Network Neutrality

As the Internet becomes a conduit for most converged services, including telephony, some operators may perceive the opportunity to gain a financial or competitive benefit by prioritizing bitstreams and by offering different quality of service guarantees.  To some observers this strategy constitutes a form of service discrimination that violates a tradition of “network neutrality” in the switching, routing and transmission of Internet traffic [1]. To others, offering different levels of service provides a means for consumers and carriers to secure and pay for premium, instead of best efforts, service if so desired [2].

In December 2010, the US Federal Communications Commission set three basic rules for net neutrality [3]:

  • Transparency.  Fixed and mobile broadband providers must disclose the network management practices, performance characteristics, and terms and conditions of their broadband services;
  • No blocking.  Fixed broadband providers may not block lawful content, applications, services, or non-harmful devices; mobile broadband providers may not block lawful websites, or block applications that compete with their voice or video telephony services; and
  • No unreasonable discrimination.  Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic.

Reasonable discrimination occurs where differential treatment of traffic does not discriminate among specific uses of the network or classes of uses.  For example, during periods of congestion a broadband provider could provide more bandwidth to subscribers who pay more for internet access or that have used the network less over some preceding period of time than to heavier users. Use-agnostic discrimination (sometimes referred to as application-agnostic discrimination) is consistent with Internet openness because it does not interfere with end users’ choices about which content, applications, services, or devices to use.  Nor does it distort competition among edge providers.

Unreasonable discrimination would occur when, say, a network provider treated Vonage differently from Skype (both voice services), or Comcast's Fancast differently from Hulu (both movie services). In either case, that would be discrimination based on application. Nor would it be allowed to treat online video differently from e-mail traffic. That would be discrimination based on class of application.

Mobile net neutrality is an emerging issue affecting the profitability of mobile networks.

It is interesting to note that only the first of the FCC’s three rules apply equally to fixed and mobiles providers. The no-blocking rule with respect to mobile providers applies only to services “that compete with their voice or video telephony services”; although the FCC has said it will regulate mobile net neutrality through spectrum licence conditions [4]. And mobile providers are not mentioned at all in the third rule because “existing mobile networks present operational constraints that fixed broadband networks do not typically encounter.  This puts greater pressure on the concept of “reasonable network management” for mobile providers [5].

The Netherlands has gone further. In April 2011, KPN announced plans to charge mobile customers extra for using Skype and WhatsApp; an application that enables smart phone users to send messages for no additional charge, sidestepping KPN's lucrative SMS business.

But to track which customers are using WhatsApp or Skype, KPN would need to look relatively carefully at the data being transferred, using a practice known as "deep packet inspection." KPN argued the practice is common in the industry and it doesn't eavesdrop on customers. But the Netherlands' consumer rights watchdog demanded an investigation into possible privacy violations, and politicians moved to stop the plan. In June 2011, the Dutch parliament passed a bill which will force mobile Internet providers to let customers use Skype and other rival services on their networks without charging extra or giving preferential treatment to their own offerings. [6]

Endnotes:

[1] For example see Tim Wu, Network Neutrality, Broadband Discrimination, 2 Journal of Telecommunications and High Technology Law, 141 (2005); Barbara van Schewick, Towards an Economic Framework for Economic Neutrality, paper presented at the 33nd annual Telecommunications Policy Research Conference, Arlington, Va. (2005); Mark A. Lemley and Lawrence Lessig, The End of End-to-End: Preserving the Architecture of the Internet in the Broadband Era, 48 UCLA L. Rev. 925 (2001).

[2] For example, see Christopher S. Yoo, "Network Neutality and the Economics of Congestion", Georgetown Law Journal, Vol. 94, June 2006, available at SSRN: http://ssrn.com/abstract=825669

[3] FCC (December 2010) Open Internet Rules, Report and Order 10-201. The FCC policy is expected to be tested in a federal court in late 2011. [add to reference list]

[4] Para 134-135, FCC Report and Oder 10-201

[5] Para 95, FCC Report and Oder 10-201

[6] http://www.physorg.com/news/2011-06-dutch-parliament-mobile-net-neutrality.html

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