Broadband network operators typically enjoy limited regulatory oversight compared to telecommunications service providers. The Internet has flourished in part due to a “hands off” approach by governments and the apparent willingness of all stakeholders to cooperate and self-regulate. As the Internet becomes a conduit for most converged services, including telephony, some operators may perceive the opportunity to gain a financial or competitive benefit by prioritizing bitstreams and by offering different quality of service guarantees. To some observers this strategy constitutes a form of service discrimination that violates a tradition of “network neutrality” in the switching, routing and transmission of Internet traffic. [1] To others, offering different levels of service provides a means for consumers and carriers to secure and pay for premium, instead of best efforts, service if so desired. [2]
The issue of network neutrality appears to grow in importance largely because of recent isolated instances where a provider of underlying bit transport capacity has blocked a specific type or stream of traffic. A major Canadian Internet Service Provider allegedly has blocked subscriber access to the Apple iTunes music service and other bandwidth intensive download services. [3] A small, independent telephone company in the United States blocked subscriber access to the Vonage VoIP service. [4] Several cable television companies allegedly have blocked ports, filtered IP addresses and have pursued other means to thwart or slow transit via their networks. [5]
Whitacre, Chief Executive Office of the merged SBC Corporation and AT&T, has provocatively asserted that underlying network operators should exercise the option of demanding higher compensation from Internet content providers in exchange for superior service:
How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes? 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! [6]
The United States Federal Communications Commission has embraced network neutrality, but in a manner that does not include regulatory enforcement. The Commission articulated its support in terms of four principles “to encourage broadband deployment and preserve and promote the open and interconnected nature of public Internet.” [7] The four principles are:
- Consumers are entitled to access the lawful Internet content of their choice,
- Consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement,
- Consumers are entitled to connect their choice of legal devices that do not harm the network, and
- Consumers are entitled to competition among network providers, application and service providers, and content providers.
Such regulation has its critics, however. For example one commentator argues that there is no evidence that broadband operators are unfairly blocking access to websites or online services, or are likely to do so. In this context, pre-emptive regulation for network neutrality is seen as unjustified. Far from being something regulators should forbid, vertical integration of new features and services by broadband network operators can be viewed as an essential part of the innovation strategy companies will need to use to compete and offer customers the services they demand. Finally, network operators also have property rights in their systems that need to be acknowledged. [8]
Endnotes:
[1] For example see Tim Wu, Network Neutrality, Broadband Discrimination, 2 Journal of Telecommunications and High Technology Law, 141 (2005); Barbara van Schewick, Towards an Economic Framework for Economic Neutrality, paper presented at the 33nd annual Telecommunications Policy Research Conference, Arlington, Va. (2005); Mark A. Lemley and Lawrence Lessig, The End of End-to-End: Preserving the Architecture of the Internet in the Broadband Era, 48 UCLA L. Rev. 925 (2001).
[2] For example, see Christopher S. Yoo, "Network Neutality and the Economics of Congestion", Georgetown Law Journal, Vol. 94, June 2006, available at SSRN: http://ssrn.com/abstract=825669
[3] “Canadian customers of Rogers, Canada's largest cable ISP, have speculated for months that the company has begun to block access to BitTorrent as well as the downloading of podcasts from services such as iTunes. While Rogers initially denied the charges, it now acknowledges that it uses "traffic shaping" to prioritise certain online activity. As a result, applications that Rogers deems to be a lower priority may cease to function effectively.” Michael Geist, “Towards a two-tier internet”, BBC News, Technology (Dec. 22, 2005).
[4] Madison River Communications, LLC, Order, DA 05-543 (released March 3, 2005).
See Cybertelecom, Vonage Complaint to the FCC, News.
[5] See Cybertelecom, Vonage Complaint to the FCC, News.
[6] BusinessWeek Online, “At SBC, It’s All About ‘Scale and Scope’” (Nov. 5, 2005).
[7] United States Federal Communications Commission, Public Notice, FCC Adopts Policy Statement (Aug. 5, 2005).
[8] See Adam Thierer, “Net Neutrality" Digital Discrimination or Regulatory Gamesmanship in Cyberspace”, Cato Institute, POLICY ANALYSIS, No. 507 (Jan. 12, 2004).