Network neutrality

Network neutrality is a regulatory concept in telecommunications provider economics, which requires them to provide the same services, at the same price, regardless of source or destination. It does not forbid traffic engineering or security procedures that protect the network infrastructure, but it does prevent, for example, a cable service provider charging more to a competing content provider than a content provider owned by the same company as the connectivity provider. A telecommunications provider that sells deregulated telephone service, under network neutrality, could not block or degrade a competitive voice over Internet Protocol service.

The issue is a worldwide one, accelerated by the capabilities of universal broadband access. Since the Internet is worldwide, national policies may not fully cover all access. The experience of each nation, however, will be informative to others. Canada has defined the mechanisms as Internet traffic management practices (ITMPs) by Internet service providers (ISPs).

Real-world networks are not designed to provide maximum bandwidth, at all times, to all users. Unquestionably, there is constant innovation in Internet-enabled services. Early ISPs engineered for electronic mail, Telnet and file transfer were overwhelmed by graphics-intensive Web traffic. University campus networks built to handle web traffic loads sometimes found they were unable to support their primary teaching and research methods, due to large volumes of music and video downloads by students.

Under network neutrality, a provider could impose traffic limits, which could not discriminate as to source and destination, and generally would be assumed to be stated in the customer contract.

Opponents to network neutrality include those who want, ideologically, minimal government regulation of the marketplace. They assert that innovation is greatest in an unregulated market. Some diversified firms, which own both content providers such as pay-per-view television and cable TV distribution, say they would not have made the capital investment on the distribution network had they not expected to see return on providing content.

Proponents of network neutrality argue that differential pricing, and blocking by service type (e.g., peer-to-peer network or VoIP) rather than bandwidth, discriminate against innovation by alternative service providers and prevent lowering of costs through competition.

Most large service and content providers are on record as opposing network neutrality, although some firms have modified their positions. AT&T, for example, no longer discriminates against third-party VoIP on its wireless network. The industry says this is self-policing; opponents say that it was done only due to the threat of regulation.

Canada

Canada has taken an aggressive pro-network neutrality position. Its Canadian Radio-television and Telecommunications Commission determined it had the authority to implement a network neutrality policy. Its approach is based on four principles:

1. Transparency

• Where any ITMPs are employed, ISPs must be transparent about their use. Consumers need this information to make informed decisions about the Internet services they purchase and use.
• Economic practices are the most transparent ITMPs. They match consumer usage with willingness to pay, thus putting users in control and allowing market forces to work.

2. Innovation

• Network investment is a fundamental tool for dealing with network congestion and should continue to be the primary solution that ISPs use; however, investment alone does not obviate the need for certain ITMPs. The Commission recognizes that some measures are required to manage Internet traffic on ISP networks at certain points in the network at certain times.
• Where ITMPs are employed, they must be designed to address a defined need, and nothing more.

3. Clarity

• ISPs must ensure that any ITMPs they employ are not unjustly discriminatory nor unduly preferential. The Commission has established an ITMP framework that provides clarity and a structured approach to evaluating whether existing and future ITMPs are in compliance with subsection 27(2) of the Telecommunications Act (the Act).

4. Competitive neutrality

• For retail services, ISPs may continue to employ ITMPs without prior Commission approval. The Commission will review such practices, assessing them against the framework, based upon concerns arising primarily through complaints by consumers.
• For wholesale services there will be additional scrutiny. When an ISP employs more restrictive ITMPs for its wholesale services than for its retail services, it will require Commission approval to implement those practices. technical ITMPs applied to wholesale services must comply with the ITMP framework and must not have a significant and disproportionate impact on secondary ISP traffic.

United States

In the United States, the the independent Federal Communications Commission (FCC) did not assume it had as much authority as its Canadian counterpart, so the matter is also the focus of Presidential and legislative activity.

Regulatory

The FCC began formal rulemaking process in October 2009, a process that will not complete soon. Authority for regulation is guided by the Communications Act of 1934, as amendment, relevant principles of which, in the proposed rulemaking, are:

• "To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to access the lawful Internet content of their choice.
• "To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement.

"*To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to connect their choice of legal devices that do not harm the network. "*To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to competition among network providers, application and service providers, and content providers.

"The Commission noted that all the principles 'are subject to reasonable network management.'"

Barbara Esbin, a senior fellow of the Progress and Freedom Foundation, which is supported by many content and telecommunications providers, disagreed with the proposal. She spent a number of years on the FCC legal staff.

There is much to commend about the net neutrality rulemaking announced today...I remain concerned, however, that the FCC is poised to take intrusive action into a well-functioning Internet ecosystem without either the demonstrated need or clear legal authority to do so. I know of no empirical evidence suggesting that the openness of the Internet that we all value is under threat today, or is likely to be under threat tomorrow. In the absence of evidence of market failure or demonstrable consumer harms, the costs of government intervention are more likely to outweigh the benefits.

The Electronic Frontier Foundation, usually a proponent of minimal regulation of the Internet, published a commentary suggesting that the FCC may not have the authority to regulate the Internet. While the EFF supports the four principles stated by the FCC, as well as the principles of nondiscrimination and transparency, it is concerned thatthe FCC might someday extend to censorship.

Legislative

As the FCC introduced its rulemaking proposal, Senator John McCain (R-Arizona) introduced legislation, the Internet Freedom Act, to deny the Commission authority to do so. McCain said he was particularly concerned that the wireless broadband industry, which has been highly innovative, was part of what he termed a "government takeover of the Internet."

Other senators, in both parties, supported the FCC action. "Network neutrality protects the fundamental rights of Americans in using the Internet and accessing content, applications, and services of their choice. A well-reasoned network neutrality policy also ensures a level playing field for companies large and small as they create an online presence, and will continue to foster the entrepreneurial innovation found not only in corporate office suites, but in college dorms across the country." Byron Dorgan (D-North Dakota), and Olympia Snowe(R-Maine)

Presidential

All Democratic presidential candidates, in the 2008 campaign, supported network neutrality. The White House website features a pro-neutrality post by FCC Commissioner Julius Genachowski

Industry

Since many Internet companies are multinational, positions cannot be considered strictly in the context of a given nation's regulatory policy. Two companies that might be expected to be on opposite sides, Verizon (primarily a telecommunications provider) and Google (primarily a content provider), issued a joint position statement on both their policy blogs:

Verizon and Google might seem unlikely bedfellows in the current debate around network neutrality, or an open Internet. And while it's true we do disagree quite strongly about certain aspects of government policy in this area -- such as whether mobile networks should even be part of the discussion -- there are many issues on which we agree. For starters we both think it's essential that the Internet remains an unrestricted and open platform -- where people can access any content (so long as it's legal), as well as the services and applications of their choice.

...broadband network providers should have the flexibility to manage their networks to deal with issues like traffic congestion, spam, "malware" and denial of service attacks, as well as other threats that may emerge in the future -- so long as they do it reasonably, consistent with their customers' preferences, and don't unreasonably discriminate in ways that either harm users or are anti-competitive. They should also be free to offer managed network services, such as IP television...Finally, transparency is a must. ... All providers of broadband access, services and applications should provide their customers with clear information about their offerings.