Putting the internet into neutral, or neutering the net?
Laws should defend the public, not ISPs
Opinion The usually perspicacious Neelie Kroes, the European Digital Agenda Commissioner, has finally hit a wall in Net Neutrality legislation, perhaps seeing the conflicting sides to the net neutrality argument. These are the same arguments that the US Government and the Federal Communications Commission (FCC) have been unable to sort out for the past five years.
Across the globe there are those who, plainly and simply, hate markets to be too highly regulated and will resist any attempt to force the internet down the same road as telecoms. But Kroes had not previously been one of these.
This position is probably equally balanced by people who fear that without regulation, major companies, especially ISPs, will block or slow traffic streams from rivals. In the past Kroes might have put herself in this camp.
But suddenly, in a speech given at a Net Neutrality Summit in Brussels, Kroes said that she thought that in general ISPs have upheld the principle of open access and said that now was not the time to create new legislation to guard the internet. She also said that the recent European Union 2009 Telecoms Framework gives regulators sufficient tools to protect the openness of the Internet. Well you might hope so, but this failure to act will immediately cause an avalanche of change on the internet and one day later it is already happening.
UK gov backs ISPs, rather than the British public
Within a day of the confession by Kroes that she will not be pursuing the creation of a Europe-wide piece of network neutrality legislation, the UK Culture, Communications and Creative Industries minister Ed Vaizey came out and said that ISPs should be free to favor traffic from one content provider over another as long as they inform customers. What was he thinking?
He issued this opinion at an FT Conference, saying that the market will decide how far ISPs can go in charging for preferential or guaranteed content delivery and QoS. Suddenly the UK government appears to have broken the deadlock on net neutrality and put itself on the side of major ISPs, instead of the public.
Part of the reasons for all this is that for five years there has been a legislation stand-off between the two sides. Back in 2005 the FCC in the US caught Comcast blocking Vonage VoIP traffic, so that its customers could not subscribe to Vonage. This week Kroes admitted that the cellular equivalent of this – cellular networks blocking Skype calls – was almost inevitable with no legislation. So who or what is going to protect Skype? Consumers' freedom to change operators, says Kroes.
Back in 2005 the FCC said that it was committed to creating an internet adhering to four principles: (1) consumers are entitled to access Internet content of their choice; (2) consumers are entitled to run applications and services of their choice; (3) consumers are entitled to connect their choice of devices to the internet; and (4) consumers are entitled to competition among internet providers.
But item 3 is already being widely broken, where US broadcasters have blocked the delivery of their video web sites to Google TV devices... and there appears to be no legal remedy in sight.
There are several key arguments here which balance each other out. The first is that if network operators cannot choose which traffic travels fastest over its internet channels, then this will reduce investment in broadband networks. They can prove this is true simply by refusing to grow their networks until the government gives way – and in the US, Verizon and AT&T have used this tactic in the past. However, they are both living with the legacy of this tactic and they lost ground considerably against cable operators in broadband.
Another argument is that 5 per cent of the users use 95 per cent of the traffic on the internet, so traffic shaping is needed to block in particular video piracy, to slow down the packets which are delivered from illegal P2P downloading sites. Except that of course they are not downloaded from those sites, but come from uplinks all over the internet.
All ISPs can do is establish that they are video packets, by using packet sniffing appliances in the network, and then marry this to where they come from and block accordingly. That would mean that an upload of Granny‘s holiday videos would be indistinguishable from a pirated movie, especially if it is encrypted, which can be achieved by using a boring old VPN.
Putting a cap on profiteering
The idea of charging punitively for all data above a certain cap has been put forward. But like all such suggestions, it ends up hurting the customer. For years cellular operators have been charging ludicrously high roaming charges for calls in neighboring countries and making excess profits on overseas traffic. It has taken years of legislation from Neelie Kroes and others, to stop this profiteering.
