7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
1/47
NetworkNeutrality
The
Evolving
Global
Debate
JohannesM.Bauer
MichiganStateUniversity
MERITMember
Conference
Ypsilanti,MI,May22,2014
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
2/47
Innovativeusesof
thatcopper
pair
(e.g.,DSL)and
advanced
technologiessuch
ashybrid
fiber
coax
(HFC),fiberand
wireless,haveledto
definitional
confusion,litigation
andadauntingly
complexpoorly
understood
networked
ecosystem(Claffy
&Clark,2013,p.1)
Itsacommon
carrier Itsaninformation
service
Itsa
utility
Its
monopolistic
Itsamedia
service
Itsasearch
engine
Itshyper
competitive
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
3/47
Mainpoints
Thenetneutralitydebateisaresponsetothe
fundamentaltransformation
of
the
Internet.
Thereisconsiderableevidencethatsomeformofdifferentiationisdesirable.
However,importantpoliticalandeconomicgoalsneed
to
be
safeguarded.
Severalcountrieshaveadoptednetneutralityprinciplesbutmorerelyonothersafeguards.
Thebiggest
challenge
in
the
US
is
finding
a
solutionthatcansurvivejudicialreview.
3
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
4/47
Overview
Background
EarlyInternet
and
its
transformation
Theevolvingglobaldebate
Waysforward
for
the
U.S.
4
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
5/47
Background
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
6/47
Benefitsof
openness
and
neutrality
Politicalbenefits
Aneutral
Internet
supports
free
speech,
democraticparticipation,andempowerscitizens.
Economicbenefits
An
open
Internet
facilitates
permission
free
innovationattheedgesofthenetwork.
Societalbenefits
An
open
Internet
contributes
to
harnessing
the
benefitsoftheInternetforeducation,healthcare,andsocietyatlarge.
6
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
7/47
Thenet
neutrality
debate
Historically,thetechnicalarchitectureofthe
Internetand
regulatory
policy
safeguarded
the
relativelyequaltreatmentofdatagrams.
Political,economic,andtechnologicalforcesare
presentlytransforming
these
arrangements.
Althoughmoststakeholdersinthenetneutrality
debateagreethatpreservinganopenInternetis
important,thereiswidedisagreementastohow
thiscanbestbedone.
7
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
8/47
OpennessItisoftheutmost
importancethat,
if
IconnecttotheInternet,
andyouconnecttotheInternet,thatwecanthen
runany
Internet
applicationwewant,withoutdiscriminationas
to
who
we
are
or
what
we
aredoing.
TimBernersLee,inventoroftheWWW
8
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
9/47
InnovationTelephonecompaniescannottellconsumerswho
they
can
call;
network
operatorsshouldnotdictatewhatpeoplecandoonline.
Creativity,innovationandafreeandopenmarketplaceareallat
stakein
this
fight.
Vint Cerf,GoogleInternetEvangelist
(right,hereshownwithfellowInternet
pioneerand
mastermind
Bob
Kahn)
EricSchmidt,CEOGoogle
9
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
10/47
Threeprincipal
positions
Strictnetneutrality
Proponentsofastringentapproachassertthatrealizingthe
benefitsof
the
Internet
requires
anetwork
architecture
in
which
all
datagramsaretreatedequally,independentofthesource,destination,application.
Weaknetneutrality
Proponentsof
amore
modest
vision
suggest
that
the
benefits
are
optimizedinanetworkorganizationinwhichqualityofservicedifferentiationisacceptableaslongasitservesareasonablepurposeanddiscriminationisavoided.
Marketbased
net
neutrality
Proponentssuggestthatanunregulatedmarketbasedsolutionisthemostefficientwaytoallocateandpricebandwidth.
10
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
11/47
Theearly
Internet
and
its
currenttransformation
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
12/47
Thehistorical
constellation
TheInternetsendtoendarchitectureemergedfroma
series
of
pragmatic
design
decisions
among
the
engineersandscientistsrunningit.
