Dissecting Net Neutrality

There has been much dramatization, gesticulation and hyperbole-ation (if that’s a word) over net neutrality. I’m going to try and explain the subject in a simple and accessible manner in this article, and also talk about the various other questions that net neutrality raises. I’m not promising to answer all the questions, but I promise to make you think about the right questions to ask.

What’s Net Neutrality?

In its purest form, net neutrality consists of one simple principle:

Internet service providers (ISPs) must not discriminate against any kind of data.

That’s it. No frills, no ifs, no buts.

While it’s seemingly simple, it has many corollaries:

  1. This means that an ISP must not slow down (throttle) connects to a specific website or a specific kind of data more than it slows down other websites or other kinds of data.
  2. An ISP may not speed up a specific website or a specific kind of data more than it speeds up other websites or other kinds of data.
  3. An ISP may not charge their consumers (retail or commercial consumers) differently based on the kind of data they consume, or the website from which the consume said data.

In other words, ISPs are to simply be data pipes, and not mess around with the data they carry, or be “extra-smart” about it.

(Net neutrality guidelines by the FCC in the US allow for “reasonable network management”, which means an ISP may temporarily treat different types of data differently due to capacity/congestion issues. We’ll temporarily ignore that and talk about the core principle involved.)

What is Not Net Neutrality?

Free Internet

Net neutrality is not about making internet service free to everyone (although that would be awesome!). So if a nutbag loudmouth tells you that net neutrality is evil and it is all a plot cooked up by Russia/Illuminati/sock puppets to drive all the big telecom companies out of business, feel free to politely ask them what they’ve been smoking.

Publicly Owned Internet

Net neutrality does not support or discourage publicly owned internet (municipal broadband). In fact, it nothings municipal broadband.

The idea behind municipal broadband is that instead of depending on a corporation to lay down, own, maintain and operate internet infrastructure in a city, a local municipal authority chooses to do it. There can be advantages to doing so, least of which is that it enables cities to better serve its underserved population (Wanna learn more details? Google it!) But those advantages have nothing to net neutrality. If a town/city/county chooses to operate a municipal broadband, they should still be held to the same standards of net neutrality as any other corporation.


Quick Rant About Bad Analogies

In my travels on le internet, I’ve come across many bad analogies trying to support or denounce net neutrality. Let me just say that they are what they are — analogies. Don’t attempt to literally apply those analogies to understand net neutrality unless you’re okay being considered an absolute nincompoop by anyone who knows the teensiest bit about the internet.

For the record, the internet is not like:

A series of tubes

No. They are not tubes. ‘nuff said.

Freeways

This one economist used the analogy of freeways to explain net neutrality, and explained that imposing net neutrality on the internet is the same as saying express lanes should not be allowed on freeways.

This analogy makes me want go like this

If the internet was like freeways, it would be owned by governments, and it would get choked every other day by a runaway accident. Freeways carry its users, while the internet carries data, not people.

… and I’m done ranting.

Now that I’m done ranting, let’s talk about some some of the side-effects of enforcing net neutrality. Let’s look through some of them, and tease apart the subtleties of these side-effects.


Conflict of interest

Did you know: In the US, when cable company runs a TV channel as well, they are not allowed to provide cable service in that area. It’s because it would be too easy for them to make their competitors’ channels costlier to access.

Did you know: In the US, if an investment bank trades for itself as well as advises outside clients, they are legally required to ensure no information is exchanged between these two sides. This is because their advising arm can have information that the internal traders can (mis)use to gain an unfair advantage over outside traders.

Scenarios like above are what is called a “conflict of interest”. It is the conflict between a corporation’s selfish interest with fairness and greater good.

In the absence of net neutrality, many such conflict of interest scenarios can arise. Some examples follow.

