Net Neutrality

Towards a Co-Regulatory Solution

Christopher T. Marsden

• Publisher: Bloomsbury Academic
• Year: 2010
• Print ISBN: 9781849660068
• eBook ISBN: 9781849660372
• Edition: 1
• Topic: Computer Science
• Subtopic: Cyber Security
• Index: Computer Science

This book is available as open access through the Bloomsbury Open Access programme and is available on www.bloomsburycollections.com. Chris Marsden maneuvers through the hype articulated by Netwrok Neutrality advocates and opponents. He offers a clear-headed analysis of the high stakes in this debate about the Internet's future, and fearlessly refutes the misinformation and misconceptions that about' Professor Rob Freiden, Penn State University Net Neutrality is a very heated and contested policy principle regarding access for content providers to the Internet end-user, and potential discrimination in that access where the end-user's ISP (or another ISP) blocks that access in part or whole. The suggestion has been that the problem can be resolved by either introducing greater competition, or closely policing conditions for vertically integrated service, such as VOIP. However, that is not the whole story, and ISPs as a whole have incentives to discriminate between content for matters such as network management of spam, to secure and maintain customer experience at current levels, and for economic benefit from new Quality of Service standards. This includes offering a 'priority lane' on the network for premium content types such as video and voice service. The author considers market developments and policy responses in Europe and the United States, draws conclusions and proposes regulatory recommendations.

CHAPTER ONE

Net Neutrality: Content Discrimination

The Internet can’t be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!¹
Ed Whitacre, AT&T

Net neutrality is a contested policy principle regarding access for content providers to the Internet end-user, and potential discrimination in that access where the end-user’s ISP or another ISP blocks that access in part or whole, often subject to special fees, bluntly described by Whitacre in the now-infamous comments (see above) in an interview. By Internet content, I refer to content accessible to the general consumer on the public Internet,² as opposed to secure private networks, an important qualification as most material on the Internet is private (hidden behind enterprise or other firewalls).³ The net neutrality debate has two broad elements:

• The ‘positive’ forward-facing element of charging more for better QoS on the Next Generation Networks (NGNs) now being developed⁴
• The ‘negative’ backward-facing element, degrading or ‘throttling’ customers who attempt to take maximum advantage of applications (typically delivered using P2P protocols) over their current broadband connection.

The first is an emerging area, while the second is the object of current consumer controversy.

Dividing net neutrality into its forward-looking positive and backward-degrading negative elements is a common approach used by Felten, Sandvig, Mueller and many others.⁵ It is the vital first step in unpacking the term, in comprehending that there are two types of problem: charging more for more and charging the same for less.

Net neutrality has been variously defined, most prominently by regard to its forerunners ‘open access’ and common carriage by US legal theorists Werbach,⁶ and Lemley and Lessig,⁷ and the term ‘Network Neutrality’ was first coined by Wu in 2003.⁸ Abusive discrimination in access to networks is usually characterized in telecoms as a monopoly problem, manifested where one or two ISPs have dominance, typically in the last mile of access for end-users. As we will see, this is not the whole story, and this chapter considers the current US situation at mid-2009 and the progress towards competition in Europe, and tries to identify whether it is a competition or a more general problem. If it cannot be competed away, then we will need to look elsewhere for answers.

ISPs can discriminate against all content or against the particular content that they compete with when they are vertically integrated. Conventional US economic arguments appear to be broadly negative to the concept of net neutrality.⁹ Hahn and Wallsten explain:¹⁰

net neutrality has no widely accepted precise definition, but usually means that broadband service providers charge consumers only once for Internet access, don’t favor one content provider over another, and don’t charge content providers for sending information over broadband lines to end users.

Frieden, whose perspective is analytical and consumer-centric, reflects where regulators’ perspectives need by law to be focused:¹¹

Network neutrality advocates worry that major ISPs have both the wherewithal and incentive to bifurcate the Internet into one medium increasingly prone to congestion and declining reliability and one offering superior performance and potential competitive advantages to users able and willing to pay, or affiliated with an ISP operating a major bitstream transmission network.