Fromthesechoices,auniquelayeredendtoendarchitectureemergedinwhichapplicationsand
servicesare
logically
at
the
edge
of
the
network
and
thecorenetworkservesmainlyasatransportationplatform.
Inthat
spirit,
the
community
of
engineers
has
dealt
withqualityofservicedifferentiationpragmatically(e.g.,discussionswithinIETFsincetheearly1990s).
12
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
13/47
Pragmaticsolutions
Wereject:kings,
presidents,and
voting.Webelievein:rough
consensusand
runningcode.
DavidD.
Clark,
MIT,
in
apresentationataconferenceof
theInternetEngineeringTaskForce(IETF)in1992
DavidD.
Clark,MIT
JonPostel,
USC(1998)
13
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
14/47
Originalendtoendarchitecture
Endhost1 Endhost
2Core
of
the
network
Source:InspiredbyB.VanSchewick,2010,S.100
PPP,
Ethernet
PPP,
Ethernet
PPP,
Ethernet
IP
PPP,
Ethernet
IP
HTTP,SMTP
TCP,UDP
IP IP
TCP,UDP
HTTP.SMTPApplicationprotocols
Transport
layer
Internetlayer
Linklayer
Applicationspecific
Coaxial
cableMobileTwistedpairOpticalfiber
Firefox,
MPlayerFirefox,
MPlayer
Specific
applications
14
Physical
networks
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
15/47
Supportivepolicy
environment
Telecommunicationspolicy
TelecommunicationsActof1996establishedcompetition
asoverarching
sector
organization
DeclaredthattheInternetshouldremainunfetteredbystateandfederalregulation(47U.S.Code 230)
Unbundlingtofacilitateaccesstoincumbentsnetworks
Accessprovidersweretreatedascommoncarriers(TitleIIoftheCommunicationsAct)
Internetgovernance
Selfregulatory
model
in
which
stakeholders
developed
voluntarystandards,protocols,operationalpractices
W3C,IETF,ICANN,ISOC,
15
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
16/47
Forcesof
change
Rapidgrowthofusers(>3billionbyend2014)andtraffic,especiallyofentertainment(video,games,)
Increasingheterogeneity
of
traffic
Timesensitive(e.g.,emergency,streamedvideo,onlinegames,voice,financialtransactions)
Nottimesensitive(e.g.,email,backenddataprocessing,
transferof
non
urgent
medical
data)
Newconcerns,suchascybercrimeandonlineprivacy
EliminationofhistoricalprotectionsthatsafeguardedanopenInternetintheU.S.
Changingdynamics
of
value
creation
and
innovation
in
thenewInternetecosystemandemergenceofprivateIPnetworks(aparallelprivateInternet)
16
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
17/47
U.S.fixedaccessnetworktraffic(1H2013actualto1H2018estimated)
17
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
18/47
U.S.mobileaccessnetworktraffic(1H2013actualto1H2018estimated)
18
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
19/47
USregulatory
policy
changes
Eliminationofunbundlingpolicy(20032005) Seenasdetrimentaltoinvestmentinnetwork
infrastructureReducedthenumberofservicebasedcompetitors
Reclassificationofbroadbandaccessprovidersasinformationserviceproviders
Eliminatedcommon
carrier
non
discrimination
obligations
Traditionalregulationseenasoverlyburdensomeanddetrimentaltocompetition
Cablemodemservice(2001),DSL(2005),mobile
broadband(2007)
LegallynonbindingopenInternetpolicystatement(2005)articulatedfirstbyMichaelPowellin2004
19
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
20/47
20
Open,
multi
layer
system
Adve
rtisers
Users
Bloggers
Pastlocus
of
value-adde
d
Future
locuso
fvalue-add
ed
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
21/47
Economicsof
the
Internet
ecosystem
Driversofinvestment
Highup
front
costs,
low
incremental
costs
Requireshighmarkupsanddifferentiation
Driversofdifferenttypesofinnovation
Modular(edge)innovationisstimulatedbyan
open,neutralInternet
Coupled
innovation
is
stimulated
by
temporary
exclusivearrangements(e.g.,iPhone)
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
22/47
Economicsof
the
Internet
ecosystem
Verticalandhorizontalintegration
Support
for
complementary
applications
and
services
Riskofsabotageofcompetitiveapplicationsandservices
Pricing
in
multi
sided
marketsSingleormultipleparticipantsmaybecharged
Oneachside,demandwillrespondtopricechanges22
Dynamic
competition
in
technologically
dynamic
marketswithhighsunkcostslookscanbeeffectivedespitehighconcentration
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
23/47
Emergenceof
aprivate
Internet
IncreasinguseoftheInternetformediaand
entertainmentpurposes
(Noam,
2014).
