Network Neutrality

What position do you advocate?

• By COB Sunday, flesh out the arguments here. Respond to the arguments other parties make.

BT

Prioritization. Huge investments in network infrastructure. Because bandwidth is expensive, we need to prioritize, and we want to charge content providers for priority. Disney should pay us if they want to reach our customers faster. The basic premise is that every bit of internet traffic costs money and somebody should pay for it. We have three parties here; contents providers, contents consumers and network operators. Basically, consumers and contents providers get their economic surplus as the traffic increases while network operator gets nothing but a flat rate. BT is not a nation owned company any more - BT has its shareholders to serve and employees who rely on the revenue from the network service. Operators could not put up with the situation that the operators of the Internet is the biggest victim in the new economy - actually the Internet economy. The solution would be in metering of upward traffic for every consumers and contents providers. BT does not want to invest more on the infrastructure to convey meaningless ad banners that is more and more traffic consuming and voice traffics that cannibalise our own revenue of telephone.

Disney's proposal of two tier internet is interesting though. As Clark, one of authors of 'end-to-end argument', is working on the Internet2 (see http://www.technologyreview.com/infotech/wtr_16051,258,p1.html), let's see what he would come up with.

Facing competition, don't want to cut Google off (and make consumers flee). Squeeze the mid-sized guys.

Network Neutrality, BT

Disney

We're big enough to cut a deal with the ISPs. Besides, we provide exceptional content which our customers should be able to enjoy without any type of streaming issues. We would welcome a structure whereby we could ensure that our customers' desire for high quality content is fulfilled.

Our proposal is that the ISPs begin a two-tiered system where quality content providers (companies like Disney) pay for a certain amount of guaranteed bandwidth and what is left over goes to the other providers. This would mean that those other providers would be limited in the quality (bit rate) by which they can stream data.

By limiting the quality of the 'second tier' providers, the levels of content copyright infringement should decline as customers will have only to visit one location to watch their desired content at a high enough quality level. This will protect our future revenues and ensure that we have the financial capability to continue making high quality content.

One major risk we see in this strategy is around future demand for entertainment produced by traditional media companies. We come from a tradition of creating content ourselves that audiences know, enjoy and trust. New media competitors offer users control over content generation, which leads to good and bad content. If we squeeze the availability of bandwidth for amateur user-generated rivals, we will hopefully drive demand back towards our own high-quality professional content. However, this strategy could backfire. We should think creatively around how we can incorporate user-generated content into our products. Owning a large piece of the distribution pipes will put us in a good bargaining position if we decide that we need to acquire or partner with a user-generated company to create hybrid content in the future.

An additional risk is that clever users may rebel against this type of restriction and will find new and creative ways to compress high quality content and deliver it at low bandwidths. This may be an inevitability as some of the key innovations on the Web have resulted from user dissatisfaction with current practices.

There also is the possibility that other big content providers may not buy into the idea, leaving Disney alone to champion what may turn out to be an unpopular position.

Google

We speak for the users and their freedom. If we can't get neutral net from BT, we'll build our own, because we rely on user content.

Economic Argument

Erosion of Competition

If Network Neutrality is not maintained, larger/wealthier internet businesses will be able to buy better service for themselves and their customers, with a corresponding decrease in service to customers of smaller/poorer internet businesses. If customers of smaller/poorer businesses experience sufficiently poor service, they may choose to switch to larger (faster) competitors, driving some smaller businesses out of business. Ultimately, this will reduce the number of options for consumers, decreasing the incentive for larger businesses to compete, thus resulting in poorer goods for all consumers.

Erosion of Network Effect

Internet users benefit from the network effect of each additional user who uses the internet. If the internet experience for users of smaller internet businesses, and consumers of low or non profit content (blogs, wikis, small independent music makers, social justice causes, etc.) is sufficiently degraded, some may decrease or even discontinue their use of the internet. This will detract from the network effect, reducing the value of membership for all. Ultimately this will negatively effect network providers as well: given the “long tail” nature of internet usage, BT depend on the subscription fees of Disney users just as much as those paid collectively by the masses of users with less conventional interests.

