The state of Net Neutrality Debate

A paper I had written for a liberal arts course on technology and society a few years back, that seems very much relevant today.


The Complications of Net Neutrality

By the end of the 20th century, first world nations around the world had made it a priority to expand infrastructure, transportation, utilities and telecommunications. It was recognized as a basic human right to have access to these types of facilities. When analog forms of media began to digitize, the world of communications technology reached a major milestone. It was the start of the digital revolution and the rise of high speed media under the internet. Although the origins of the internet can be dated back to the 1960’s, its use in a contemporary style emerged in the 1990’s when telephone companies which were regulated by the government began to convert their existing architecture to support data transfers. While this new technology used the same physical infrastructure as telephone lines, the internet was not treated as a vital communication service (Hart, 2001, p.419). This left the internet unregulated by the government so Internet Service Providers (ISPs) were able to set their own standards on which places received a connection, what restrictions applied to that connection and what that connection would cost. If we fast forward to the early 2000's, electronics and communications technology had advanced a great deal but regulations were still lagging, unable to unify with the mass media internet age. Just recently, the discussion of internet freedoms and regulation has been brought into the spotlight of mainstream culture.

In his 2003 paper, Columbia Law School professor Tim Wu, described the internet as a media with freedom of expression, equal treatment of data and neutrality within Quality of Service (QoS). He coined the term for this internet practice ‘net neutrality.’ Over the years, the idea has spread like wildfire through consumer pressure, government legislation, technical demands and economic growth. However, the exact definition of net neutrality has become blurred with many experts viewing the problem at slightly different angles. For these reasons, net neutrality has become a global socio-political hot topic and has drawn controversy over the internet. Common sources and academic sources have shown slightly different pictures on the situation. Common sources of information have for the most part, looked toward making the general public aware of the existence of net neutrality debate, have criticized the malpractices and discrimination of ISPs and promoted political pressure. Academic sources have been more analytical in the technical framework, legislative issues, and economic impacts. The debate is essentially between two groups; Telecommunications providers who oppose net neutrality, and Universities, commercial website, and end users who support net neutrality. The debate surrounds the issues regarding technical, social, economic and legislative issues.

The current model for internet structure in most countries is a simple one. An end user purchases access to the entire internet through a pipeline of finite bandwidth from an ISP. The user is charged by the ISP based on the size of the bandwidth and the amount of data throughput. The ISPs themselves purchase a virtual pipeline through the physical connections called ‘Transit’ where the ISP incurs a fee. Connections that are static have fewer options to choose from in the ISP pool because of regional dominance (Economides & Tåg, 2012, p.92).

There are a few immediate reasons for which net neutrality seems favorable. Some might consider neutrality the ethical and just choice. Among the primary concerns is the economic impact of net neutrality. The prevailing markets in which ISPs operate in are distributed into small regions where monopolies or duopolies exist. Without regulated net neutrality, pricing schemes and fee structures are altered. Content and application providers would have to pay residential ISPs to distribute their content based on what QoS they can afford. ISPs would simultaneously charge end users with fees to be able to have better quality connections to these content providers. In addition to this, deregulation worsens performance for a company that does not pay premium which has an economically ill effect. This three-party economic system is called a platform or ‘two sided model’ (Economides & Tåg, 2012, p.92).

The two sided model approach requires a planned pricing scheme for both the end user and the content provider that can, in the best case scenario, produce an economic surplus in the entire platform while leading to no losses for each of the three parties. The study conducted by Economides and Tåg, suggests that the net value of a platform depends on whether the content providers value customers more, or vice versa. This value is expressed as a ratio and applied to the monopoly and duopoly market. Then, it is estimated that when content providers value end users far more than vice versa, net neutrality results in decreased platform profits. On the other hand, in the duopoly model the platform is better off under net neutrality regulations. Since the advertising is the primary revenue source for content providers, it must be noted that this ratio will likely favour end user value. Therefore, the economics of net neutrality may largely boil down to regional market structure (monopoly, duopoly or other) and the type of network demand for content that region has.

When content providers value end users far more than vice versa, net neutrality results in decreased platform profits.

There are numerous social consequences in alterations of internet structure that could arise from abolishing network neutrality. Many of these are connected to the economic changes in pricing models that will have access issues. With decreased access times and signal quality, non-premium content providers are left far behind their premium, big-name counterparts. This affects the content permeation into the end user base (Lee & Hwang, 2011, p.765). Latency sensitive services such as VOIP, streaming music or video and online gaming will be primarily affected while non latency sensitive applications such as email will see nearly no performance drop implications. The usage of these high bandwidth, low latency forms of hot media can, in the worst case, be throttled so far that they are essential unusable and effectively blacklisted (if they are not intentionally blacklisted in the first place). Internet based physical product companies such as shopping sites are profoundly affected by throttling and blacklisting. In India for example, if Amazon.com had increased speed compared to its rival flipkart.com, the revenues made for Flipkart would be insignificant compared to Amazon. This can destroy market competition and lead to increased prices for end users (All India Bakchod, 2015).