Networkoperatorsandotherplayershaverolled
outprivateIPnetworkstosupporttheseuses
(e.g.,CDNs)
and
provide
higher
quality
of
service.
Initially,thesenetworkswereforinternaluse
only(e.g.,todeliverVoIP)buttheywill
increasinglyinterconnect,
starting
to
form
a
privatemultifirmInternet(Claffy&Clark,2013).
23
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
24/47
ParallelInternets
24
Source:Claffy&Clark,2013.p.9
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
25/47
ThenewInternet
BBISP
Residential
Business
Wikipedia
NYT
Bloggers
CDN2
CDN1
Netflix
Peering,interconnection Netneutrality
Inspired
by
T.
Wu,
NYT,
May
11,
2014
Internet
PublicInternet
PrivateIP
networks
25
Civicsociety
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
26/47
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
27/47
Theevolvingglobaldebate
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
28/47
Approachesto
NGN
investment
U.S.hasadoptedamodelwithprimaryrelianceonprivatesectorinvestment.
EuropeanUnion(EU)onaveragesuffersfromlackofinvestmentinnextgenerationinfrastructure.
SeveralEuropeancountrieshaveovercomethis
problemwith
municipal
investment
and
public
privatepartnerships(PPPs)(e.g.,Switzerland,Nordiccountries,Netherlands).
SeveralAsian
countries
(e.g.,
South
Korea,
Japan,
Singapore)havesubsidizednetworksand/orusedheavyhandedgovernmentdirection.
28
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
29/47
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
30/47
Council
of
Europe
ImpliesalegitimateexpectationthatInternetservicesbe
accessibleandaffordable,secure,reliableandongoing
UsersshouldhavethegreatestpossibleaccesstoInternet
basedcontent,
applications
and
services
of
their
choice,
whetherornottheyareofferedfreeofcharge,usingsuitabledevicesoftheirchoice
Trafficmanagementshouldnotbeseenasadeparturefromtheprincipleofnetworkneutrality
Usersand
service
providers
should
be
adequately
informed
aboutanynetworkmanagementmeasuresthataffectinasignificantwayaccesstocontent,applicationsorservice
Establishmentofavenuestochallengenetworkmanagementdecisions
Additionalelaborationofguidelineswithandforprivatesectoractorsinordertodefinemorepreciselyacceptablemanagementmeasuresandminimumqualityofservicerequirements
30
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
31/47
EuropeanUnion
EuropeanUnionTelecomPackage(2009)
Consumers
will
[have
to]
be
informedeven
before
signingacontractaboutthenatureoftheserviceto
whichtheyaresubscribing,includingtraffic
managementtechniquesandtheirimpactonservice
quality,as
well
as
any
other
limitations
(such
as
bandwidthcapsoravailableconnectionspeed)
BodyofEuropeanRegulatorsofElectronic
Communications(BEREC)
entrusted
to
use
existingframeworktoascertainanopenInternet.
31
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
32/47
EuropeanUnion
Source:
BEREC,
2012 32
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
33/47
EuropeanUnion
In2013,theCommissionintroducedalegislativeproposalConnectedContinent:BuildingaTelecomsSingleMarket
Intendedtoenddiscriminatoryblockingandthrottlinganddeliver
effectivenet
neutrality.
