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Net neutrality

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Definitions Edit

There is no single accepted definition of network neutrality (also called net neutrality).[1] However, most agree that any such definition should include the general principles that owners of the networks that compose and provide access to the Internet should not control how consumers lawfully use that network; and should not be able to discriminate against content provider access to that network.

The terms "net neutrality" and "network neutrality" have been used to identify various policy concerns and prescriptions raised by diverse parties to the larger social discussion of broadband Internet connectivity. Typically, such terms are identified with positions that recommend, at least, some legal or regulatory restrictions on broadband Internet access services that include non-discrimination requirements above and beyond any that may be implied by existing antitrust law or Federal Communications Commission (FCC) regulations.[2]
Network neutrality refers to rules mandating that these providers [broadband and wireless access providers] do not unreasonably block, degrade, or impose tolls on unaffiliated providers of applications, services and content. Supporters of network neutrality say it is a means to facilitate innovation at the edges of the network, and to assure the free flow of information among individuals. However, the topic is quite controversial.[3]

Overview Edit

There is an extensive debate over what statutory and regulatory framework is most likely to foster innovation and investment both in physical broadband networks and in the applications that ride over those networks. Perhaps the most contentious element in that debate is whether competitive marketplace forces are sufficient to constrain the broadband network providers from restricting independent applications providers' access to their networks in a fashion that would harm consumers and innovation. Or is government intervention needed in the form of what has been referred to as "network neutrality," unfair competitive practices, or other nondiscrimination rules placed on the network providers?

Typically, the term "net neutrality" is identified with positions that recommend at least some legal or regulatory restrictions on broadband Internet access services that include non-discrimination requirements above and beyond any that may be implied by existing antitrust laws or Federal Communications Commission (FCC) [[regulations.

Some policymakers contend that more specific regulatory guidelines may be necessary to protect the marketplace from potential abuses which could threaten the net neutrality concept. Others contend that existing laws and FCC policies are sufficient to deal with potential anti-competitive behavior and that such regulations would have negative effects on the expansion and future development of the Internet.

Changes in telecommunications market Edit

This debate has been stimulated by some fundamental changes in the telecommunications market environment — several technology-driven, several market-driven, and one regulatory-driven.

  • Digital technology has reduced the costs for those firms that already have single-use (for example, voice or video) networks to upgrade their networks in order to offer multiple services over their single platform. The cost for these previously single-service providers to enter new service markets has been significantly reduced,[4] inducing market convergence. Most notably, cable companies are upgrading their networks to offer voice and data services as well as video services, and telephone companies are upgrading their networks to offer video and data services as well as voice services.
  • Despite these lower entry costs, however, wireline broadband networks require huge sunk up-front fixed capital expenditures. This may limit the number of efficient broadband networks that can be deployed in any market to two (the cable provider and the wireline telephone company) unless a lower cost alternative becomes available using wireless or some other new technology.[5] Although wireless technology may provide a third or even fourth alternative, it is not likely to be a ubiquitous option anytime soon.[6] The commercial mobile wireless (cellphone), WiFi, and WiMAX technologies still require significant further technical developments before they will be able to provide comparable service and operate at the necessary scale. Moreover, spectrum is just being made available for these technologies, and in many cases parties currently using that spectrum must be moved to other spectrum.
  • Although the telephone and cable companies are deploying different network architectures, they are pursuing business plans and regulatory strategies with the same key elements:
* They expect latency-sensitive video and voice services to be the “killer applications” that will generate the revenues needed to justify upgrade and buildout of their physical broadband networks.
  • To minimize customer churn and to gain an advantage over providers of single services, they market bundles of voice, data, and video services, with discounts that are greater the greater the number of services purchased. (It is expected by many that this “triple-play” bundle will be expanded to a "quadruple-play" bundle with the addition of mobile wireless service.)