It is estimated that in nearly every form of net-partiality, the ISP would have a significant economic incentive to discriminate on the application provider’s end (Lee & Kim, 2014, p.387). This would affect the variety and quality of internet content around the world. If content makers do not see the same amount of profits, the quality of the material would likely be altered and emerging content makers (entrepreneurs) would be dissuaded by large transmission fees (Ruth, 2010, p.62). Since this applies to all forms of media, including news media, certain media outlets would be able to advance their side of the story much better than others affecting public perception of current events. Small businesses which the government encourages, would never take off (Net Neutrality: What You Need to Know Now, 2015).

It is estimated that in nearly every form of net-partiality, the ISP would have a significant economic incentive to discriminate on the application provider’s end.

Neutrality of internet architecture also requires service providers to build physical connections without discriminating geography. This was part of the plan for US Government expansion of broadband internet in 2010 when $7.2 billion was distributed in stimulus funds to increase the internet connectivity of rural lands (Ruth, 2010, p.61). New rural broadband internet connections have been shown to create more than 5000 jobs while connecting over half a million residents and nearly a hundred thousand businesses (Ruth, 2010, p.61). This can have the effect of a heighten sense of community and can serve to attract more people into rural areas which have historically seen population growth decline due to the technological gap. There is also evidence to support the idea that disasters such as the 2003 North Eastern Blackout could be avoided with better communications structures (Ruth, 2010, p.60).

Despite all these positives, there are several possible negative effects of net neutrality that could prove to be a larger challenge than most might assume. In the study of economic impacts, many of the estimation models used to predict whether the end user will see improved internet quality or not, show that the simulation results in no significant relation between application services and the efficiency of content provider networks (Lee & Hwang, 2011, pg. 771). Even though certain components have a negative effect, the total sales grow more than the net neutrality model. Certain studies have found that the incentive to invest in bandwidth is greater when the ISP can price discriminate. In some cases this can reverse the welfare losses of a non-neutral structure (Economides & Tåg, 2012, p.93). Growth of physical structures benefits a country as a whole greatly as it leads to improved facilities to conduct business and leisure activities. Nations around the world encourage ISPs to expand these connections but ISPs argue that doing so under neutrality is not profitable especially to entrepreneurs since they will see fewer opportunities to sell assorted internet facilities. The problem becomes worse when ISPs cannot shape traffic, due to the increasing amount of internet connections made, so that the system is running stable (Larouche, 2009, p.22). Post congestion, the system can have better performance under traffic shaping conditions (Cerf, 2014, p.88). Throttling and ISP QoS application tries to optimize throughput of data for everyone running on a shared, overcrowded line. In these situations, the transfer amounts are not important but transfer rates play a role in determining internet performance (Cerf, 2014, p.88).

Since the internet was first brought to the general public, attempts have been made to explain the structure of the internet using analogies such as water/electricity flow to highway traffic. The highway traffic analogy is one of the most popularly used metaphors to date but they actually misguide the recipient. When net-neutrality proponents argued that paid prioritization was like adding tollbooths on a previously free highway, it gave people the sense that their rights and freedoms were being taken away (Romero, 2015, p.11). However, unlike state highways, the internet is a privately owned infrastructure which is built using an extremely large initial cost. The FCC classification of the internet as equivalent to telephony, in its recent approval of net neutrality, is also technically wrong. The internet, more specifically Internet Protocol (IP) is unlike cable or telephone systems because it is able to support a multitude of services and no data is generic (Romero, 2015, p.11). Given this situation, it is not surprising to see that telecoms may show little interest for public opinion for net neutrality.

With regards to network expansion, rural internet connectivity might not be economically profitable since lower population concentration would still require a similar amount of physical building. ISPs also see these areas unfavorably due to lower potential customers. The Akamai 2014 world ranking places the US as no. 11 on the list of average internet speeds. World leaders such as South Korea have shared physical structure internet, so this has raised the question of shared infrastructure to improve the US internet service (Ruth, 2010, p.62). This can become a major task for the FCC and could take several years to completely realize under the current system. The problem exists due to the time constraints and the speed of technological development. Regulation must be done as early as possible to maximize its effects and because reverting from failed strategies is costly and time consuming (Lee & Kim, 2014, p.395). The US government is expected to spend $73bn a year on upgrading infrastructure to support an estimated 100% usage time increase and 800% data transmission increase (Wakefield, 2015). The venture can only be made possible if the ISPs know with sufficient certainty that the projects will be sustainable. So far, more data is required to make predictions.