I agree that this is the focus of the problem: Network owners with vertical integration into content or alliances have enhanced incentives to require content owners (who may also be consumers) to pay a toll to use the higher-speed networks that they offer to end-users. Note all major consumer ISPs are vertically integrated to some extent, with proprietary video, voice, portal and other services. My approach is of the middle way proposed in the United States by Atkinson and Weiser¹² and Frieden. It proposes neither:

• an absolute ban on ‘positive’ price discrimination when justified (for example, when higher-speed access to fibre links to the consumer provides an investment that certain high-bandwidth applications find attractive)
• nor an absolute prohibition on regulatory oversight, particularly of ‘negative’ net neutrality.

Instead, it begins by asking which abuses are key to the problem, by looking at US regulation, including the abandonment of common carriage, and then European regulation. As discussed later, the problems for end-users in accessing content (and vice versa) are not necessarily the same as those for networks competing with and interconnecting with each other.

The chapter progresses as follows: the first section addresses the changes towards deregulation in US communications policy and the abandonment of common carriage. The second investigates the FCC Four Freedoms, the ‘smoking gun’ case of Madison River and the 2006 merger conditions on Verizon and AT&T. The third explores the Comcast decision and the ramifications of that case. I then turn to European policy and the previous ‘American problem’ that many European policymakers used as their lens to suggest that different conditions predetermined different responses. Finally, I sum up the latest manoeuvres in the United States under the Obama administration These are of such recent vintage, and so likely to rapidly develop, that I draw no firm conclusions, in view of FCC Chair Genachowski’s speech of 21 September as this book went to press: see http://www.openinternet.gov/read-speech.html. This paints the background for the rapidly developing scene in Europe that preoccupies much of the rest of the book.

The American Challenge: Abandoning Common Carriage

The United States is different to Europe. US telecoms policy, as we saw in the Introduction, has rolled back from allowing competition to information providers on cable networks in its AOL-TimeWarner and AT&T/MediaOne merger cases in 1999–2000, to reversing entirely the presumption of competition on networks. The position established in 2005 by regulatory and court decisions is that competition is to be inter-modal – between the networks – rather than intra-modal – on both the cable and telephone wires.¹³ Instead of regulated access to both cable and telecoms networks, there is now a monopoly on both wires, which are classed as ‘information’ not ‘telecommunications’ services, and therefore largely unregulated.

The ‘Baby Bells’, the Regional Bell Operating Companies, divested from AT&T with the Modified Final Judgment of 1984 and re-emerged in 2006 as two local–long distance–Internet–wireless combines, now called AT&T and Verizon¹⁴ (the latter having also absorbed MCI WorldCom, the biggest Bell competitor in the 1990s). Some tinkering with the terms of those mergers in 2006 does not dispel the greatly increased concentration in the industry, and the abandonment of competition on the telecoms local loop. In the United States, the recreation of ‘Ma Bell’¹⁵ via a series of mergers has led to a situation in which only cable companies make an effective challenge to incumbents.¹⁶ Competition is now only ‘inter-modal’ between cable and telecoms, not ‘intra-modal’ between different telecoms companies using the incumbents’ exchanges to access the ‘last mile’. This has been viewed with a bemused detachment by the European Union, whose members and the Commission have carried on pursuing the competitive unbundling of incumbent facilities that began in 1996, inspired by the US Communications Act.¹⁷

Network congestion and lack of bandwidth at peak times is a feature of the Internet. It has always existed. That is why video over the Internet was until the late 1990s simply unfeasible with patchy quality and why engineers have been trying to create higher QoS, as we will see in Chapter 2. ‘End-to-end’ is a two-edged sword, with advantages of openness and a dumb network, and disadvantages of congestion, jitter and ultimately a slowing rate of progress for high-end applications such as high definition video. End-to-end may have its disadvantages for those introducing zoning as compared with QoS, and in this it has obvious parallels with ‘common carriage’ under the Telecommunications Act and its alter ego ‘information services’.