The FCC's responses to these developments Edit

  • The FCC's network neutrality rules expressly did not extend to wireless networks, but the agency has left open the possibility of taking further action as the industry evolved.[15]

Position of proponents Edit

According to proponents, network neutrality is the fundamental principle that prevents Internet service providers from discriminating against Web content based on its source, ownership or destination. They argue that net neutrality has made the Internet an unrivaled environment for free speech, democratic participation and economic innovation. As noted by Google:

Network neutrality is the principle that Internet users should be in control of what content they view and what applications they use on the Internet. The Internet has operated according to this neutrality principle since its earliest days. Indeed, it is this neutrality that has allowed many companies, including Google, to launch, grow, and innovate. Fundamentally, net neutrality is about equal access to the Internet. In our view, the broadband carriers should not be permitted to use their market power to discriminate against competing applications or content. Just as telephone companies are not permitted to tell consumers who they can call or what they can say, broadband carriers should not be allowed to use their market power to control activity online.[16]

Proponents of network neutrality regulation include, among others, some content and applications providers, non-facilities-based ISPs, and various commentators. They generally argue that “non-neutral” practices will cause significant and wide-ranging harms and that the existing jurisdiction of the FCC, FTC, and DOJ, coupled with Congressional oversight, are insufficient to prevent or remedy those harms. Proponents suggest that, with deregulation of broadband services, providers of certain broadband Internet services have the legal ability, as well as economic incentives, to act as gatekeepers of content and applications on their networks.

Principally, these advocates express concern about the following issues:

  • (3) effects on innovation at the “edges” of the network (that is, by content and applications providers);
  • (5) remaining legal and regulatory uncertainty in the area of Internet access; and
  • (6) the diminution of political and other expression on the Internet.

Some applications providers therefore have proposed enactment of statutory and regulatory requirements, such as nondiscriminatory access to broadband networks or network neutrality requirements. Others have been less confident about the ability to craft effective nondiscrimination or neutrality rules. They have suggested that government policy that promotes entry by broadband network providers that do not share the business plans of the cable and telephone companies might be a more effective way to foster innovation and investment in applications.[18] This might include prohibiting restrictions on municipal deployment of broadband networks, expediting the availability of spectrum for wireless broadband networks, and limiting the amount of such spectrum that can be acquired by companies owned by or in other ways affiliated with the wireline broadband providers.

Not all proponents of net neutrality regulation oppose all forms of prioritization, however. For example, some believe that prioritization should be permitted if access to the priority service is open to all content and applications providers on equal terms; that is, without regard to the identity of the content or application provider.

Position of opponents Edit

Opponents of network neutrality regulation include, among others, some facilities-based wireline and wireless network operators and other commentators. They maintain that net neutrality regulation will impede investment in the facilities necessary to upgrade Internet access and may hamper technical innovation. They also argue that the sorts of blocking conduct described by net neutrality proponents are mainly hypothetical thus far and are unlikely to be widespread and thus are insufficient to justify a new, ex ante regulatory regime.

Principally, opponents of net neutrality regulation argue that:

  • (1) neutrality regulations would set in stone the status quo, precluding further technical and business-model innovation;
  • (4) allowing network operators to innovate freely and differentiate their networks permits competition that is likely to promote enhanced service offerings;
  • (5) prohibiting price differentiation would reduce incentives for network investment generally and may prevent pricing and service models more advantageous to marginal consumers;
  • (7) there is insufficient evidence of either the likelihood or severity of potential harms to justify an entirely new regulatory regime, especially given that competition is robust and intensifying and the market generally is characterized by rapid technological change.

Opponents also note that the FCC has not requested further authority[19] and has successfully used its existing authority, in a March 3, 2005, action. In that case, the FCC intervened and resolved, through a consent decree, an alleged case of port blocking by Madison River Communications, a local exchange (telephone) company.[20] The full force of antitrust laws is also available, they claim, in cases of discriminatory behavior.

Other arguments Edit

To further complicate the debate, there is a growing economic literature on “two-sided” markets, in which a network provider has two distinct sets of customers to whom it provides service and sets terms, conditions, and rates for network accessend users, who seek access to the network to receive services, and applications services providers, who seek access to the network in order to reach those end users. According to that literature, while additional access networks will increase the competitive options available to end users, they may not improve the market of independent applications providers that do not have the option of choosing among access networks for the best deal, but rather must connect to all of the access networks in order to reach their customers.[21]

Barack Obama's campaign platform Edit

Barack Obama strongly supports the principle of network neutrality to preserve the benefits of open competition on the Internet. Users must be free to access content, to use applications, and to attach personal devices. They have a right to receive accurate and honest information about service plans. But these guarantees are not enough to prevent network providers from discriminating in ways that limit the freedom of expression on the Internet.