The Cable TV-ISP

I buy my internet and cable TV via fictitious company called Bombast. All I watch on TV is cat shows. One day I start using Catflix (an online cat shows streaming service — also fictitious of course!), and realize I don’t really need TV, and I cut down my subscription with Bombast to just internet. Somehow, Bombast’s ISP business has ended up cannibalizing its cable TV business. To make up for lost revenue, Bombast decides to charge me extra just for the gigs of data I use for Catflix. What! I don’t want that!

OMG!

What we have right here is a conflict between the consumer’s interest and Bombast’s interest. Is it ethical for Bombast to charge me extra just for using Catflix?

Flip side: Bombast decides to not ruin its relationship with me, and goes after Catflix. It decides to slow down Catflix’s data packets to a point where my cat shows are constantly buffering. I go tell everyone that Catflix is great but their streaming sucks. In a way, Bombast holds Catflix’s entire reputation at ransom, and asks it to pay up for lost revenue, and calls the payment “fast lane fees”.

Is it okay that an ISP be able to wield this much power? Is it okay for them to have the ability to prioritize their self-preservation over the interest of consumers, or of other digital service providers? I think not. Enforcing net neutrality strips ISPs of the ability to wield such power.

The Mobile Carrier-ISP

This is a similar case as the previous one. I use Fairtel (a fictitious company) as my mobile service provider, and I use it to make calls to my friends and family, all the while paying Fairtel by the minute. But then I discover that I can call all these people on Whatsapp now, and I choose to do so over my conveniently unlimited data plan. Same story again — Fairtel’s internet service eats into their telephony services revenue. Again, Fairtel should not be able to charge me simply for what data I use towards WhatsApp calling.

A mobile carrier may justify them charging their consumers extra for essentially the same data service by saying they are enabling this new form of communication, but the fact is that these carriers did not build or provide anything new. It is companies like Skype or Whatsapp that are innovating, and carriers are simply attempting to make money off someone else’s innovation. Not only that, but erecting barriers against adoption/operation.

The above case of conflict of interest enabled by the lack of net neutrality can be easy to decide about. It can be easy to take sides on that one. But hold on to your seats, because the following cases I bring you will be much more in the gray area.


Of Sponsored Data and Airtel Zero

AT&T has an offering called sponsored data. The idea is that if a company X pays AT&T a certain amount of money, and AT&T makes data used towards that company’s services by AT&T’s customers not count towards their data cap. AirtelZero is basically the same thing, except it is provided by a mobile telecom operator Airtel present in India. Essentially the company X can use their money to make their services more lucrative to their consumers by essentially subsidising its use.

Obviously, AT&T and Airtel both need to violate net neutrality to be able to provide such an offering. No two ways about it. But whether or not they’re violating net neutrality is not the interesting question. The interesting question is, “Is it fair?”

“Fair to who?”, you ask. Great question — lets look at it in detail.

The Consumer

For the consumer, only change is that less data counts towards their data cap for the same amount of money. This is better than fair for the consumer — its a good deal!

The Company X, and its competitors

So, Company X has chosen to use its money to subsidize its customers, and probably also gets a boost in its brand value. It spent money to make its customers happier, and to make themselves look better. All it had to do was, make a deal with “Fairtel”, and pay some money. Doesn’t seem like there’s anything wrong with that to me so far. A company’s money is their own business if they’re spending it on lawful activities.

But when we start consider how fair this is for the competitors of Company X, opinion starts to diverge, and starts to enter more of a gray area. Is it fair that Company X can enter an agreement with Fairtel and put any competitor like Company Y at a disadvantage? My opinion is that it is no different from a company spending its money on advertising, or on product discounts. If one of them is fair, so should be the other. Move along — just capitalism at work, nothing to see.

However if Company X’s deal with Fairtel is an exclusive one and it locks out its competitors, I’d change my stance on the whole thing. In that case, the whole thing feels anti-competitive and unfair to me. I’d like to hear your thoughts on this too.

Fairtel, and Other Carriers

By making this free-access deal with Company X, Fairtel and Company X both earned cool points with its customers and probably some word of mouth publicity with its customers’ friends and family. There’s no question of fairness on Fairtel’s end — its unquestionably advantageous.

