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Network Neutrality

Network neutrality is the concept of broadband providers treating all traffic equally. It applies to people’s ability to access the content they choose from wired as well as mobile devices. The following are the basic tenets of network neutrality:

  • Treat all users’ traffic in an equal manner.

  • Prohibit slowing down traffic to particular web sites.

  • Prohibit blocking lawful content from any provider.

  • Prohibit blocking access to lawful content or service.

  • Network operators are required to publicly disclose actual attainable speeds on their networks as well as reasonable network-management practices and terms of service.

  • Landline network operators are not allowed to block lawful content, applications, or services, subject to reasonable network management. Operators of wireless networks are not allowed to block access to lawful web sites, subject to reasonable network management. Wireless operators are additionally not allowed to block applications that compete with their own voice or video telephony services.

  • Providers of fixed broadband are not allowed to discriminate in transmitting lawful network traffic over a consumer’s broadband access service.

During the Obama presidency, the primarily Democratic United States Federal Communications Commission (FCC) enacted the above network neutrality rules for wireline and mobile companies.

The Issues Surrounding Network Neutrality

However, in 2018, the Republican majority in the FCC rescinded network neutrality rules specifying that ISPs (Internet Service Providers) that provide access to the Internet (essentially telephone companies) must notify customers of their network policies. They additionally changed the classification of the Internet from telecommunications provider to information service. This is significant because the FCC regulates telecommunications services and not information services. The FCC order was titled “Restoring Internet Freedom Order.” In overturning network neutrality on July 17, 2017, Ajit Pai, the chair of the FCC, stated:

  • Today, we take a much-needed first step toward returning to the successful bipartisan framework that created the free and open Internet and, for almost 20 years, saw it flourished. By proposing to end the utility-style regulatory approach that gives government control of the Internet, we aim to restore the market-based policies necessary to preserve the future Internet Freedom, and to reverse the decline in infrastructure investment, innovation, and options for consumers put into motion by the FCC in 2015.

The two main issues around network neutrality are that some large ISPs such as AT&T, Comcast, and Verizon control networks throughout the USA and sell movies and television content. Comcast acquired content through its partial ownership of Hulu, and its 2011 purchase of NBC Universal. Comcast and AT&T transmit Netflix, Amazon, and Roku’s content. These companies are competitors with whom these and other ISPs compete to attract streaming customers. Moreover, the merger between AT&T and Warner Brothers means that AT&T owns content including HBO and HBO NOW. Thus, they too will compete with streaming companies.

Network Neutrality Rationale—Compensation for Adding Network Capacity

Carriers that provide broadband and/or mobile network infrastructure have lobbied the federal government to overturn the Obama-era network neutrality rules. ISPs’ public statements are that they should be compensated for investing in new equipment to carry the added traffic created by streaming services. The number of streaming providers and its percentage of streaming traffic are both growing. Thus, ISPs want to be paid for carrying this additional streaming traffic to homes in neighborhoods and over cellular networks. Below is a December 14, 2017, statement by CEO Jonathan Spalter of the USTelecom, a trade association made up mainly of broadband service providers, made the day after the FCC overturned network neutrality and classified the Internet as an information service, not a telecommunications service. The FCC is empowered to regulate only telecommunications services, not information services. The Federal agency referenced below is the FTC (Federal Trade Commission):

  • Today, the future of our open, thriving internet has been secured. The nation’s top consumer protection agency now has jurisdiction over fairness and neutrality across the Internet; ensuring consistent rules apply to all players, including the most powerful online companies. And America’s broadband providers—who have long supported net neutrality protections and have been committed to continuing to do so—will have renewed confidence to make the investments required to strengthen the nation’s networks and close the digital divide, especially in rural communities. It’s a great day for consumers and our innovation economy.

The major carriers are in favor of eliminating network neutrality. They want to be compensated for upgrades to their networks to accommodate increased traffic. Currently, most wireline access in the United States offer tiered unlimited plans for residential customers. Thus, most of these customers have no incentive to cut back on streaming because they pay a flat fee for broadband capacity however much capacity they use.

Pro Network Neutrality Proponents Against Fees and Throttling

Network neutrality proponents are concerned that network service providers have a monopoly or near monopoly on infrastructure and might slow down (throttle) or even block competitors’ traffic in favor of their own services without concerns that subscribers will move to a different ISP. This puts competitive services at a disadvantage against the services offered by broadband providers and might lock consumers out of new, possibly lower-cost, offerings. This could be a problem for streaming providers because they are likely to pass on some of these costs to their customers. It will additionally increase consumer and enterprise costs for broadband connections because ISPs will have the option to charge content providers for not slowing down their traffic. This, essentially, creates a fast lane in networks for large content providers that are able to pay these fees.

Web site owners such as Zappos and content providers such as Netflix, Amazon, and Facebook profit from services they sell over the Internet. They pay for connections from their site to the Internet via local carriers. When these carriers transfer traffic to other networks needed to reach customers, neither the other network owners nor the carrier connected to the subscriber are compensated. See Figure 6-1 in the section “Streaming—A Disruptive Technology” in this chapter, which illustrates Netflix and others’ streaming traffic connections to telephone companies’ equipment.

The Have’s vs. the Have Nots: First Class and Everyone Else

Many consumer watchdog organizations feel that creating exceptions for certain possibly lucrative applications will in effect create two different Internet classes of network services. They fear that the part of the network providing priority “first class” treatment for new applications will take increasing amounts of capacity away from ordinary applications and bog them down. This is because without network neutrality, carriers are free to charge content providers extra for not throttling the movies and TV shows carried over the Internet to subscribers.

Content providers such as Netflix and Amazon may pass on these fees they incur to customers. For many ISPs, competition for their wired broadband services has been non-existent or in a minority of locations; they have one competitor or at the most two competitors. This means they can demand concessions from Netflix and Amazon and their competitors without losing broadband customers. This makes it easy for them to make whichever policies are advantageous to them and to block content from providers that won’t pay a premium for faster transmission. Customers in these locations have no or limited options for ISPs to use.

Prioritizing certain applications over others has the potential to increase congestion and slow down traffic that is not prioritized. It additionally has raises the possibility of a slowdown innovation and competition by making it costly for start-ups to pay for specialized treatment for the traffic they generate. Owners of smaller web sites as well as start-ups may not have the money to pay broadband networks for not slowing down their traffic.

Attempts to Overturn the Repeal of Network Neutrality

Opponents of the FCC’s cancellation of network neutrality are currently pursuing two options for overturning this ruling. A coalition of 21 states’ Attorney Generals plus Washington DC are suing the FCC over its cancellation of network neutrality. In addition to the states’ efforts, Internet activists have also initiated suits to overturn the FCC’s ruling. These include Mozilla Corp. (the producer of Firefox), the Open Technology Institute (part of the New America Foundation), Public Knowledge, the Free Press, and The Internet Association whose members include Google, Facebook, and Amazon.

There are additionally legislative efforts in the Senate to overturn the FCC’s cancellation of network neutrality. However, even if the Senate succeeds, there is the hurdle of passing the bill in the House of Representatives. And, the president has the power to veto the legislation if it passes both houses.

Most ISPs agree that both wireless and wireline carriers should adhere to rules on transparency and that transparency should apply to network management and disclosure in understandable language about conditions and characteristics of their networks. Network management refers to a carrier’s efforts to handle congestion and security threats. However, transparency means that ISPs will disclose throttling. It does not mean that they will not throttle or block certain traffic.

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