Net Neutrality or Net Bias? Finding the Proper Balance in Network Governance

1. Net Neutrality or Net Bias? Finding the Proper Balance in Network Governance A Presentation at the What Rules for IP-enabled NGNs Workshop International Telecommunication Union Geneva, Switzerland 23-24 March 2006 Rob Frieden, Professor of TelecommunicationsPenn State Universityrmf5@psu.edu web: http://www.personal.psu.edu/faculty/r/m/rmf5/

2. Explaining the Concepts—Network Neutrality • Advocates for network neutrality in the United States and elsewhere have called upon NRAs and legislatures to ensure that Internet Service Providers (“ISPs”) cannot discriminate against, or favor specific bitstreams. • Net neutrality advocates want to convert “aspirational” views of what the Internet can be into rules that can restrict ISP flexibility in terms of pricing, service quality and offerings. • They believe this principle should apply both upstream to other ISPs, or downstream to other ISPs, including how end users are treated. • Net neutrality advocates believe that the Internet has contributed to national productivity, economic opportunity and innovation in light of its nondiscriminatory, end-to-end connectivity.

3. The FCC’s Four Network Freedoms In a Policy Statement The FCC has articulated four non-biding “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.

4. Explaining the Concepts—Network Flexibility • Advocates for network flexibility reject constraints on their ability to price discriminate and recoup sizeable investment in broadband infrastructure. • They view net neutrality as thwarting competition and creating disincentives to invest in NGNs. • Advocates for net flexibility note that ISPs do not operate as common carriers in most nations. • As information service providers, ISPs have flexibly negotiated interconnection arrangements without evidence that any ISP or user group has faced concerted refusals to deal boycotts or and other anticompetitive practices.

5. How Does Either Concept Jibe with Existing Internet Protocols? • ISPs have achieved widespread geographical reach by securing “best efforts” routing and reciprocal carriage agreements from other ISPs information service providers. • They acquired significant market penetration by offering subscribers unmetered “All You Can Eat” service options. • “Nethead” philosophy about the Internet emphasizes lofty notions about ubiquitous access with less emphasis on cost recovery and analysis of cost causation. • Netheads favor zero payment Sender Keep All/Bill and Keep “peering.”

6. Revenge of the Bellheads: Internet Privatization Changes the Protocols and Who Rules • As the Internet grew government incubators withdrew financial support forcing a more commercial orientation. • The Internet industrial structure became more hierarchical with small ISPs paying for transit and a few Tier-1 ISPs continuing to peer. • Because the major telecoms carriers own the major ISPs, a Bellhead management and telecoms cost recovery template predominates. • The telecom template has a route specific focus with comprehensive route tracking, usage metering and cost accounting.

7. Challenges to a Telecoms-Based Economic Model • ISPs generate some content as well as the bit transport conduit. • Traffic streams typically are asymmetrical, i.e., a small upstream request triggers a large cascade of traffic, often augmented by unsolicited advertising. • Transiting and peering are connection and bandwidth based with less, if any, emphasis on metering. • Until recently metering cost exceeded the benefits, and “tunneling” a complete end-to-end link was technologically difficult and likely to violate existing “best efforts” transit and peering agreements.

8. Net Bias Versus Reasonable Price and Service Discrimination • Net bias occurs when an ISP deliberately discriminates against a specific type of bitstream or generator of a bitstream without an operational justification. This includes blocking ports and “snifting” bits to identify and block certain types, e.g., a competitor’s VoiP traffic. • ISPs can and should drop bits and deny service based on congestion and the inability to route bits. Net bias occurs when an ISP denies access even though ample capacity to switch and route the traffic exists. • ISPs can and should offer end users different bandwidth and throughput speeds as well as different interconnection and access arrangements to upstream peers versus clients. • Net bias occurs when an ISP deliberately degrades service by partitioning bandwidth and leaving it underutilized so that public transit routes become more congested and unreliable.

9. Conclusions and Recommendations • Network flexibility in pricing, service provisioning and quality of service options can make economic sense. • However deliberate blocking or degrading traffic does not. • ISPs should be able to partition bandwidth and offer downstream end users and upstream ISPs different levels of bandwidth and QOS. • Better than best efforts is not a contradiction, but existing interconnection and SLAs may restrict this option as might competition laws. • ISPs should fully disclose terms and conditions. Requiring transparency does not foreclose net flexibility.

10. Conclusions and Recommendations (cont.) • Net flexibility should not extend mid-stream to the switching and routing of traffic between a content source and end user unless and until a single ISP can offer a superior and complete routing from server to client. • SBC-at&t Ed Whitacre has not demonstrated how content providers such as Google have enjoyed a free ride. On the other hand ISPs should have the option of offering a more expensive, premium content delivery option if ISPs can deliver it. • Net bias to mid-stream traffic should not occur simply because certain content providers generate a lot of traffic and have greater market capitalization, or because an ISP can create congestion like Enron did.