As for Fairtel’s competitor carriers, they need to start similar and competing offerings to their customers to remain an attractive carrier in the market. Plain ol’ capitalism at work again. However, if any of Fairtel’s deals are exclusive deals and prevent companies signed up with Fairtel from making deals with other carriers, it is not only unfair to other carriers, it is also unfair to consumers. Such a situation forces consumers to choose a carrier based on their need to access other services, and is a form of lockdown that I can never stand by. I deem that practice unfair — again, I’m interested to get your thoughts.

The end game

Now this section here is just speculation on my part. I could well be dead wrong about this. But I have a small feeling that in a world where such deals are allowed freely and have found mass adoption, the free market will eventually reach a point where three things may be true:

  1. The mobile network providers will have finished competing with each other on the price of such deals to the point where the cost of such a deal will not be too high as to prevent the entry of
  2. every company worth its name has “zero rated” deals with every popular mobile network provider.
  3. However, regulatory oversight will be needed to ensure that no anti-competitive dealmaking happens.

In this world, the new normal would be companies paying for their customers’ data, and mobile internet consumers paying only for accessing the smaller players. Smaller players would be at a disadvantage, sure, but that’s really no different from them having an uphill battle to fight right now. Whether the regulatory overhead to maintain a competitive market is worth the benefit consumers get from such this practice would be pure speculation — something I would not even attempt to opine on.


T-Mobile’s Music Freedom

T-Mobile’s Music Freedom is a feature of their data network where their customers can stream music from a (large) set of online music streaming providers without having it count towards their data cap. How’s this different from sponsored data? The music streaming services are not charged for this privilege. My understanding is that they can simply apply to be part of Music Freedom, and T-Mobile will include it if it meets certain usage volume criteria.

T-Mobile does not prevent these music streaming services from striking a free-data deal with any other carrier, and since it doesn’t charge the services, there is no apparent incentive for T-Mobile to prevent certain music services from being part of this plan. They seem to be applying their eligibility criteria freely and fairly. All this seems as fair as can be. Win-win all around.

To be clear — as great as this sounds for consumers, we must note that it does break net neutrality because T-Mobile treats music streaming data differently from other data (its the difference between free everything and free music streaming). But as we noted earlier, whether or not net neutrality is being violated is not the interesting question to ask — the interesting one is, “So what?”

Such cases are much more of a gray area than any other we’ve talked about so far. While everyone wins, the losers in this deal are probably services that compete with music streaming. What about YouTube? What about podcasts? Could T-Mobile be accidentally discriminating against these other services? More importantly, do these other services feel at a disadvantage because T-Mobile prioritizes music streaming? What those feelings change if every carrier starts doing this? If they do feel disadvantaged, what legal/regulatory recourse do they have?

Music Freedom does sound like an awesome thing to have. But it also raises these hairy questions that policymakers and regulators will need to address if they choose to not enforce strict net neutrality.


Internet.org

Internet.org is an initiative by Facebook with the goal of providing underprivileged communities access to a subset of the internet in the developing world. The idea is that they will work with local mobile network carrier(s) to make it free for the customers of that carrier(s) access to a select set of services (online searching, facebook, mobile banking, e-commerce, etc). The initiative is a completely philanthropist one. From what I understand, service providers do not have to pay to be part of the free offerings, and neither does the mobile network carrier get paid. It seems like an initiative with nothing but good intentions at heart.

Mark Zuckerberg published this long article stating that they fully support the spirit of net neutrality, and that internet.org does not violate it. My stand on that is — FALSE. Internet.org definitely violates net neutrality in essence, because to be able to provide this service, network carriers need to distinguish between different data packets, and only serve those that are part of the free offering. However, he’s right about the part where he says internet.org doesn’t violate net neutrality “in spirit”. The intent behind internet.org is to provide access to more people, not to use the distinguish between different kinds of data for selfish profit. If it was feasible/affordable, I’m sure internet.org would strive to provide access to the full open internet. But its not, so they’re going with the next best thing.

