Introduction

The Internet was originally called the “Information Superhighway,”¹  but that analogy seems to have been long-abandoned. In many ways, the analogy is enlightening. Highways are open to anyone with a driver’s license and a roadworthy vehicle. With the exception of law enforcement and emergency vehicles, the same speed limit is imposed on everyone. (Whether people obey the speed limit is another matter.) And although there are a number of toll roads, there are toll-free alternatives for most of them. Most toll roads are government-owned, just as the toll-free alternatives, and maintained to the same general level. Toll roads are paid for by the tolls collected and toll-free roads are financed from taxes on gasoline.

But there’s one huge difference between highways and the Internet. Highways don’t have intersections. The Internet equivalent of intersections are called routers. Data transmitted over the Internet is sent in packets which contain a header that specifies the IP address of the specific source and intended destination computer. Most of the Internet “backbone” (the city-to-city connections) consists of fiber-optic cables. That means packets travel at the speed of light. These fiber-optic connections transmit all packets at the same speed, regardless of whether they are being used at one percent of their capacity or 100 percent of their capacity.

The cause of most perceived delays on the Internet is the routers. The Internet is a web of fiber-optic cables connected to each other at routers. A router acts like a traffic cop directing traffic through an intersection. When a packet arrives at a router, the router must look at the header of each packet to determine where to send it, one packet at a time, and then transmit the packet across the proper fiber-optic connection. Depending on the way the network between the source and destination for a packet is designed, the packet may cross many fiber-optic connections and routers. The telecom boom during the 1990s resulted in a “fiber glut” that many believe won’t be exhausted in the near future.²  But as network operators use more and more of the existing fiber-optic connections, they must also increase the capacity of their routers.

When there are too many packets for a router to handle, they are queued in the router’s memory.³  This queuing imposes some delay. If the memory becomes full, the router drops (deletes) some of the packets and tries to keep going.⁴  If the sending computer doesn’t get a response in a certain amount of time, it assumes the packet has been dropped, sends it again, and the receiving computer must wait even longer to received the re-transmitted packet. This is also perceived by the user as delay.

The Effects of Delay

When the Internet was only used for email and Web browsing, prioritizing traffic wasn’t necessary. If you had to wait an extra second for a web page to load, it wasn’t a big deal. But today the Internet is used for a much wider variety of applications: streaming music and video, Voice over IP (making phone calls over the Internet, AKA VoIP), videoconferencing, telecommuting, and multiplayer online games. Opponents of Network Neutrality (AKA Net Neutrality) argue that it would prevent them from prioritizing these time-critical applications from less time-critical applications like file downloading and email, to the detriment of all.

Supporters of mandated Net Neutrality argue that it is cheaper and easier to just increase the Internet’s capacity than it is to implement a complex system of prioritizing packets.⁵  They believe service providers don’t want to prioritize traffic based on the type of service, but rather want to be able to charge content providers premium fees for faster access to customers.

The question of whether the Internet’s capacity can be continually increased to carry all of the data that is sent across it without needing to queue or drop packets, is really purely an academic one. There have been and will continue to be events that make the whole world “tune in.” For example, CBS SportsLine served 19 million video streams of the NCAA March Madness basketball tournament last year, and has doubled its capacity for this year.⁶  Some cellular networks now can prioritize service for emergency first-responders when the network gets overloaded.⁷  Why not have the same functionality on the Internet? And even if it were technically feasible to guarantee enough bandwidth for everyone, it would be incredibly expensive.⁸ 

One further point must be explained. Although streaming video may be the most common high-bandwidth application on the Internet⁹ , buffering makes packet prioritization less important for streaming video (and audio) than it is for other high-bandwidth applications.¹⁰  When you watch a YouTube video (or any other streaming video or audio), an extra second of delay between when you click the play button and when the video starts playing may not be a big deal.

During that initial delay, the video begins streaming to your computer and is buffered in your computer’s memory. If the Internet connection between your computer and the computer sending the video is momentarily slowed by routers queuing or dropping packets, the stream plays from the buffer until the connection quality improves and refills the buffer. If the buffer is large enough, you won’t even notice the delay. If you have experienced online videos “stuttering” during playback, it’s probably because the software was written to favor beginning playback quickly instead of ensuring that playback would continue uninterrupted from beginning to end.

Imagine that each different source of content available on the Internet as a channel on your TV. Assume that the Internet’s capacity (for the near term, this means the routers’ capacity) can’t be increased quickly or economically enough to ensure that when you flip through the channels the video begins playing immediately. Advocates of Net Neutrality argue that there should be approximately the same delay for each channel. Opponents to Net Neutrality believe they should be able to prioritize certain channels so that they begin playing more quickly than others—if the content providers on those channels pay for the privilege.