Moral/Ethical Argument

The argument ISPs are making about lack revenue source from new internet traffic is shorttermism at its best! ISPs fail to understand that the more content user is accessing the more value she is extracting out of internet and when the value proposition becomes compelling even marginal users will also become a consumer. In other words; ISPs are thinking of revenue from net as a fixed size pie whereas in reality the size of the pie increases as more quality contents come online. To cite how equal access content may increase the revenue source; consider the case of IPTV. The current infrastructure of internet does not scale up to deliver jitter-free interactive TV services over the net. Youtube came up with the alternative model of internet TV that offers unparallel interactivity no TV channel can even dream of matching. This had two effects on the revenue of ISPs over internet. Consumers who stayed out of internet because they could not find streaming entertainment source joined the ISP to access Youtube. This in effect reduced the customer acquisition cost for these marginal consumers to zero. Moreover, this also allowed consumer to see the benefit a scalable IPTV infrastructure can provide to them and thus creating implicit demand and consumer awareness for IPTV. For a mass market oriented product like IPTV; awareness generation could have been a costly expenditure that ISPs sidestepped. Economically, existing customer base of ISPs actually subsidized the customer acquisition cost for marginal customers and consumer awareness creation cost for IPTV.

Net neutrality is the oxygen of the internet (and hence should not be taxed under any regime). It allows content creator to differentiate themselves through the quality of the content and content consumer to choose among the available content and get the best deal. The pressure from the user forces content creator to create even better content to get the share of eyeballs. This virtuous cycle of continuous improvement is leading internet to become the most attractive media for consumer to spend time on. Content creators congregate believing the only competitive advantage is through content quality and hence deploy available resource towards it. Content consumers also know that they can get the best deal out of internet and hence they become loyal consumers. Any non-net neutral stance will add another dimension to the competitive scenario. We are likely to see a massive reduction in the quality of the content as content creators are forced to divert resource towards access issue of competitive imperative. Thus quality of the content will go down and consumers will be less willing to come to internet. This in effect will reduce the consumer base for ISPs which will be detrimental to the bottom line.

Google as company believes on net neutrality because of strategic reasons. Google is a platform and gateway to content creators. The value of Google lies in the value of underlying quality of content. In other words, when a content creator spends $1 on improving the content it is actually making Google 1 cent more valuable (numbers mentioned here are for illustration purpose and does not have any economic data backing). A non-neutral net creates two problems for Google:

1. As another dimension is added to the competitive environment; spending on content quality reduces and hence overall value Google reduces.

2. A non-neutral net that has gone to a great extent can make search engine redundant as there will be only a few sources from which user can get information. Thus the business model for Google and other search engine completely breaks down.

Thus we have seen a non-neutral net benefits no one: o It does not benefit ISPs as customer base diminishes. o It does not benefit content creators as the dimension of competitiveness changes completely requiring major strategic and organization reengineering. o It does not benefit startups as the monopolies stifle competition by denying access to information highway.

-- Response 1:

I believe policies like this are not neutral. I also believe they contribute to a non-neutral, to a perfectionist network. Is this bad? I don't think so. I do not believe "neutrality" can be the oxygen of the Internet, though a non-absolute end-to-end principle may well be so. As much as Google creates exceptions to its principle of neutral search arguably in defence of the the public interest, I also believe some exceptions to the end-to-end principle may need to be in place at some point to protect the same public interest. Though I agree with the goal of preventing Internet traffic prioritization initiatives merely targeted at economically benefiting private actors, I also believe that some discrimination of Internet traffic may need to be carried out at some point so as to protect users. For instance, the blockage of SPAM, or the filtering of DDos attacks are not neutral procedures. They are part of a network which must make some choices, according to a more or less general conception of "the good". They are part of a network which is not, and should not be neutral... which is quite different of saying that economic initiatives of traffic prioritization should be allowed, as they should not.

Business Argument

Net neutrality will definitely affect Google from a business perspective.

More and more of our revenues come today from our advertising networks (AdSense, AdWords and soon DoubleClick), in the first quarter of 2007 they accounted for almost 40 % of our total revenues, an increment of 45 % in one year. Also, International (non-US) web sites represent 47 % of the total revenues of the company. (1)

If ISPs are to prioritize the traffic that is coming from companies that are willing to pay – or to put it in a more clear way, that have the means to pay for the prioritization service – we might see a deterioration in the quality of service of most of the many thousands of small and international web sites that participate in our advertising networks.

It is clear that if less traffic is directed to many of those sites that account for an important part of our revenues, the impact on our finances could be potentially large.

Sources: (1) http://www.google.com/intl/en/press/pressrel/revenues_q107.html
http://www.gadgetell.com/2007/04/google-profits-up-waay-up/

Image argument

Google has managed to build one of the most valuable brands in the world in less than ten years. A part of the success of our company could probably be linked to our ability to create open products that could be customized by anyone accessing our APIs and our “Don’t do evil” karma that so many people within and outside the company feel so identified with.