Because most Americans only have a choice of only one or two broadband carriers, carriers are tempted to impose a toll charge on content and services, discriminating against websites that are unwilling to pay for equal treatment. This could create a two tier Internet in which websites with the best relationships with network providers can get the fastest access to consumers, while all competing websites remain in a slower lane. Such a result would threaten innovation, the open tradition and architecture of the Internet, and competition among content and backbone providers. It would also threaten the equality of speech through which the Internet has begun to transform American political and cultural discourse. Barack Obama supports the basic principle that network providers should not be allowed to charge fees to privilege the content or applications of some web sites and Internet applications over others. This principle will ensure that the new competitors, especially small or non-profit speakers, have the same opportunity as incumbents to innovate on the Internet and to reach large audiences.

Obama will protect the Internet’s traditional openness to innovation and creativity and ensure that it remains a platform for free speech and innovation that will benefit consumers and our democracy.

Current Administration's position Edit

The net neutrality issue has been narrowly addressed within the context of the economic stimulus package.[22] Provisions in that law require the National Telecommunications and Information Administration (NTIA), in consultation with the FCC, to establish "nondiscrimination and network interconnection obligations" as a requirement for grant participants in the Broadband Technology Opportunities Program (BTOP).

It was anticipated that the NTIA would release these rules by summer 2009. The ARRA also required the FCC to submit a report, containing a national broadband plan, to both the House and Senate Commerce Committees by February 2010. The FCC adopted, on April 8, 2009, a Notice of Inquiry (NOI) to seek input from stakeholders as it begins to develop this plan.[23] Included among the issues under discussion in the NOI is the question of the role of "open networks." More specifically the FCC is seeking comment "on the value of open networks as an effective and efficient mechanism for ensuring broadband access for all Americans" and how the term “open” should be defined.

Additional comment was sought regarding the possible adoption of a fifth "nondiscrimination" principle to its August 2005 Internet Policy Statement including whether one is needed and, if so, how "nondiscrimination" should be defined.[24] Comments were due June 8, 2009, and replies were due July 7, 2009.

The FCC adopted an order in February 2015 that established regulatory guidelines to protect the marketplace from potential abuses that could threaten the net neutrality concept.[25]. The order bans broadband Internet access providers (both fixed and wireless) from blocking and throttling lawful content, and it prohibits paid prioritization of affiliated or proprietary content. The order also creates a general conduct standard that Internet service providers cannot harm consumers or providers of applications, content, and services. These rules went into effect, with limited exceptions, on June 12, 2015, but have been challenged in the U.S. Court of Appeals for the D.C. Circuit.[26]

References Edit

  1. The term "net neutrality" was introduced into the academic debate by Prof. Tim Wu in 2003:
    Network neutrality is best defined as a network design principle. The idea is that a maximally useful public information network aspires to treat all content, sites, and platforms equally. This allows the network to carry every form of information and support every kind of application. The principle suggests that information networks are often more valuable when they are less specialized — when they are a platform for multiple uses, present and future.

    Tim Wu, "Network Neutrality, Broadband Discrimination," 2 J. Telecomm. & High Tech. L. 141 (2003).