The concern is that this will change the character of the Internet, which until now has been a (mostly¹¹ ) level playing field. Because most Internet users don’t pay for the content they access (though online music services are an exception), given a choice between two channels with roughly equivalent content but different start-up speeds, many fear that people would simply choose the channel that loads faster.

Although this analogy is fairly accurate for one-way streaming music and video, it is completely inappropriate for real-time two-way communications such as VoIP, videoconferencing, telecommuting, and multiplayer online games. If there was a one second delay for each side during a phone call, the conversation would be more like talking on a walkie-talkie, with each having to say “over” to indicate they are done speaking and the other side can respond. While this many be tolerable, if delays on the Internet can’t be eliminated, the biggest victim of mandated Net Neutrality may be online gaming.¹² 

What to Prioritize

The Net Neutrality debate is really just about what to do when a router (as opposed to the fiber-optic backbone) gets overloaded. Thus the question isn’t whether routers should prioritize packets, but which packets routers should prioritize. Routers already prioritize packets to some extent, in that when their buffers are full they drop newly-arriving packets instead of the packets in the buffer (this is called First In, First Out, or FIFO).¹³  Net Neutrality advocates want to keep the current system. Most network operators instead want to be able to prioritize packets based on more complex criteria. They also want to be able to use prioritization rules to determine which packets are queued in memory and which packets are forwarded as quickly as possible.¹⁴ 

This could mean that low-priority packets are queued or dropped even when the network has the capacity to transmit them. If packets are prioritized based on the type of service being used (e.g. videoconferencing is prioritized over file downloads or emergency first-responders are prioritized over other users), it may benefit everyone. But network operators also claim that being able to charge content providers more to have their packets marked as high-priority will ensure the revenue needed to increase the capacity of their networks. They see Net Neutrality requirements as hindering their efforts to impose differential pricing. They are also opposed to federal regulations that they say will hinder their abilities to design new features for their networks.

Without mandated Net Neutrality, network operators can also completely block access to their competitors. This is important because network operators are branching out into other areas such as providing content and services. If AT&T wanted to start its own online music service, it could block its AT&T DSL customers from accessing competing music services like iTunes or demand that Apple pay AT&T a premium for access.¹⁵  There has already been one case of a local phone company blocking its customers from using a competitor’s VoIP service.¹⁶ 

Many people on both sides of the Net Neutrality argument agree that this sort of flat-out blocking is bad. But at least one network operator would like to charge twice for the data transmitted over its network. In November 2005, then SBC CEO (now AT&T CEO) Ed Whiteacre said “Now what they [responding to competition from Google, Yahoo, eBay and others] would like us to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using.”¹⁷  Mr. Whiteacre would like to charge customers for their connection to his ISP and then charge content providers for access to those customers. Content providers who don’t pay will have their packets given a low priority and their customers will suffer from delays.

Consolidation

Net neutrality is less of an issue if there is a wide variety of ISPs for customers to choose from. In 1980, the FCC ruled that telephone companies must allow ISPs to use their networks to provide Internet access to consumers.¹⁸  But in 2005 the FCC reversed that policy and allowed telephone and cable companies to close their networks to competitors.¹⁹  As a result, the number of competitors has decreased and ISPs have consolidated. This has caused the distinction between local ISPs and Internet backbone providers to virtually disappear.

When a single company provides commercial hosting, broadband access for consumers, and owns the backhaul network that connects the two, it’s easy to charge hosting clients for preferred access to consumers. Three of the nine Tier 1 Internet backbone providers also own local telephone networks: AT&T, Verizon, and Sprint Nextel.²⁰  Although there are new technologies that can compete with broadband service via DSL and cable modem, the do not have significant market share. An April 2005 White Paper found that only two percent of Americans receive high-speed Internet access from someone other than their local phone company or cable provider.²¹ 

At the same time the FCC allowed telephone and cable companies to close their networks to competitors, it adopted a policy statement meant “to ensure that broadband networks are widely deployed, open, affordable, and accessible to all consumers.”²²  The statement outlined four principles that support Net Neutrality: (1) “consumers are entitled to access the lawful Internet content of their choice”; (2) “consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement”; (3) “consumers are entitled to connect their choice of legal devices that do not harm the network”; and (4) “consumers are entitled to competition among network providers, application and service providers, and content providers.”²³ 

Conclusion

The 1996 Telecom Act was intended to foster intramodal competition within each technology market.²⁴  Its authors did not envision the intermodal competition between telephone network operators (providing DSL service) and cable network operators (providing cable modem service) that has subsequently developed. As a result, the current statutory and regulatory framework may be inconsistent with, or unresponsive to, current market conditions.²⁵ 