Trafficmanagementhastobenondiscriminatory,proportionateandtransparent.
Companiesareallowedtodifferentiatetheiroffers(forexampleby
speed)and
compete
on
enhanced
quality
of
service.
Tomeetendusers'demandforbetterservicequality,contentprovidersmayagreedealswithinternetproviderstoassureacertainqualityofservice.
Specializedservicesmustnotleadtoqualitydegradationofthe
"normal"/besteffort
Internet.
They
are
coherent
with
the
way
the
internetwasengineered.
AdoptedinfirstreadingbyEUParliamentinApril2014
33
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
34/47
Netherlands In2011,KPN,theincumbentDutchtelecomprovider
announcedplanstoblockVoIPandinstantmessagingunlessuserspaidanadditionalfee.
Netherlandsadopted
alaw
in
support
of
net
neutrality
in2011(amendedin2012)
Networkmanagementallowedtopreservenetwork
security,in
times
of
congestion,
to
avoid
distribution
of
spamandmalware,andtocomplywithacourtorder.
Differentiatedpricingallowedfordifferentservicetiersbutnottodiscriminateagainstspecificusesandapplications.
Minimumquality
requirements
may
be
imposed.
CriticizedasbeingtorestrictivebytheheadofOPTA,theDutchagencyoverseeingthesector.
34
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
35/47
Chile
ChilewasoneofthefirstLatinAmericancountriestoliberalizeandestablishastrongmarketbasedframework.
CitizengroupNeutralidad S,notleastusingasocialmedia
campaign,pointed
out
throttling
and
blocking
of
traffic.
In2010,theChileanCongressamendedtheGeneralTelecommunicationsLaw No[ISP]canblock,interferewith,discriminate,hinder,nor
restrictthe
right
of
any
Internet
user
of
using,
send,
receive,
or
offeranycontent,application,orlegitimateservicethroughtheInternet,aswellasanyactivityorlegitimateuseconductedthroughtheInternet.
LawalsohasarticlesthatforceISPstoprovideparentalcontrol
tools,clarify
contracts,
guarantee
users
privacy
and
safety
when
surfing,andforbidsthemtorestrictanylibertywhatsoever.
Carriersmoreconcernedaboutrecentchangestointerconnectionandaccesspricing.
35
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
36/47
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
37/47
Neutralityrevisited
Somestakeholdersdemandstrictnetneutrality Anetworkarchitectureinwhichalldatagramsaretreated
equally,independentofthesource,destination,
application. Somestakeholdersdemandmarketbasedneutrality
Themajorityofcountriesseeksweaknetneutrality
Differentiation
of
applications
and
services
is
permitted
(e.g.,higherqualityathigherprices,lowerqualityatlowerprices).
NetworkoperatorsandISPshavetoavoidunwarranteddiscrimination(e.g.,mustnotsignexclusivecontractswith
singlecontent
providers).
Networkmanagementisallowedtoachievedesirablegoalssuchasincreasedsecurityandreliability.
37
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
38/47
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
39/47
Nearly
a
decade
of
U.S.
efforts BroadbandpolicystatementbyFCC(2005)
Numerousunsuccessfulattemptstolegislatenetneutrality
InternetNondiscrimination
Act
of
2006
(Ron
Wyden,
D
OR)
InternetFreedomandNondiscriminationActof2008(proposedtoamendClaytonAct)(JohnConyers,DMI;ZoeLofgren,DCA)
InternetFreedomPreservationActof2009
Regulatory
decisions
(Madison
River
Communications,
2005;Comcast,2008)
FCCOpenInternetOrder(2010),overturnedinJanuary2014onmainlylegalgrounds(i.e,atpresentNOexplicitpolicytosafeguardnetneutrality)
ProtectingandPromotingtheOpenInternetNoticeofProposedRulemaking(FCC,May15,2014)
39
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
40/47
FCCpolicystatement
Toencouragebroadbanddeploymentandpreserveandpromotetheopenandinterconnectednatureof
thepublic
Internet,
consumers
are
entitled
to
accessthelawfulInternetcontentoftheirchoice
runapplicationsanduseservicesoftheirchoice,subjectto
the
needs
of
law
enforcementconnecttheirchoiceoflegaldevicesthatdonotharmthe
network
competitionamongnetworkproviders,applicationand
serviceproviders,
and
content
providers.