  2. Federal Trade Commission, Broadband Connectivity Competition Policy: FTC Staff Report n.2 (June 2007).
  3. The Development and Diffusion of Digital Content, at 33.
  4. See George Ford, Thomas Koutsky & Lawrence Spiwack, "Competition After Unbundling: Entry, Industry Structure and Convergence," Phoenix Center Policy Paper, No. 21 (July 2005).[1]
  5. According to the FCC report, "High-Speed Services for Internet Access: Status as of December 31, 2005," Table 6 (July 2006), the vast preponderance of high-speed internet access lines were provided by local telephone companies or cable companies: of the 50.2 million total high-speed line (over 200 kilobits per second (kbps) in at least one direction) in the U.S. in December 2005, 19.7 million were provided by Regional Bell Operating Companies, 2.9 million were provided by other incumbent telephone companies, and 27.6 million were provided via cable modems. Tables 3 and 6 of that report indicate that of the 42.9 million high-speed lines designed to serve primarily residential end users, 57.5% used cable modems and 40.5% were asymmetric digital subscriber lines (ADSL), and that the vast majority of the latter were provided by local telephone companies.
  6. See, e.g., Robert D. Atkinson & Philip J. Weiser, "A 'Third Way' on Network Neutrality" 7-8 (The Information Technology and Innovation Foundation, May 30, 2006).[2]
  7. Latency is affected by physical distance, the number of “hops” from one internet network to another internet network that must be made to deliver the packets (since there can be congestion at each hand-off point), and voice-to-data conversion. Congestion that delays the transmission of packets can cause several problems. In effect, the internet (or a proprietary IP network) is a set of routers connected by links. Packets of data get passed from one router to another, via links. A packet is forwarded from router to router, until it arrives at its destination. Typically, each router has several incoming links on which packets arrive, and several outgoing links on which it can send packets. When a packet shows up on an incoming link, the router will figure out on which outgoing link the packet should be forwarded. If that outgoing link is free, the packet can be sent out on it immediately. But if the outgoing link is busy transmitting another packet, the newly arrived packet will have to wait — it will be “buffered” in the router’s memory, waiting its turn until the outgoing link is free. Buffering lets the router deal with temporary surges in traffic. The router will be programmed to determine which packets should be delayed and also, when the link is available, which buffered packet should be transmitted. That is, a packet prioritization scheme is devised. This could be a simple, first-in, first-out scheme or a favor-applications-sensitive-to-packet-delay scheme, or a pay-for-priority scheme, or something else. But if packets keep showing up faster than they can be sent out on some outgoing link, the number of buffered packets will grow and grow, and eventually the router will run out of buffer memory. At that point, if one more packet shows up, the router has no choice but to discard a packet. It can discard the newly arriving packet, or it can make room for the new packet by discarding something else. But something has to be discarded. The router will be programmed to determine which packets should be dropped, thus creating a second packet prioritization scheme. Again, this could be a simple, first-in, first-out scheme or a favor-applications-sensitive-to-dropped-packets scheme, or a pay-for-priority scheme, or something else. Dropped packets can be retransmitted, but for those applications, such as voice, that require the packets to arrive and be reassembled within a short period of time, such packet recovery might not occur in the timely fashion needed to retain service quality. With such congestion, at least two problems may occur. One problem is dropped packets. Some applications are more sensitive than others to dropped packets. A second problem is “jitter” caused by the delay of certain packets. Internet traffic is usually “bursty,” with periods of relatively low activity punctuated by occasional bursts of packets. (For example, browsing the Web generates little or no traffic while reading the page, but a burst of traffic when the browser needs to fetch a new page.) Even if the router is programmed to minimize delay by only delaying low-priority packets when congestion absolutely requires such delay, if the high-priority traffic is bursty, then low-priority traffic will usually move through the network with little delay, but will experience noticeable delay whenever there is a burst of high-priority traffic. This on-again, off-again delay is called jitter. Jitter has no affect when downloading a big file, for which one’s concern is the average packet arrival rate rather than arrival time of a particular packet. But the quality of applications like voice conferencing or VoIP — which rely on steady streaming of interactive, real-time communication — can suffer a lot if there is jitter.
  8. For simplification of exposition, this article will refer to those applications that are sensitive to dropped packets or to jitter or any other congestion-related transmission problem as “latency-sensitive” applications.
  9. "P2P in 2005," Presentation by Andrew Parker, co-founder and chief technology officer, CacheLogic. In an interview,[3] Mr. Parker stated that the traffic generated by two popular P2P applications, Kazaa and Gnutella, represented 40% of internet traffic.
