

Many of the weirdness which comes up in answering all of the above can be dated to the telecommunications act of 1996 - that made the presumption that long distance telephony was "where the money was" and that ensuring competition in that area took precedence. The act had the stated purpose of encouraging overbuilding such that there would be multiple last-mile providers, but the net effect was the exact opposite, and the CLECs generally did NOT actually build their own last-mile infrastructure.

Better questions for any net neutrality proposition are:

1) Is a provider allowed to attempt to provide deterministically better service to "well-behaved" network endpoints? (i.e. matching identifiable telephony packets and trying to minimize their jitter) If the answer is "yes" then that means that "poorly-behaved" endpoints will NOT get this service.

2) Interconnections between Internet providers are not currently regulated - they are entirely private matters, and the US Government does not provide a neutral NAP (not since the 90s) of last resort. Clearly there can be no serious performance guarantee of service once traffic leaves a certain provider's network. Is a provider allowed to provide a service guarantee if the customer's traffic stays entirely on their network? We certainly allow mobile-phone providers to do this (notice the "no minute charge for calls to the same carrier" type approach).

Much of what I've read on the network neutrality topic doesn't convey the impression that the authors understand how networks actually work, let alone the complex interaction between networks (hint: the "Internet" is *by definition* a "network of networks" where each of the component networks has independent policy - as has been said on NANOG and elsewhere "your network, your rules.").

Want to know how I think it should be done? That's a conversation which requires a beer or two... :)

AZMos said...

David has it right. You can't just impose Net Neutrality regulation on
top of what is currently a completely anachronistic regulatory regime. The medium should not matter - let's argue about appropriate regulations, if any, for different services.

That said - something else missing in the net neutrality debate is the existence of a middle ground. For example, why not allow ISPs to treat different types of content differently (e.g. voice, video, text, etc.) but not differently depending on who is providing the content?

The BBC article you linked to brings up the the problem with imposing neutrality regulations on wireless carriers. Until the technology and spectrum is available to handle the bandwidth, does it make sense to regulate neutrality? I know that I want mobile broadband that works as well and is as open as my wired broadband. The day I can get that from a wireless carrier is the day I subscribe to a data plan. But I'm not sure regulating net neutrality is the way to encourage more advanced and better managed networks.

And as for wired internet - I'm worried that these regulations will become obsolete quickly. Limited bandwidth which would lead ISPs to discriminate against certain traffic isn't really a problem for those with fiber to the home. Fiber can handle significantly more bandwidth than is being used today and that is expected to be used in the near future. As bandwidth capacity becomes less of a problem, are we really worried about ISP discrimination?

Maybe the answer is yes. I know I'm arguing that limited capacity and unlimited capacity may both be reasons to be concerned about neutrality regulations, but that I because I don't know the answers. I'm worried that here, as in every debate, some nuance is really being lost. Open and nondiscriminatory Internet access and transmission is a laudable goal, but I'm not yet sure this is the best way to get there.