Net neutrality opponents, mostly telecom operators, in India are lobbying extensively to abolish neutrality in India. Unlike the US, no formal government regulatory mandates have been made so far in India. Proponents for net neutrality are mostly among the crowd of general public and internet activists who do not have much of a voice and cannot influence the people enough to care about the issue (All India Bakchod, 2015). The Telecom Regulatory Authority of India (TRAI) has cunningly hidden a 118 page document about this topic in the corner of their webpage disguised with the innocuous name ‘Consultation Paper for Regulatory Framework for over the top (OTT) services.’ Similar sleights are observed in the US where end users are not made aware of the debates surrounding the issue. The hearings and procedures of net neutrality debates are technical and tend to appear very boring, killing public interest (Avery et al., 2014).

Common sources of information on TV and YouTube which are easily accessed by everyday folk reveal these events using humor, satire and with apprehension. The arguments are posed with an ‘us vs them’ approach. Popular magazines and websites seem to reiterate the same idea. There are several criticisms of the industry and the news delivery is emotionally charged. This is expected as these forms of media can fall directly victim to any sort of two tiered internet or two sided fee structure. It is in the best interests of content makers to have better connections to their audiences so their arguments are all of immediate concern. Last week tonight was critical of the appointment of a top lobbyist in the position of the chair of FCC; a presumptuous point of view to have. The show was also critical of multiple ISPs in a regional area for increased competition but failed to explain whether or not that kind of competition benefited the platform. It seems as if both sides of the debate are scoffing at each other’s capabilities. Common sources also extend unexpectedly to secondary topics such as internet freedoms, government privileges and censorship with loose connections. There is a distinct lack of explanation of scholarly research and statistics can be easily misinterpreted since no parameters or control variables are expressed. The language is simple and casual, filled with rhetorical questions to the viewer. There are also recommendations given to viewers to act on promoting net neutrality. With the recent changes in the US, internet communities, TV shows and newspapers have all expressed the FCC regulations with approval showing unanimous approval for net-neutrality.

Scholarly sources of information such as peer reviewed journal articles and research studies delve deep into the study without preference to any particular side (see two sided market analysis). The material is more lackluster to read when compared to the emotionally engaging hot media outlets. Regardless, there are more citations present in scholarly sources with details of any experiment/simulation conditions clearly spelled out. Scholarly sources have their articles written with technical terminology which may make everyday readers disinterested or confused. However, they are an excellent source of relatively unbiased information written as if they seek to solve a problem.

A course theme that this debates covers is management of new technologies. The internet has come a long way since its early implementations and will continue to grow in directions people cannot completely predict. Improvements in speed and capacity will allow users to reach newer types of media and be connected in different ways from different places. However, it seems that the infrastructure of the internet itself will be privately owned for the foreseeable future. This can be considered a major management obstacle since these private parties are ultimately the sole responsible individuals who can make industry defining decisions. There is a push from governments around the world, forcing the ISPs and transit managers to expand because the internet is undoubtedly being seen as a utility. These governments have to do such regulations in order to be internationally competitive. If these governments would extend their targets and attempt to make the physical structures shared among everyone, countries would move towards faster internet connections such as South Korea or the Netherlands.

Net-neutrality is a complex issue that is surrounded by many variables. End users should not be the only viewpoint to consider since economic and legislative issues can make or break a system. Despite the challenges, net-neutrality can be optimized to work for any nation provided that the government is willing to make sufficient changes sufficiently fast. In order to make good decisions, research and development in these new areas must be consistently conducted and scholarly sources must be encouraged to produce information regarding the subject. In ideal conditions, regional monopolies do not exist, the infrastructure is shared, and government spends sufficient amount to grow infrastructure. In the instance where traffic shaping and throttling can improve the productivity of the overall system, the government must make regulations on a case by case basis. This will require governments to work very closely with ISPs. Small businesses and entrepreneurs must not feel discouraged by entering the markets. The internet net must remain an equal opportunity platform like it historically has. Given all these conditions, the internet can grow in a controlled manner without abuse and serve to meet the demands of future generations hassle-free.

References

Avery, K., Carvell, T., Gurewitch, D., Haggerty G., Mauer, J., Oliver, J., Sherman, S., Tracy, W., Tracey W., Twiss, J., Weiner, J. (Writers) & Perota, J. (Director). (2014). Episode #1.5 [Television series episode]. In Oliver, J., Carvell, T., Taylor, J., Thoday, J. (Executive Producers), Last Week Tonight with John Oliver. New York, New York: HBO.