Even if net neutrality had little or no impact on our business, Google should support net neutrality. Not doing so, would not only confront with our corporate culture but it would also jeopardize both, our credibility and our image.

Startup

[The entrepreneurs were omitted from the table/group assignments. A metaphor for the way they're often left out of the policy debate? ]

Think about the kinds of entry barriers that various network rules would impose.

Government

As government officials and bureaucrats, we welcome the open discourse surrounding the very complicated issue of network neutrality. As brokers of peace and goodwill and other stuff, we look forward to bringing both sides of this healthy debate to a sensible resolution (conveniently, we suspect that the ultimate resolution will be that which maximizes the potential of our re-election--as well as that of our political superiors). Seeing as how around 70% of the U.S. population is now online--significantly more than the number of people that vote--we figured that our citizens find this issue to be important, so we have prioritized finding a solution.

Our goal has always been to find a mutually beneficial solution to this issue. While the internet has become a quasi-utility, the legal matter is that telcos/ISPs own the property that networks are built on, and as such their rights as property owners should be respected. These telcos argue that they shouldn't be subsidizing this quasi-utility by bearing a disproportionate share of the financial burden associated with its ownership. That being said, we also recognize that net neutrality has helped create the vast economic, social, and cultural advancements over the past few decades since the internet was "created." Proponents of net neutrality contend that the parity of internet exposure enjoyed by startups, small businesses, and corporate titans alike has created an environment that benefits the consumer by reducing barriers to entry among established industries and allowing for disruptive innovations such as eBay and Amazon. These proponents also assert that the existing companies big enough to "strike deals" with companies such as BT/TIme Warner/Comcast are those with the most to lose to disruptive innovators such as, say, YouTube. Net neutrality, they say, promotes the very innovation that defines the internet. Both sides make "convincing" freedom of speech claims.

These issues came to the forefront of the political world last year, when our colleagues in Congress voted on the aptly-named "Communications Opportunity Promotion and Enhancement Act of 2006." Despite significant lobbying efforts on behalf of phone and cable companies, the COPE act failed and net neutrality remains intact as a significant number of everyday citizens wrote their representatives in Congress in support of net neutrality. Yet another example of government's undying devotion to the common man/woman.

We expect our stance on net neutrality to remain consistent--as long as our constituents continue to remind us that they'll hold us accountable if we give in to the significant political machine driven by the phone and cable companies.

Public interest consumer group

The Internet is a utility and should be treated as such. In times of electricity shortages we wouldn't allow Dyson to pay for priority electricity to their vacuum cleaners, so why should allow Disney to pay for priority bandwidth when it is a limited resource?

Furthermore, BT has been raising the possibility of government subsidies for broadband in rural regions while simultaneously arguing for a non neutral Internet. These two cannot co-exist as it is completely inappropriate for the government to subsidize Internet connections while allowing BT to dictate what the consumer can access at full speed.

-- Response 1:

Is there really a public interest in "network neutrality", or is it that the public interest lies merely on the non-prioritization of Internet bandwidth according to private interests?

But there is no difference between the former and the latter! - one would say. The non-prioritization of bandwidth IS network neutrality. Though, it could also be said that a neutral network is so much more than that...

I need to stake two ideas out before making my point. I will do this by raising some questions.

First, what do we mean by "the network"? Which layer are we focusing on? Is it merely the stupid, narrow part of the hourglass architecture - the internet protocols which were designed to preserve the end-to-end principle? Does it also involve the code and content, on the one hand, and wires, routers, spectrum etc., on the other, which are built on the top and bellow those protocols, respectively?

Second, if the Internet involves all these dimensions, can/should we be neutral in only one of them? If we say that law must enforce equal and unrestrained opportunities for information flow at the protocol layer, don't we risk having an unequal and restrictive concentration of communicative power in the content layer? Let us have in mind the excessive concentration of power by Google, which exerts an increasingly strong influence on the way information flows in the net. If some day we need to limit the way this happens, if we need to limit this excess of power, can we do so by intervening only in the content layer, or safeguards of some sort would also need to be embedded in the infra-structure itself? Besides, if we advocate neutrality at the protocols level, if we ensure the non-discrimination of information according to its sources, don't we also risk having some very harmful content unfiltered? Think of a terrorist organization, like, say, Al Qaeda - can't/shouldn't we stop content of this sort from flowing around?

