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April 17, 2014

The Net Neutrality Debate: What You Need to Know

By Daniel Dimov

Network neutrality (also known as net neutrality or Internet neutrality) refers to a general principle that Internet service providers (ISPs) should not control how their customers lawfully use the Internet. For example, the ISPs should not restrict any Internet traffic or charge differently for different types of traffic.

Ever since the commercialization of the Internet, there has been an extensive debate on whether the principle of network neutrality should be implemented in the law and the increased demand for video content is adding heat to the debate. This article provides an overview of the key arguments for and against network neutrality as well as outlines several of the key moments of the net neutrality debate in the European Union and the United States.

Arguments in Favor of Network Neutrality

There several key arguments in favor of network neutrality.

The first is that network neutrality protects the right of freedom of speech. The reason is that network neutrality restricts ISPs from blocking or prioritizing content on the Internet. Countries that have not implemented the principle of network neutrality in their legislation often control or suppress the publishing or accessing of information on the Internet. For example, in China, the government uses a system that does not allow the residents of China to access certain online content. As a result, if an Internet user searches in Google or other search engines for the word “Tibetan independence,” “democracy movements,” or other blacklisted words, he or she will be redirected to a blank page stating “page cannot be displayed.”

Secondly, ISPs have no right to control data transmitted between end-users. According to this argument, the network’s only function is to move data, not choose which data to move. In this context, Vinton Cerf, a co-inventor of the internet protocol (IP), stated that “the Internet was designed with no gatekeepers over new content or services.”

Network neutrality does not allow ISPs to restrict content and/or services provided by their competitors. As known, restrictions of competition may lead to increased prices of services and/or goods. For example, in 2009, Deutsche Telekom (News - Alert) announced plans to prohibit the use of Skype over iPhones. Such a prohibition will harm the interests of consumers who can otherwise save money on calls by using Skype.

Fourthly, the involvement of ISPs in determining what content or services reach consumers will stifle innovators. For instance, if Google can pay ISPs to deliver YouTube videos faster than other sources of Internet video, any startups offering better services than YouTube will have tremendous difficulties enter the online video market.

Network neutrality preserves the existing Internet standards. The reason is that, at present, the Internet runs on technical standards created by variety of organizations, such as the internet engineering task force (IETF). By using the existing Internet standards, computers, services, and software created by different companies can be integrated together. Without network neutrality, the Internet will be regulated by ISPs under standards chosen by them.

The final argument is that network neutrality maintains the end-to-end principle. It “allows nodes of the network to send packets to all other nodes of the network, without requiring intermediate network elements to maintain status information about the transmission” (Daly, 2010). The principle allows people using the Internet to innovate free of any central control.

Arguments Against Network Neutrality

The first major argument against net neutrality is that the prioritization of bandwidth stimulates innovation because the ISPs can use the money paid for preferential treatment of Internet traffic  to pay for the building of network infrastructure that would increase broadband access to more consumers. This argument is well implemented in Cisco’s position regarding neutrality. An excerpt from Cisco’s position can be found below.

“Cisco and other opponents of net neutrality regulation believe that this approach is unnecessary and potentially harmful. Many of the Internet’s benefits come from its open nature and the ability of anyone to develop new and innovative devices and services that connect to it. Such innovation has created entirely new industries and has fostered competitive markets in Internet applications and equipment. Allowing broadband service providers to innovate freely and differentiate their networks will enable them to provide consumers with to enhanced service offerings and richer content.”

Secondly, the recently added video sharing websites, such as YouTube, Vimeo, and Vevo, take up a lot of bandwidth. According to Cisco, global Internet video traffic was 57 percent of all consumer traffic in 2012. The global Internet video traffic will be 69 percent of all consumer Internet traffic in 2017. This statistic does not include video exchanged through peer-to-peer (P2P) file sharing. Cisco states that the sum of all forms of video traffic, including P2P, will be in the range of 80 to 90 percent of global consumer traffic by 2017. In order to deal with the increased bandwidth requirements, ISPs will need to charge more high-bandwidth websites.

Thirdly, network neutrality decreases the revenues earned by the ISPs. The decreased revenues of the ISPs increase the level of the employment and decrease GDP. Moreover, the decreased revenues of ISPs prevent them from deploying and maintaining networks, and improving them over time. In order to recoup the decreased revenues, the ISPs may charge their customers increased fees.

Key Moments of the Network Neutrality Debate in the European Union and the United States

The table below displays the recent developments related to network neutrality in the EU and the US. The list of developments is not exhaustive.

YEAR

EU

USA

2005

The Federal Communications Commission (FCC) adopted four principles of network neutrality, namely: (1) consumers are entitled to access lawful Internet content of their choice; (2) consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement; (3) consumers are entitled to connect their choice of legal devices that do not harm the network; (4) consumers are entitled to competition among network providers, application and service providers, and content providers.

2007

The Federal Trade Commission (FTC) expressed reluctance about the adoption of network neutrality laws. The FTC stated that the adoption of regulations implementing network neutrality “may well have adverse effects on consumer welfare, despite the good intentions of their proponents.” The reason is that the current status quo has not led to a “significant market failure or demonstrated consumer harm from conduct by broadband providers.”
Senator Byron Dorgan told Deborah Platt Majoras, FTC Chairwoman, that he feared new services as innovative as Google would not be able to succeed in a system with price discrimination.
Comcast, the largest mass media and communications company in the world, was “caught” blocking BitTorrent traffic. The information came from tests performed by the Associated Press.