  10. See Julie Bosman & Tom Zeller Jr., "Warner Bros. To Sell Movies and TV Shows on Internet," N.Y. Times, May 9, 2006, at C3.
  11. In the Matter of Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities; Internet Over Cable Declaratory Ruling; Appropriate Regulatory Treatment for Broadband Access to the Internet Over Cable Facilities, 17 FCC Rcd. 4798, 4799 (Mar. 15, 2002). In this decision, the FCC concluded that the telecommunications functionality in cable modem service is integral to the service, and not transparent to the consumer, and therefore cable modem service should be treated as a pure information service and not subject to the requirements imposed on telecommunications services under Title II of the Communications Act (47 U.S.C. §§151 et seq.).
  12. National Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967 (2005).
  13. In the Matter of Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities, Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd. 14853 (Sept. 23, 2005). The FCC used the same argument to support its DSL decision as it used in its cable modem decision. Not surprisingly, the United Power Line Council then petitioned the FCC to issue a declaratory ruling that broadband over power lines is an information service akin to cable modem and DSL service. (In the Matter of the Petition of the United Power Line Council for a Declaratory Ruling Regarding the Classification of Broadband over Power Line Internet Access Service as an Information Service, Petition for Declaratory Ruling, filed Dec. 23, 2005.[4] The FCC did so on November 3, 2006. (See “FCC Classifies Broadband Over Power Line-Enabled Internet Access as ‘Information Service’,” FCC News, Nov. 3, 2006.)
  14. Title I of the 1934 Communications Act gives the FCC such authority if assertion of jurisdiction is “reasonably ancillary to the effective performance of [its] various responsibilities.” The FCC in its order, cites consumer protection, network reliability, or national security obligations as examples of cases where such authority would apply.
  15. The Development and Diffusion of Digital Content, at 35.
  16. Google, "A Guide to Net Neutrality for Google Users."[5]
  17. The practice of consumer tiering, that is the charging of different rates to subscribers based on access speed, is not the concern. Access tiering, that is the charging of different fees, or the establishment of different terms and conditions to content, services, or application providers for access to the broadband pipe is the focus of the net neutrality policy debate.
  18. For example, at the November 10, 2005, panel of academics at the “Peripheral Visionaries’ VoIP Communications Policy Summit” conference sponsored by pulver.com, Susan Crawford of Cardozo Law School, argued that it is unlikely to be possible to craft legislative language that broadband network providers could not get around in the name of network management, and that instead the public policy focus should be on the “real problem” of lack of competitive alternatives to the cable and telephone networks.
  19. FCC Chairman Martin has indicated that the FCC has the necessary tools to uphold the FCC’s stated policy principles and has not requested additional authority. Furthermore, Chairman Martin has stated that he is “confident that the marketplace will continue to ensure that these principles are maintained” and is “confident therefore, that regulation is not, nor will be, required.” See Chairman Kevin J. Martin Comments on Commission Policy Statement. However, FCC Commissioner Copps, in an April 3, 2006 speech, did express concerns over the concentration in broadband facilities providers and their “ability, and possibly even the incentive, to act as Internet gatekeepers,” and called for a “national policy” on “issues regarding consumer rights, Internet openess, and broadband deployment.” See Chairman Copps' speech is available here.
  20. The FCC entered into a consent decree with Madison River Communications to settle charges that the company had deliberately blocked the ports on its network that were used by Vonage Corp. to provide Voice over Internet protocol (VoIP) service. Under terms of the decree Madison River agreed to pay a $15,000 fine and not block ports used for VoIP applications. See a copy of the consent decree here.
  21. See, e.g., Jean-Charles Rochet & Jean Tirole, “Platform Competition in Two-Sided Markets,” 1 J. of the European Econ. Ass'n, June 2003, Issue 4, at 990; Julian Wright, “Access Pricing under Competition: An Application to Cellular Networks,” 50 J. of Indus. Econ., Issue 3, at 289 (2002); Julian Wright, “The Determinants of Optimal Interchange Fees in Payment Systems,” 52 J. of Indus. Econ., Issue 1, at 1 (Mar. 2004); Julian Wright, “One-Sided Logic in Two-Sided Markets,” 3 Rev. of Network Econ., Issue 1, at 42 (Mar. 2004); Stephen C. Littlechild, “Mobile Termination Charges: Calling Party Pays versus Receiving Party Pays,” 30 Telecomm. Policy 242 (2006); Mark Armstrong, “Competition in Two-Sided Markets,” RAND J. of Econ. (2006).
  22. American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5.
  23. In the Matter of A National Broadband Plan for Our Future, GN Docket No. 09-51. Notice of Inquiry, released April 8, 2009 (full-text).
  24. For the specific discussion on open networks see id. §§47 and 48.
  25. Federal Communications Commission, "Protecting and Promoting the Open Internet; Final Rule," 80 Federal Register 19738–850 (Apr. 13, 2015) (full-text).
  26. The challenges were consolidated under U.S. Telecom Association v. FCC, D.C. Cir. No. 15-1063 (Apr. 14, 2015).

See also Edit

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