On Net Neutrality

07Feb11

When GigaOm commentator Stacey Higginbotham called the recent debate about net neutrality “tech policy’s version of the movie Groundhog Day“, she gave me the perfect excuse to write this post. To many people ‘net neutrality’ is an exotic idea and ‘car’ isn’t, but in leading blog post the terms seem evenly mundane. However, the idea of net neutrality is thorny, and heavily debated. In particular between entrepreneurs and regulators on the web. In this post I will try to give a brief introduction to the ideas and arguments from both sides of the net neutrality debate. Possibly your next encounter with the term may be less ‘casual’. At least I hope so.

Let me ask you a question. Do you believe the service you get from an internet service provider (ISP), should depend on what you are doing on the web? Say you get internet access through the Dutch provider “Ziggo”. Should “Ziggo” give you the same speed when you are using the web to consult a Wikipedia site for a school project, or when you are using it to look a porn site? Should internet telephony get the same priority as p2p file sharing and should credit card payments be the same? Would it be a bad idea if Ziggo distinguished between a subscription with internet telephony (or porn, or Google) and a subscription without, so you pay more if you want to be able to make internet phone calls?  If your answer is yes, you are in support of the net neutrality idea.

However, even if you do not consider ‘the bigger picture’ there are reasons not to favour net neutrality at all. Say you are using the same ‘internet line’ as your neighbour, which is usually the case if you have a cable connection. And say he is building a porn video collection with p2p file sharing programs. Should this really interfere with your internet banking? All right, this is a prisoner’s dilemma, so let me frame it more positive.  Wouldn’t you want to be able to pay for extra bandwidth and reliability just when you need it? For example for credit card payments and on-line gaming- and pay less when for ‘unimportant’ traffic: like surfing around or using Twitter? Under a net neutrality policy you can’t. For better or for worse, under net neutrality, Internet Service Providers (ISP’s) cannot look into the packets that make up your internet traffic (called ‘deep packet inspection). They cannot see what data is in there, to give those packets priority or apply a different charging scheme for downloading them. ISP’s are simply not allowed to distinguish between different types of traffic: data is data.

In ‘the bigger picture’ network neutrality does make sense for a couple of reasons.  One, often overlooked, reason is the end-to-end principle. The end-to-end principle is fundamental to the design of the internet and its protocols. There are several convincing arguments for dump networks (see David S. Isenberg’s in the“Dawn of the Stupid Network”). But the central idea is that the network (making up ‘internet’) should be as dumb as possible. It should not be responsible for traffic to arrive, it should not be responsible for traffic taking the shortest route, it should not distinguish between types of traffic, and so on. If any intelligent decision about traffic should be made it should be a made between client (one end) and server (other end) and nowhere else. And, simply put: violating net neutrality is violating the end to end principle and the idea of network dumpness.

Another common argument is the ‘last mile’ argument. The internet is a ‘network of networks’, so any data you get over the internet passes the ‘hands’ of multiple ISP’s. Just imagine how complex it would get if any network involved in sending you a data packet would be able to set up a pricing scheme according to the contents of those packets. What if you’re ISP, who controls the last mile would have to charge you for this, based on a comprehensive pricing scheme. Consider how difficult it would be for your ISP to adjust its routing schemes to give you the best price available. Or, conversely, it would be in a position to ‘overcharge’ you because you have no way to control your ISP’s contacts with other networks and their pricing schemes.

A last, and controversial, argument for net neutrality that I want to discuss is the ‘competition and innovation argument’. The idea is the internet has been as innovative as it is because of net neutrality and that therefore it is in the public interest to keep it this way. And yes: many internet services such as voice over IP (internet telephony) and peer to peer (p2p) file sharing would have been, well, unthinkable under other conditions. At the same time, some services that might have been profitable for ISP’s and valuable to users like you and me, may not have come in to place because of the inability of ISP’s to charge for it. The difficulty of the ‘competition and innovation argument’ is that you need a mix of two ‘forces’ (see my posts on open innovation 1,2,3). First you need some protection in place to guarantee payback on investments on new technology and second you need an equal playing field to allow many players to monetize many ideas. These two forces bite each other. The balance in the early internet may have leaned towards providing equal playing fields. But this may not be the best mix to ensure innovation as the internet is maturing. Also, the ‘old’ internet has been ‘build’ on bankrupt ISP’s, so it is even questionable whether net-neutrality has ever been the best condition.

Apart from the innovation argument, used at both sides of the net neutrality debate, the arguments against net-neutrality fall into two categories. First, some cast net neutrality as  a non-achievable ideal. Currently, big ISP’s have a performance advantage over small ISP’s, so it is a non-neutral situation, anyhow. This makes net neutrality a ‘slogan’, and not something to strive for. The second argument stresses the advantages of a ‘smart’ network. One stream of thinking tends to cast the ISP as a sort of police, being able to protect you (or the net) from bad traffic. Wouldn’t you want your ISP to filter out spam or be able to combat denial of service attacks? If so, you need to allow them to filer traffic based on what is in the packets (called ‘deep packet inspection’). Surely, this deep packet inspection can be used for competitive goals (such as denying you access to internet telephony traffic) but the benefits weigh out the (imagined) disadvantages.

So, should you support a ‘radical’ form of net neutrality, or are the compromises that Higgbotan discusses reasonable? I would say that net-neutrality is not a sustainable concept. It reduces the ISP’s to ’dump’ infrastructure providers, which can hardly be a profitable business. In the end this leads to pressure on the quality of data service, which in turn hinders the innovation that net neutrality should be ensuring. But I also do not believe in ‘deep packet inspection’ and I do not think intricate data pricing schemes are a solution. There needs to be a ‘third way’.

So, I would argue as follows. The difficulty of net neutrality is to be able to settle the price of a bit (of data). What a bit is worth to you depends on the service that you get through that data and what the service is worth for you. There is no one-to-one relation between the amount of data and its value. If anyone knows what the data is worth to you it is the application provider: “Google, Facebook or You Tube”. But what counts for the cost of ISP’s is bit price. This mismatch between consumer interest and ISP cost can be resolved if application providers chip in. If application providers like “Google”, would to pay internet service providers like “Ziggo” for the data theysubmit (this is what T-Mobile proposed recently). ISP’s would not have to increase the intelligence of their networks by deep packet inspection or increase the complexity of their pricing schemes. This way the user would pay the application provider – thus why he wants the data in the first place for the data as well as the service.  Possibly the internet would be able to stay ‘neutral’ while preserving a sustainable pricing argument.

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