
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


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


4/47

Overview

Background

EarlyInternet

and

its

transformation

Theevolvingglobaldebate

Waysforward

for

the

U.S.

4


5/47

Background


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


7/47

Thenet

neutrality

debate

Historically,thetechnicalarchitectureofthe

Internetand

regulatory

policy

safeguarded

the

relativelyequaltreatmentofdatagrams.

Political,economic,andtechnologicalforcesare

presentlytransforming

these

arrangements.

Althoughmoststakeholdersinthenetneutrality

debateagreethatpreservinganopenInternetis

important,thereiswidedisagreementastohow

thiscanbestbedone.

7


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OpennessItisoftheutmost

importancethat,

if

IconnecttotheInternet,

andyouconnecttotheInternet,thatwecanthen

runany

Internet

applicationwewant,withoutdiscriminationas

to

who

we

are

or

what

we

aredoing.

TimBernersLee,inventoroftheWWW

8


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


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


11/47

Theearly

Internet

and

its

currenttransformation


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


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


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


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


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


17/47

U.S.fixedaccessnetworktraffic(1H2013actualto1H2018estimated)

17


18/47

U.S.mobileaccessnetworktraffic(1H2013actualto1H2018estimated)

18


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


20/47

20

Open,

multi

layer

system

Adve

rtisers

Users

Bloggers

Pastlocus

of

value-adde

d

Future

locuso

fvalue-add

ed


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)


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


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


24/47

ParallelInternets

24

Source:Claffy&Clark,2013.p.9


25/47

ThenewInternet

BBISP

Residential

Business

Wikipedia

Google

NYT

Bloggers

CDN2

CDN1

Netflix

Peering,interconnection Netneutrality

Inspired

by

T.

Wu,

NYT,

May

11,

2014

Internet

PublicInternet

PrivateIP

networks

25

Civicsociety


26/47


27/47

Theevolvingglobaldebate


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


29/47


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


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


32/47

EuropeanUnion

Source:

BEREC,

2012 32


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


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


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


36/47


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


38/47


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


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


41/47


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.

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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


44/47

Recap


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


46/47

Thankyou!


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

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