Citizens believe they have ancient rights of way and of service. The UK Carriers Act of 1830 was the first legislation for carriage of goods, codifying the common law. The Act applied to all common carriers by land (‘more effectual protection of mail contractors, stage coach proprietors, and other common carriers’²¹), including road and railway carriage, then in its infancy for passengers but well established for coal and other commodities. The UK Railways Act 1844 does include provisions for common carriage and ‘Parliamentary trains’ (low-cost trains that stop at all stations, later known as ‘milk trains’ because they ran pre-dawn to avoid inconveniencing more expensive trains at peak hours). Common carriers in medieval times included farriers and public houses (every horse to be shoed and person to be allowed shelter without discrimination between travellers).²² Common carriage should not be confused with charging tolls for higher-speed networks, though the Turnpike Riots of eighteenth-century England were associated with turning the King’s Highway into a private road, and UK opposition to road charging continues to this day.

Common carriage is historically defined by the duties imposed on public networks in exchange for their right to use public property as a right of way, and other privileges:

Common carriers and public carriers are under duty to carry goods lawfully delivered to them for carriage. The duty to carry does not prevent carriers from refusing to transport goods that they do not purport to carry generally. Carriers may indeed restrict the commodities that they will carry. Further, everywhere, carriers may refuse to carry dangerous goods, improperly packed goods, and goods that they are unable to carry on account of size, legal prohibition, or lack of facilities.¹⁸

This definition offers several reasons not to ‘common carry’, which can be extended to ISPs – spam and viruses for instance may be refused. In common-law countries such as the United Kingdom and the United States, carriers are liable for damage or loss of the goods that are in their possession as carriers, unless they prove that the damage or loss is attributable to certain excepted causes (such as ‘acts of God, acts of enemies of the Crown, fault of the shipper, inherent vices of the goods, and fraud of the shipper’, perils of the sea and particularly jettison).¹⁹ There are several more reasons for ISP data loss – the loss of undersea cables or alleged foreign power denial of service (DoS) attacks, as we will see in Chapter 2. It might be stretching a definition to suggest that P2P streams can be ‘jettisoned’ in order to allow other traffic to progress during peak time congestion.

It is worth stating what common carriage is not. It is not a flat rate for all packets and also not necessarily for all packets of a certain size. It is, however, a medieval non-discrimination bargain between the sovereign and the transport network or facility, in which an exchange is made: for the privileges of classification as a common carrier, those private actors will be granted the rights and benefits that an ordinary private carrier would not have. As Cherry has written, common carriers are not a solution to a competition problem, they far predate competition law.²⁰ They prevent discrimination between the same traffic type – if I offer you transport of your high definition video stream of a certain protocol, then the next customer could demand the same subject to capacity, were the Internet to be subject to common carriage (in the US it is not).

Telecoms networks were established to be common carriers as they achieved maturity, following telegraphs, railways, canals and other networks. Noam explained in 1994 the practice from the glass-half-empty school of neorealist communications:

Common carriage, after all, is of substantial social value. It extends free speech principles to privately owned carriers. It is an arrangement that promotes interconnection, encourages competition, assists universal service, and reduces transaction costs. Ironically, it is not the failure of common carriage but rather its very success that undermines the institution. By making communications ubiquitous and essential, it spawned new types of carriers and delivery systems … the pressure on common carriers come from two other directions: private NGNs offered by syst...

Table of contents

• Net Neutrality
• Copyright
• Contents
• List of Abbreviations
• Preface
• INTRODUCTION: Net Neutrality as a Debate about More than Economics
• CHAPTER ONE: Net Neutrality: Content Discrimination
• CHAPTER TWO: Quality of Service: A Policy Primer
• CHAPTER THREE: Positive Discrimination and the ZettaFlood
• CHAPTER FOUR: User Rights and ISP Filtering: Notice and Take Down and Liability Exceptions
• CHAPTER FIVE: European Law and User Rights
• CHAPTER SIX: Institutional Innovation: Co-regulatory Solutions
• CHAPTER SEVEN: The Mobile Internet and Net Neutrality
• CHAPTER EIGHT: Conclusion: Towards a Co-regulatory Solution?
• Notes
• Bibliography
• Index