But I can’t help but wonder about some other aspects of internet.org. Can any service self-select itself into internet.org? If every service tries to do so, will internet.org be forced to deny it to some services? If so, would that be fair to the services being kept out of this free internet? Also, the carrier that provides internet.org will definitely get a boost/advantage over other carriers simply because they can capture a larger segment of the market. Would other carriers be able to participate as well? These are some questions that need to be answered if we are to understand the downsides of internet.org.

When in doubt, I revert to the principle of “beneficence”. I can understand that internet.org has the very best interests at heart, but are the trade-offs worth the benefit ? If internet.org is actually doing more good than bad, then I totally support it. If the bad parts can be mitigated by regulatory controls, I’m all for it. But for now, I reserve judgement.


Encryption and Anonymity

Using encryption/anonymization like Tor can make your data impervious to snooping. This means your ISP cannot tell what kind of data your traffic consists of. This means that if your ISP has a sponsored data plan, you reap no benefit from that. If you’re streaming music via Tor on T-Mobile, you continue to get charged lose the benefit that any “sponsored data” plan can provide you.

Oh boy. This feels like it is a price to pay for anonymity. No seriously, AT&T has already done it. Seems like the price of anonymity is $29 per month. This is another consequence of it being okay to violate net neutrality. It allows ISPs to put a real price on your privacy. There is nothing wrong with wanting to be anonymous, and this unintended consequence is tantamount to being penalized for doing nothing wrong. I’m so not cool with this one.

The troubling thing is, anonymization is an all or nothing deal. It is incompatible with any kind of data-discrimination in the most direct way possible. So any possible benefits of net neutrality will be denied to the consumer that wants to protect his privacy.

This point needs to be considered especially by policy makers. If industry regulators allow data-discriminatory practices, it is equivalent to legally sanctioned discrimination against anonymity. It unknowingly (or knowingly) makes the regulators responsible for putting a dollar value on the privacy of internet consumers everywhere.


The “Capitalist” Argument

I’ve heard some arguments against net neutrality that eschew it based on reasoning that roughly sounds like this:

We live in a capitalist free-market economy, and god forbid if anyone comes along and says a corporation can’t do this or that.

False. We might live in a theoretically free market economy, but it is FAR from being practically free. The pure capitalism that this argument refers to exists only in imagination. Most “free markets” are subject to a lot of regulation.

Hell, there are a lot of anti-free-market behaviour in this so-called free market of ours that isn’t even regulatory. Examples, you ask?

  • Tesla being denied the right to sell their cars directly.
  • Electric utility companies making it expensive for consumers to own solar power generators.

All that assholery aside, the fact is that any technology can be used for great good or great evil. Regulation ensures that great evil does not transpire. It is the case with many industries — finance, nuclear power, real estate and telecommunications to name a few. Yes, telecommunications. It is already a regulated industry.

I outright reject the capitalist argument against net neutrality.


Conclusion

After looking at all these facets of net neutrality, its definitely hard to say a clean yes or now to it. There are clearly the good sides to not enforcing net neutrality strictly as per its definition. Consumers can actually benefit from possible schemes like sponsored data or Music Freedom (things that FCC calls “creative pricing”). On the other hand, absence of proper regulatory control can result in an anti-competitive market in this space, and can be a major blow both to consumer interests and to startups and innovation.

The ideal answer, I think, is to not enforce net neutrality strictly, and to also set up regulatory controls that can prevent all the possible negative outcomes from transpiring. It’ll be hard work, but it has to be done if the interests of consumers are to be preserved, and a market that is free and open to innovation is to be sustained.

An easy way out of this mess would be to simply enforce net neutrality with a heavy hand, and eliminate all possible negative outcomes in one fell sweep. But that would be lazy and irresponsible.

The one thing we absolutely cannot do is — to do nothing.

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