Keeping the Internet Neutral?: A Response to the Wu-Yoo
Debate
Rob Frieden
Professor,
102 Carnegie Building
(814) 863-7996; rmf5@psu.edu
web page: http://www.personal.psu.edu/faculty/r/m/rmf5/
blog site: http://telefrieden.blogspot.com/
Professors Tim Wu and Christopher Yoo have provided great insights on network neutrality through their writings including the online debate hosted by the FCLJ and reprinted in Volume 59, No. 1 (Dec. 2006). Their work has helped me find a middle ground in my written work on the subject, [1] including this short piece. Professor Yoo has persuaded me that many types of price and service quality discrimination, including what I term “better than best efforts routing” and exclusive access to content, supports network diversity and competition. Professor Wu has convinced me that the first and last mile access to the Internet has not become so robust that government can ignore access issues, including discrimination of bitstreams in the same way Enron employees manipulated electron streams.
The crux of the network neutrality debate involves one’s assessment of how the Internet will continue to evolve. Already we have witnessed the quick migration of a network of networks managed by “Netheads” keen on promoting connectivity with little regard for the cost. During the Internet’s formative years governments underwrote development with monetary grants and by serving as anchor tenants. Since 1995, with decommissioning of the National Science Foundation’s backbone network, [2] the Internet has become increasingly commercialized with major telecommunications companies owning both the Tier-1 Internet Service Providers, which provide the Internet’s super high capacity long haul backbone routes and the links providing consumers with first and last mile access to the Internet cloud. [3] “Bellhead” managers of Internet networks conceptualize access and interconnection using a telecommunications template that can readily meter use and attribute responsibility for cost recovery. It makes perfect sense to former AT&T Chairman Ed Whitacre to expect payment from Google every time Google’s traffic traverses AT&T networks [4] regardless of the peering agreements AT&T executed which requires it to offer free carriage of traffic in exchange for reciprocal carriage of traffic generated by AT&T’s subscribers. Likewise it predictably grieves Mr. Whitacre and others to see any Network Neutrality initiatives that would prevent flexibility in recovering investment and profiting from infrastructure upgrades.
Mr. Whitacre and Professor Yoo need to appreciate that even lacking the dreaded common carrier telecommunications service provider status, Internet Service Providers cannot engaged in unlimited discrimination. Service proliferation and “network diversity” should not extend to tactics like that practiced by Enron employees. After the fact antitrust remedies do not fully compensate for the harm done to consumers and competitors when network mangers—whether wheeling kilowatts or switching bitstreams—deliberately create bottlenecks, price squeezes, shortages and dropped traffic. Professor Wu has convinced me that network operators, particularly veritically integrated ones serving end users and operating major backbone networks upstream, can discriminate in many different, anticompetitive ways. The discrimination need not appear obvious as would occur with absolute blockage. Enron benefited by straining the grid thereby forcing intermediary carriers to drop off the network temporarily. ISPs could benefit by partitioning their networks so that the plain vanilla, public Internet all but guarantees dropped packets and degraded performance even in the absence of real congestion.
On the other hand, Professor Wu and Network Neutrality advocates need to appreciate that a one size fits all Internet no longer satisfies all user requirements. As a college basketball fan I am glad CBS freely made most of the March Madness tournament play available via the Web. Demand for these extremely valuable bits required CBS to pay for a superior traffic management arrangement, because plain vanilla best efforts routing—even in the absence of deliberate packet discrimination—would not ensure a consistently reliable viewing experience. I do not begrudge ISPs from pricing service based on customer tiers from low volume users who do not tax any network all the up to the power users whose bursty broadband traffic may require costly network upgrades. I also have to agree with Professor Yoo that exclusive content access agreements help stimulate investment and entrepreneurship as evidenced by what America Online achieved with its “walled garden” of preferred content.
AOL offers a case study on how a venture lost its competitive advantage, but it also demonstrates how conditions have so changed that such a company might not become so quickly dislodged now. AOL operated in a competitive marketplace where content and conduit were divided, with many ISPs and content providers competing but all using the telephone company’s dial up network. In today’s broadband access environment Professors Wu and Yoo disagree on the competitiveness of the marketplace and whether the emphasis should lie in the content layer, or lower down in the networks that links consumers with the Internet cloud. [5] I agree that at the content and software applications level, the Internet marketplace operates robustly without the need for government intervention. However at the lower network level, credible statistics, [6] without the positive spin the FCC chooses to use, [7] show limited facilities-based competition between relatively slow speed telephone company and higher speed cable television company offerings. [8] I do not see the cable/telco duopoly quickly dissolving in the near term. Broadband over electrical power lines remains a test and demonstration technology. Terrestrial and satellite wireless technologies currently offer lower speeds at twice the cost and accordingly do not offer real, cost-elastic alternatives. Until facilities-based competition at the first and last mile matches the robustness further upstream concerns about Network Neutrality remain real when price and service discrimination exceeds a reasonableness standard.
[1] See Rob Frieden, Internet 3.0: Identifying Problems and Solutions to the Network Neutrality Debate (Feb. 2007); available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=962181;
Network
Neutrality or Bias?--Handicapping the Odds for a Tiered and Branded Internet
29 HASTINGS COMMUNICATIONS AND ENTERTAINMENT LAW JOURNAL, No. 2, 171-216
(2007);
[2] See National Science Foundation, Cyberinfrastructure, A Brief History of NSF and the Internet; http://www.nsf.gov/news/special_reports/cyber/internet.jsp.
[3] See Rob Frieden, Revenge of the Bellheads: How the Netheads Lost Control of the Internet, 26 TELECOMMUNICATIONS POLICY, No. 6, 125-144 (Sep./Oct. 2002).
[4]
“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!” At SBC, It’s All About “Scale and Scope,”
BUSINESSWEEK, ONLINE EXTRA
[5]
For an examination of the
various layers of technological functions involved in Internet access see Rob Frieden, Adjusting the Horizontal and Vertical in
Telecommunications Regulation: A Comparison of the Traditional and a New
Layered Approach, 55 FEDERAL COMMUNICATIONS LAW JOURNAL, No. 2,
207-250 (March, 2003).
[6]
Even the FCC’s statistics show
DSL and cable modems sharing a 98% national market share. “Of the 64.6 million
total high-speed lines, 44.1% were cable modem, 34.9% were ADSL, 1.5% were
symmetric DSL (SDSL) or traditional wireline, 1.1% were fiber to the end user
premises, and 18.4% used other technologies.” High-Speed
Services for Internet Access: Status as of
“Of the 50.4 million
lines which were faster than 200 kbps in both directions, 55.9% were
cable modem, 36.3% were ADSL, 1.9% were SDSL or traditional wireline, 1.4% were
fiber to the end user premises, and 4.5% used other technologies.”
[7]
“The Commission’s data
collection program requires providers to list the Zip Codes in which the
provider has at least one high-speed connection in service to an end user . .
..” High-Speed Services for Internet Access:
Status as of
[8]
Despite technological
superiority in many areas the