An Essay on Net Neutrality (Part 2)

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This control, however, is limited to the user’s premises. Once it leaves the user’s modem the data flowing over the network will continue to be "best effort" with no service level guarantees.

At this point it may seem that “traffic prioritization” is not bad in itself. However, when it is used in an anticompetitive fashion it becomes problematic. So it really comes down to who should prioritize traffic in the Internet. According to what we have said it would be desirable to empower only the user to decide which applications should be prioritized. The question becomes then how to preserve net neutrality while improving the users’ experience on the net.

But the net neutrality debate is not limited to application providers and broadband access carriers. There is a more philosophical and enriching debate surrounding innovation and the Internet architecture itself. Recently, different views coming from the engineers that devised the software protocols of the Internet have emerged. Although they both coincide that the development of the net should have at its core consumer choice and innovation, they differ on the point where innovation should focus “on the net” or “at the edges of the net”. Cerf’s view:

“The remarkable success of the Internet can be traced to a few simple network principles –end to end design, layered architecture, and open standards- which together give consumers choice and control over their online activities. This “neutral” network has supported an explosion of innovation at the “edges” of the network, and the growth of companies like Google, Yahoo, eBay, Amazon, and many others”.

Whereas Kahn:

“It is a slogan [net neutrality] […] what does net neutrality try to achieve? One model says that the network is just some transport vehicle of some sort and that all the important things take place in the boundaries […] organizations ought to be able to provide services and those services could include functionality that is provided within the net.”

I honestly believe that these views are not entirely incompatible; rather I would say that they are at some point complements. Kahn never argues against the end to end principle of the Internet but he is opposed of mandating that “nothing interesting can happen inside the net” meaning that experimentation at the edges shouldn't come at the expense of improvements elsewhere in the network. On the other hand, net neutrality advocates are not against improvements on the net itself but rather worried that changes in the original architecture of the Internet may hinder innovation on the edges or be used anticompetitively.

At the core of all this net neutrality debate is that -unlike other public interest issues that have arisen over the Internet- net neutrality advocates are claiming for some kind of government intervention to preserve the net neutrality principle. Say it again!! Government intervention in an Internet related issue?


Is there a need for regulatory intervention?

I recall reading or hearing "the private sector should lead". The reference was made by the Clinton Administration in 1998 for e-commerce but describing the progress made by Internet applications. Certainly, they were acknowledging that the Internet had flourished without any centralized promotion or regulation. This is not to say that the Internet was randomly created (rather it is the result of vision and initiative from many brilliant people). The point is that under a market economy, government intervention is only justified before a market failure and of course by 1998 no one had identified a market failure in the Internet.

But even before a market failure, how could national governments intervene given the global and open architecture features of the Internet? It is precisely this issue the main point of the discussion surrounding the Internet Governance debate worldwide. We do not attempt to discuss deeply Internet Governance in this paper, but we should highlight that defining government intervention in Internet related issues has not been an easy task.

For all of us who were trying to build a case for educated government intervention in the Internet, net neutrality provides fresh flesh for our analysis. Telecom regulators around the globe were systematically approached to take at least a public position on Internet Governance issues. In some of the issues, telecom regulators were endowed with sufficient powers (as mandated in their statutory documents) to address them, in others, there was a need to coordinate with one or more governmental agencies, and in others (perhaps the most) there was not (and still there is not) a public policy or clear mandate that could at least provide guidelines as to how governments should intervene.

There are two reasons that make net neutrality appealing for telecom regulation. The first one is that broadband access markets competition status involving licensed facilities-based carriers and ISPs fall within the remit of regulators; the second one is that perhaps for the first time regulators are expressively asked to intervene. But let’s not jump into any misleading conclusions and put this request of intervention in to perspective.

Advocates of net neutrality do welcome deregulation of telecommunications they only claim that legal and regulatory frameworks must preserve restricted elements of openness and non-discrimination:

“Google supports tailored, minimally-intrusive safeguards to promote net neutrality”.


When assessing what sort of government intervention should be applied to preserve net neutrality we can find a range of possibilities, from directly intervening by enacting laws or regulatory instruments that prohibit traffic shaping from anyone but the final user, to indirectly intervening and guarantying a level playing field that may assure an optimal functioning of markets, hence eliminating incentives to block or prioritize Internet traffic.

It looks like that directly forbidding blocking or shaping is not what a liberal government would follow for three main reasons. The first one is that this kind of intervention is not economically-correct. It is not the kind of policy that regulators usually pursue, since it does not seem as a market oriented mechanism to deal with a market failure. The second one is that, even if governments wanted to intervene directly by banning blocking or traffic shaping, enforcement mechanisms will not be efficient enough to assess whether a broadband provider is effectively complying with the mandate or acting anticompetitively.

The third one is that direct intervention could risk being incomplete or incorrect. As Cerf puts it for the US case:

“Both drafts include provisions requiring broadband providers to allow consumers to access content, applications, and services, and to connect devices. Both versions also contain a number of important exceptions to those duties, related to elements like value-added services and enhanced quality of service. Unfortunately, as written the exceptions in each of these bills are so broad that they undermine the underlying neutrality requirement.”

Furthermore, from the observed experience (mainly in developed countries) it does not seem to be a consensus in implementing policies to preserve net neutrality. Some governments, such as the UK, prefer to remain “neutral”. In November, 2006 OFCOM Chairman Lord Currie of Marylebone declared to leave content providers to negotiate premium deals with access providers if they want, while giving them the option of using competition law if they feel they are being turned over.

“…the crucial point is whether providers are attempting to force content providers to pay. A content provider going to a service provider and asking for a guaranteed level of service is OK. Access providers strong arming content providers into paying, is not OK.”