2008

Time Warner (News - Alert) Cable announced plans to move to “consumption-based billing.” Under the new plan, consumers’ fees for using the Internet were going to be based on how much bandwidth they use.
Kevin Martin, the Chairman of the FCC, stated that he was “ready, willing, and able” to stop broadband providers that unreasonably interfere with users’ access to online content. On August 2008, the FCC stated that Comcast violated the law by throttling the bandwidth available to some of its customers in order to ensure that other customers had sufficient bandwidth.

2009

Deutsche Telekom threatened to block the use of Skype over iPhones.
BT (News - Alert), Britain’s biggest broadband supplier, has been accused of limiting the speed of downloading video content without informing the users in advance.
The aforementioned violations of network neutrality drew the attention of the European Commission. In December 2009, Neelie Kroes, then a candidate for an EU Commissioner for Digital Agenda stated at a hearing in the European Parliament: “We also need to ensure that the new technologies are secure, respect privacy, and that networks are reliable and resilient, open, and neutral.”

2010

In 2010, Neelie Kroes stated that control or limitation of users’ access to any content is justified only in cases of non-commercial issues, such as security issues or spam. It should be noted that, despite Neelie Kroes’s commitment to protect the principle of network neutrality at the beginning of her term of office, the EU has not implemented a law that guarantees network neutrality.

In Comcast Corp. v. FCC, the United States Court of Appeal for the District of Columbia stated that the FCC does not have the right to force Comcast to stop interfering with its subscribers’ use of peer-to-peer software.
The FCC approved the FTC Commission Open Internet Order, a set of rules that prohibited telephone and cable television service providers from preventing access to certain websites and competitors.

KPN (News - Alert), a Dutch landline and mobile telecommunications company, announced plans to charge mobile phone users additional fees for instant messaging programs, streaming video, and VoIP services.
The European Parliament adopted a resolution on the open Internet and network neutrality in Europe. The resolution called the European Commission
“to ensure that Internet service providers do not block, discriminate against, impair or degrade the ability of any person to use a service to access, use, send, post, receive or offer any content, application or service of their choice, irrespective of source or target.”

2012

The Netherlands became the first country to implement network neutrality in the law. The Dutch network neutrality law prohibited ISPs from interfering with the traffic of their users. Pursuant to the law, ISPs can use traffic management measures only in case of congestion and for network security. Moreover, the traffic management measures should serve the interests of the Internet users.
The Body of European Regulators for Electronic Communications (BEREC) published the findings of an investigation concerning traffic management and other practices restricting the open Internet in Europe. According to BEREC, “At least 20% of mobile Internet users in Europe have some form of restriction on their ability to access VoIP services.”
Slovenia implemented network neutrality in law. The law prohibited discrimination of Internet traffic on the basis of the services provided and confirmed the open and neutral character of the Internet.

The CEO of Netflix stated that Comcast does not follow the network neutrality principles. According to the Netflix’s CEO, Comcast restricted the access to several video sharing websites with the aim to promote its own video services.

2013

Stephane Richard, CEO of France Telecom-Orange, said that Google paid France Telecom-Orange for the traffic sent by Google.
The founder of the free text app “Viber,” quoted byThe Guardian, stated that Vodafone disrupted the operation of the app. Viber is an application for iOS and Android OS. It allows users to send free text messages and make free phone calls with anyone who has installed the app.
ZDNet stated that SFR (News - Alert), a French telecommunications company, modified the source code of web pages displayed on the terminals of its 3G subscribers.
Neelie Kroes stated that: “Blocking or throttling services isn’t just unfair and annoying for users—it’s a death sentence for innovators too. So I will guarantee net neutrality.”

Conclusion

The debate on network neutrality in the EU and the US has been going on for years. There is no straightforward answer to the question whether or not network neutrality should be mandatory. On one hand, network neutrality guarantees the right of freedom of free speech, provides users with full control of their data, promotes the competition between ISPs, provides Internet startups with a greater chance to enter the market of online services, and preserves the existing Internet standards and the fundamental end-to-end principle.

On the other hand, mandatory network neutrality may decrease the revenues of ISPs and, thus, prevent them from expanding their Internet infrastructure. Moreover, mandatory network neutrality may prevent ISPs from meeting the increased bandwidth requirements. This is because ISPs would not be able to charge more for the high-bandwidth websites. A mandatory network neutrality may also decrease the revenues of the ISPs, which may lead to increase in the prices of the access to the Internet, lost jobs, and decreased GDP.

Therefore, any regulations concerning network neutrality should be based on an adequate balance between the different interests concerned. The developments related to network neutrality in the EU and the US presented in Sections 4 of this article clearly indicate the efforts of the EU and the US to find the aforementioned balance. Any major involvement of the ISPs in the way their customers lawfully use the Internet leads to a wave of social protests and initiates political discussions. In turn, any proposal for a mandatory network neutrality raises fears about excessive government intervention in the market of Internet services and unintended consequences on the players of that market.




Edited by Alisen Downey
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