All India Bakchod. (2015, April 11). AIB : Save The Internet [Video file]. Retrieved from https://www.youtube.com/watch?v=mfY1NKrzqi0

Cerf, V. G. (2014). Knocking down strawmen. IEEE Internet Computing, 18(6), 88–88. doi:10.1109/MIC.2014.115

Economides, N., & Tåg, J. (2012). Network neutrality on the internet: A two-sided market analysis. Information Economics and Policy, 24(2), 91–104. doi:10.1016/j.infoecopol.2012.01.001

Hart, J. A. (2011). The net neutrality debate in the united states. Journal of Information Technology & Politics, 8(4), 418–443. doi:10.1080/19331681.2011.577650

Larouche, P. (2009). Law and technology

the network neutrality debate hits europe. Communications of the ACM, 52(5), 22–24. doi:10.1145/1506409.150641

Lee, D., & Hwang, J. (2011). Network neutrality and difference in efficiency among internet application service providers: A meta-frontier analysis. Telecommunications Policy, 35(8), 764–772. doi:10.1016/j.telpol.2011.07.005

Lee, D., & Kim, H. (2014). The effects of network neutrality on the diffusion of new internet application services. Telematics and Informatics, 31(3), 386–396. doi:10.1016/j.tele.2013.10.001

Net Neutrality: What You Need to Know Now. (n.d.). Retrieved June 9, 2015, from http://www.savetheinternet.com/net-neutrality-what-you-need-know-now

Romero, J. J. (2015). Why net neutrality analogies will always fail [news]. IEEE Spectrum, 52(4), 10–12. doi:10.1109/MSPEC.2015.7065401

Ruth, S. (2010). Bumps on the road to the national broadband plan. IEEE Internet Computing, 14(6), 59–63. doi:10.1109/MIC.2010.134

Wakefield, J. (2015, February 26). Net neutrality rules passed by US regulator. BBC News. Retrieved May 30, 2015, from http://www.bbc.com/news/technology-31638528

Akamai Technologies. (n.d.). Retrieved May 30, 2015, from http://www.akamai.com/stateoftheinternet/

Cerf, V. G. (2014). Knocking down strawmen. IEEE Internet Computing, 18(6), 88–88. doi:10.1109/MIC.2014.115

Economides, N., & Tåg, J. (2012). Network neutrality on the internet: A two-sided market analysis. Information Economics and Policy, 24(2), 91–104. doi:10.1016/j.infoecopol.2012.01.001

Hart, J. A. (2011). The net neutrality debate in the united states. Journal of Information Technology & Politics, 8(4), 418–443. doi:10.1080/19331681.2011.577650

Larouche, P. (2009). Law and technology

the network neutrality debate hits europe. Communications of the ACM, 52(5), 22–24. doi:10.1145/1506409.150641

Lee, D., & Hwang, J. (2011). Network neutrality and difference in efficiency among internet application service providers: A meta-frontier analysis. Telecommunications Policy, 35(8), 764–772. doi:10.1016/j.telpol.2011.07.005

Lee, D., & Kim, H. (2014). The effects of network neutrality on the diffusion of new internet application services. Telematics and Informatics, 31(3), 386–396. doi:10.1016/j.tele.2013.10.001

Ruth, S. (2010). Bumps on the road to the national broadband plan. IEEE Internet Computing, 14(6), 59–63. doi:10.1109/MIC.2010.134

Verma, P. (2011). The elusive goal of net neutrality. International Journal of Critical Infrastructure Protection, 4(3–4), 135–136. doi:10.1016/j.ijcip.2011.09.001

Akamai Technologies. (n.d.). Retrieved May 30, 2015, from http://www.akamai.com/stateoftheinternet/

All India Bakchod. (2015, April 11). AIB : Save The Internet [Video file]. Retrieved from https://www.youtube.com/watch?v=mfY1NKrzqi0

Avery, K., Carvell, T., Gurewitch, D., Haggerty G., Mauer, J., Oliver, J., Sherman, S., Tracy, W., Tracey W., Twiss, J., Weiner, J. (Writers) & Perota, J. (Director). (2014). Episode #1.5 [Television series episode]. In Oliver, J., Carvell, T., Taylor, J., Thoday, J. (Executive Producers), Last Week Tonight with John Oliver. New York, New York: HBO.

Net Neutrality: What You Need to Know Now. (n.d.). Retrieved June 9, 2015, from http://www.savetheinternet.com/net-neutrality-what-you-need-know-now

Romero, J. J. (2015). Why net neutrality analogies will always fail [news]. IEEE Spectrum, 52(4), 10–12. doi:10.1109/MSPEC.2015.7065401

Steimie, J. (n.d.). Am I The Only Techie Against Net Neutrality? Retrieved May 30, 2015, from http://www.forbes.com/sites/joshsteimle/2014/05/14/am-i-the-only-techie-against-net-neutrality/

Wakefield, J. (2015, February 26). Net neutrality rules passed by US regulator. BBC News. Retrieved May 30, 2015, from http://www.bbc.com/news/technology-31638528