From these questions we may perhaps conclude that neutrality in one of the layers, if achievable, could carry out a noxious and uncontrollable lack of neutrality in other layers. This may prompt converse and non-neutral policies, like, for instance, enforcing the use of authentication and identification technologies allied to prohibitions of routing harmful content, and badware around. Will we have a neutral internet if content of this sort cannot be put through?

In this sense, does StopBadware further a neutral Internet, or does it make/incentive choices on the flow of information according to its sources?

In sum, if what happens in one of the layers influences what happens in the others - if the Internet is all these layers, to ensure a really neutral network, we must ensure neutrality in all of the layers.

Being neutral, for political philosophy, means not to further a particular conception of the good; means not to make evaluative choices. A neutral Internet, then, is one in which no choices are made. But isn't the end-to-end principle, in itself, a choice?

Of the many definitions of "the Internet", the one that I like the most is that given by Searls and Weinberger in their "World of Ends". There, they say: "The Internet isn't a thing. It's an agreement".

There is no agreement without choice. And, IMHO, there is not such a thing as a neutral inter-network.

Trying to enforce one in the narrow, stupid layer of the protocols, may hinder the control of what happens in the other layers – may hamper consumer protection, may hamper generativity, may hamper... the public interest?

Are Google and the Public Interest really so interwined?

---

So trying to turn this into an agenda to further the interest of those we are representing, we should first agree on a set of criteria on what is in the public interest and as a second step identify the areas of advocacy where we need to get involved.

• High quality content at the lowest possible price
• Wide choice of options at the network, the content and the application layer
• Low switching cost between service providers at all layers
• Protection from harm by spam, virus, fake emails, etc.

In order to get there we need to take a holistic view and not merely focus on prioritization of network traffic on the network layer.

• Advocate a compulsory blanket license regime for all digital transmission of media to provide adequate remuneration for creators
• Foster agreement on open standards on the network and the content layer. Oppose proprietary encryption and transmission technology. Use anti-trust and consumer protection law if a voluntary process does not produce adequate results
• Strict anti-trust control on network service and content providers, both with respect to market concentration (Break monopoly of European incumbent telcos) and vertical integration (Require evaluation of YouTube/Google, Time/Warner/AOL type deals by independent consumer choice agency)
• “Freedom to tinker” for all consumer devices. We should not oppose the trend to locked-down devices if they are serving consumer convenience, but should require vendors to provide the required information to develop software for any given platform.
• Liability of application providers for harm caused by the provisioning of faulty internet browsers, email clients, firewall applications, etc. Exemption from liability can be achieved if security-relevant source code of application has been made available to the public under an Open Source License.

The claims of BT and other European telco incumbants need to be balanced by the large amount of subsidies the tax payer has paid in recent years to build the network they are now capitalizing. Proving network connectivity to the people is similar to providing people with utilities like electricity, gas, water, etc. The latter industries are profitable despite strict regulation of the government to protect the public interest. We acknowledge that BT is responsible to its shareholders, but only under a legal framework, which reflects public interest.

--- Response 2

1. The internet is an incredibly powerful tool because it does not discriminate based on content. A wealth of independent, alternative, and local news sources have a voice via the internet; they have equal ability to distribute their content and now compete with massive news conglomerates (many with their own political biases) to provide rapid, transparent, and potentially more accurate information. Telecom companies should not offer "favoritism" to large companies with deep pockets who can pay for faster service, larger channel distribution, and (in effect) channel blocking against smaller companies or individuals. As a result, telecom companies could dictate what information a user will receive, and when the user will receive it.

2. The internet is "democratic" at present, because there is no preferential treatment based on ability to pay. Research suggests that 60% of web content is authored by the average person, and not by companies. The average person will likely not be able to pay for premium access (for example, in the way that television ads or air time is sold at a premium, and in effect controlled by t.v. networks). In turn, companies will likely compete against each otehr for premium access through "dealmaking" and other exclusionary, monopolistic practices.

3. The internet must remain a "free and open" technology in order to cultivate innovation. Significant innovations on the internet have resulted from individuals working out of their garages with little to no capital, and not from large corporations. Should large corporations control people's ability to distribute and access information across the internet easily, the environment of open competition and innovation on the internet would be destroyed.

4. Much of the information on the internet is currently free, which is resulted in a democratization of access to information. Telecom companies and large companies could curtail people's ability to easily access free information, and essentially block these channels of distribution or provide them but at a cost. Limiting access to otherwise free information or regulating what content is free, and what is not, is contrary to the public interest.

Big picture

Is this "rough consensus" or negotiation among established players?