FCCPolicyStatement,August5,2005
40
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
41/47
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
42/47
May
2014
NPRM OnMay15,2014,theFCCadoptedaNoticeofProposed
Rulemaking(NPRM)onProtectingandPromotingtheOpenInternet
Proposesto
preserve
the
2010
definitions
(i.e.,
only
covers
publicnotprivateInternet).
Proposesenhancedtransparencyobligations.
Proposestorenewnoblockingrule.
Suggestsarebuttable
assumption
that
priority
service
offered
to
anaffiliateshouldbeconsideredillegal.
Asksforinputonmultifactortesttoassesscommercialreasonableness.
AsksforinputonwhetherSection706orTitleIIwouldbetter
serveas
the
legal
foundation
for
open
Internet
policy.
ProposesanewdisputeresolutionprocessandOmbudsmanforconsumers,smallbusinesses,andstartups.
42
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
43/47
Balancing
political
&
economic
goals Noblocking(withminimalexceptions)toascertainfree
speechandexpression.
Differentiation
of
services
(at
wholesale
and
retail)
to
allowinnovativeservicesandalignpricingwithcostdrivers.
Safeguardstoavoidthatdifferentiationdegeneratesto
discriminationand
anticompetitive
behavior.
Possiblyneedprovisionstosecureminimumqualityofservice.
Allowforinstitutionalcompetition(e.g.,nonprofit,
municipalversus
for
profit
ISPs).
Netneutralityasaframeworkforadvancedcommunicationmarketswithexpostenforcement.
43
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
44/47
Recap
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
45/47
Main
points Thenetneutralitydebateisaresponsetothe
fundamentaltransformationoftheInternet.
Thereis
considerable
evidence
that
some
form
of
differentiationisdesirable.
However,importantpoliticalandeconomicgoalsneedtobesafeguarded.
Severalcountrieshaveadoptednetneutralityprinciplesbutmorerelyonothersafeguards.
Politicalandeconomicgoalscanbebalanced.
Thebiggest
challenge
in
the
US
is
finding
a
solutionthatcansurvivejudicialreview.
45
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
46/47
Thankyou!
7/21/2019 Bauer MERIT Network Neutrality 2014 Fin
47/47
References Bauer,J.M.,&Obar,J.A.(2014).Reconcilingpoliticalandeconomicgoalsinthe
netneutralitydebate.TheInformationSociety,30(1),119.
BEREC(2012),AviewoftrafficmanagementandotherpracticesresultinginrestrictionstotheopenInternetinEurope,BoR (12)30.
Claffy,K.
C.,
&
Clark,
D.
D.
(2013).
Platform
Models
for
Sustainable
Internet
Regulation.AvailableatSSRN:http://ssrn.com/abstract=2242600.
Krmer,J.,Wiewiorra,L.,&Weinhardt,C.(2013).Netneutrality:Aprogressreport.TelecommunicationsPolicy,37(9),794813.doi:http://dx.doi.org/10.1016/j.telpol.2012.08.005
Mueller,
M.
(2007),
Net
neutrality
as
global
principle
in
Internet
governance,
http://www.internetgovernance.org/wordpress/wpcontent/uploads/NetNeutralityGlobalPrinciple.pdf
Noam,E.M.(2014),FromtheInternetofsciencetotheInternetofentertainment,forthcominginJ.M.Bauer&M.Latzer(eds.),HandbookontheEconomicsoftheInternet,CheltenhamandNorthampton,EdwardElgar.
Special
issue
on
net
neutrality,
International
Journal
of
Communication,2007,
http://ijoc.org.
VanSchewick,B.(2010),Internetarchitectureandinnovation.Cambridge,MA:MITPress.
47