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Monday, February 27, 2006

More Commentary on Network Neutrality

By Martin Geddes
I’ll shut up about network neutrality some time, but the craziness of the whole think just gets me riled.
Imagine that a ‘neutrality’ rule is imposed in the US. Verizon and at&t’s regional market power goes unchanged, and the cablecos are the only competition. Continued artificial spectrum scarcity is bought with some skillful lobbying. Don’t expect any price competition, because game theory tells you that you need a minimum of 3 players to de-stablise a cartel (even if an unspoken one).
If I’m Ed or Ivan, what should I do next? Easy. Raise prices for “Internet” access. And put in place a system not interconnected at the IP layer, where every service has to get through a gateway. Sell this “Web + mail” Net at a reduced price. (It looks just like the restricted GPRS gateways we live with today, so everything’s off the shelf and the regulatory rules are predictable and favourable). Want to run Vonage? Fine, $5/month, we’ve cut a deal with them, and know how to proxy their SIP traffic. Want to run Skype? Tough, they don’t support our proxy.
Note that they ARE NOT SELLING ‘INTERNET’. Your neutrality rules don’t apply: it’s entirely a private IP network with some application layer gateways. Unless you believe that such network architectures should be illegal, too. Whaddayamean, you didn’t think of this in your “interconnected Internet Protocol network” definition? ;)
I suspect that decreasing the number of people with “Internet” access isn’t the intent of neutrality advocates. The assumption seems to be that the incumbents won’t react to the obvious incentives placed before them. Lots of mini Chinas.
By the way, does the ‘no application discrimination’ rule mean my Tesco Mobile data service is illegal (ignoring the 4000 mile jurisdictional leap)? Their main selling point is cheap circuit voice minutes. The data offering is a minor feature to their users. It’s built on IP, but the only destinations allowed are those on the ports for HTTP/HTTPS. Do you think a neutrality rule would make Tesco open up full Net access? Or just junk the whole data side? Why do you feel that I should be prevented from buying such a service from Tesco, presuming the limitations are made clear?
Is the Internet the only networked good deserving of a neutrality rule? There’s a lot of network-effect industries out there. Should the makers of USB-enabled goods not be allowed (by force of law) to set license fees that depend on the application? Why doesn’t this ‘neutrality’ logic stop at exchanges over Internet Protocol? At what size of player does neutrality no longer apply?
What evidence have “neutrality” proponents have that it is better to treat the symptoms rather than causes of uncompetitive connectivity markets? Why is it so important to prevent a price signal of “MONOPOLY RENTS — OVER HERE! COME AND GET IT!” leaking out? How come the forces that scream blue murder when it comes to freedom of speech fall silent when it comes to freedom of contract?
Now there are some things that could be done that would be fair and constructive. There should be “full disclosure” rules, much like with credit card offers. I would also suggest that some “regulated terms” be used that compulsarily be included in all marketing material, e.g.:

  1. “Full Internet access”. Does what it says on the tin. Servers, VPNs, pr0n, whatever you like. Any default filters can be turned off by the user (a sensible compromise, IMHO).

  2. “Partial Internet access”. Anything less than full Internet access where end-to-end IP connectivity is in place. Filters can be at the IP layer, or in Terms of Service.

  3. “Restricted Internet access”. Access is provided via proxies to selected services, and not end-to-end IP connectivity.
(There would be common exceptions for illegal content, protection of networks from attack, etc. And some special rules would apply to content delivery network caches.)
Other progressive, constructive suff to campaign for? Switch all Universal Service funds from one application (landline PSTN) to connectivity. Unbundle the identity space (E164) from the telephony service using some cunning privacy-enhanced version of ENUM (I’ve got a few ideas…). The usual spectrum stuff. Oh, and give the FCC commissioners a big bonus package if they manage to abolish themselves ;)
But the last thing you want is a neutrality rule. As Vint Cerf’s Senate testimony said:
nothing less than the future of the Internet is at stake.
Indeed. But in the exact opposite way to which he suggests.

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