Such caps can be brought in, but they will need to be brought in alongside regulation which actually tells the consumer when they have entered the punitive level of payment and offer a paid top-up. Operators will not volunteer this information to consumers without legislation. They will just send out a $500 bill which shows your usual $50 for service and an extra $450 for going 1GB over the limit. That‘s what happened with cellular, so why would it be any different with broadband caps?
Instead of sending out a nice text saying, "You have just gone over your limit, but we can sell you a cheap deal for an extra 1 GB of data, just click Y and send", the cellular operators thought it was clever to just steal money from their customers. They felt safe in doing this because they have in place device subsidies which spread over two years and few consumers could afford to kick out their operator and pay up the penalties on those subsidies.
This is exactly the case with telcos and cable operators – they have offered subsidised DVRs and set tops, and can invoke penalty clauses for early termination. So one way or another, there has to be legislation either for Net Neutrality or for being more open with the consumer.
Kroes reckons Europe now has that legislation, so perhaps that‘s what the US needs, something like the European Telecoms Framework and forget about net neutrality.
Kroes goes as far as saying this, offering the opinion that once member nations of the EU had time to implement the provisions of her Telecommunications Framework we would see both more competition, as well as an obligation for openness with customers and local regulators, making it easy to leave a broadband operator and take their business to a rival. If there are provisions for this and if they become law, then as soon as a breach of network neutrality occurs, although it may not be illegal, it would become obvious and a broadband customer could leave that ISP.
But the idea advanced, for a second time in the US later week, of self-regulation by operators over Network Neutrality, from Comcast this time, from Verizon and Google last time, is of course nonsense. If operators are obligated by law to tell consumers what they have done with their data – ie if they have slowed it down or not, or if they have charged more for it, or are about to charge more for it – then that‘s fine. But if they are left to decide when that‘s a good idea, then they will simply transgress by omission.
You can see it can‘t you: Our software knew that it was a video packet, and it wasn‘t from us, so we put it at the back of the packet queue, because we thought it was piracy, but it turns out that this is done to all packets coming from Netflix identified servers. Customers then form the opinion that the internet, or the Netflix servers, are a bit slow, and video being what it is, will be full of half second pixellation screens, because key I-Frames were cleverly abducted.
Now if an ISP knows that it risks a large fine for doing that, it won‘t do it, but if it risks losing the odd customer, but at the same time freezing out a rival, then it will.
Where were the people who blindly believed in the power of the market when the cellular operators were virtually stealing from the pockets of all international travellers? Where were the people who said that the operators can regulate themselves? Nowhere to be seen. Instead we had 10 years of complaint and obfuscation until finally legislation was brought in.
One of the biggest worries is that by definitively saying that we will not legislate, we can no longer pretend that we might, at a later date. While the issue is in the air, operators will not risk repeating the actions of Comcast when it blocked Vonage. As soon as the prospect of legislation goes off into the distance, as it appears to have done this week, operators will revise their policy, and the internet as we know it is dead.
Finally the idea that you can charge Google to get its packets to customers on time is a non-starter. Google is like the destination in a car journey. It makes no sense to charge the state of New York for the petrol, or the road tax on each journey that ends up at the city. Those charges go to the taxpayers and road users. And the same needs to be true of the internet. Customers using it need to pay their way for enough petrol and road use, or in internet parlance, data and band-width, in order to get the job done.
A sensible way is not to have punitive capping charges, but to have multiple layers of service for each online service a home takes and gradual increases in charges as we go over thresholds. But it makes no sense to charge the destination site under any version of the future.
Kroes said in her speech: "The open character of the internet is a value almost universally recognised, and if we encounter significant and persistent problems, I will not be afraid to change the law in the future to achieve competition and choice consumers deserve…"
So in a way she continues to leave the legislation door half-closed rather than slammed shut. But already, with the UK minister‘s speech, the impression that legislation has now been foregone could infect Europe with the feeling that it‘s okay to pursue insane regimes of traffic-shaping which are purely competitive and not for the health of the network. And the US is likely to follow suit, or overtake Europe, in its zeal to do the same.
Copyright © 2010, Faultline 
Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here .