Advocates of Net Neutrality believe the end-to-end principle of having the Internet’s core routers treating all traffic equally is more important than giving network operators the freedom to devise pricing structures and features without government regulation. Opponents believe that network operators need increased revenues so they can afford to increase the capacity of the Internet backbone and deploy broadband to every household in the U.S. With so few companies controlling so much of the last-mile connections to consumers as well as much of the Internet backbone in the U.S., without some regulatory oversight in the near-term, they are free to impose whatever pricing structures they want without fear of losing customers. Discriminatory pricing may seriously affect the ability of small content providers to compete for audiences, which would destroy the level playing field of the Internet that has resulted in such a wide variety of content.

As a policy, the FCC’s four Net Neutrality principles may be sufficient. It is certainly less onerous for network operators than the previous rules which required network operators to allow competitors to resell their services at non-discriminatory prices. Until a majority of households have a choice between at least three providers of broadband service, the FCC should require network operators to abide by its Net Neutrality principles.²⁶  Although ISPs are not subject to mandatory common-carrier regulation under Title II of the Communications Act, the FCC “has jurisdiction to impose additional regulatory obligations under its Title I ancillary jurisdiction to regulate interstate and foreign communications.”²⁷  The question is whether new legislation will encourage the FCC to use this power or take it away.

Sources

1. http://en.wikipedia.org/wiki/Information_superhighway

2. See Jim Duffy, “Don’t expect video to exhaust fiber glut,” Network World (Feb. 15, 2007), available at http://www.networkworld.com/news/2007/021507-dont-expect-video.html

3. Jonathan Davidson et al., Voice over IP Fundamentals, 2nd ed., Cisco Press (2007), chapter 7, chapter available online at http://www.ciscopress.com/articles/article.asp?p=606583&rl=1

4. Id.

5. Gary Bachula, Congressional Testimony 5 (Feb. 7, 2006), available at http://commerce.senate.gov/pdf/bachula-020706.pdf (last visited Dec. 1, 2006).

6. http://www.xchangemag.com/hotnews/73h984212.html

7. http://wps.ncs.gov/

8. http://bennett.com/blog/index.php/archives/2006/08/17/how-much-bandwidth-is-enough/

9. http://www.networkworld.com/news/2007/021507-dont-expect-video.html

10. For the sake of simplification, peer-to-peer applications that attempt to shorten the virtual distance between the content and the user can be thought of as a type of buffering. The process of obtaining a list of nearby nodes from which to get the requested will also impose an initial delay. And without mandated Net Neutrality there is nothing stopping network operators from imposing unnecessary delays on their internal routers as well as the routers that connect their networks to others.

11. Some have argued that caching services like Akamai break the “level playing field” concept. See http://mischa.beitz.org/node/29 for some citations and a refutation of this argument.

12. http://www.ramprate.com/marketcommentary/neutrality.html

13. http://www.cisco.com/en/US/products/hw/routers/ps167/products_tech_note09186a00801e1dc1.shtml

14. http://itpolicy.princeton.edu/pub/neutrality.pdf

15. http://www.slate.com/id/2140850/fr/rss/

16. http://news.com.com/Telco+agrees+to+stop+blocking+VoIP+calls/2100-7352_3-5598633.html

17. http://www.businessweek.com/@@n34h*IUQu7KtOwgA/magazine/content/05_45/b3958092.htm

18. In re Amendment of Section 64.702 of the Commission’s Rules and Regulations (Second Computer Inquiry), Final Decision, 77 F.C.C.2d 384 (1980). In this order, the FCC distinguished between “basic” services, which were regulated and would continue to be subject to common-carrier requirements, and “enhanced” services, which would not. 7 Tex. Tech J. Tex. Admin. L. 265, 273. This distinction was later codified in the Telecommunications Act of 1996 (1996 Act), which amended the Communications Act of 1934 but used the terms “telecommunication service” and “information service” instead of “basic services” and “enhanced services.” 47 U.S.C. §§ 153(20), (46) (1997). Telecommunication service providers must charge “just and reasonable, nondiscriminatory rates to their customers, [and] design their systems so that other carriers can interconnect with their communications networks [on a nondiscriminatory basis]… and contribute to the federal ‘universal service’ fund.” 47 U.S.C. § 2696. Unlike telecommunication services, information services are not subject to those mandatory regulations and charges, and thus have a competitive advantage. 7 Tex. Tech J. Tex. Admin. L. 265, 273.

19. In 2002, the FCC ruled that broadband Internet service delivered via cable modem should be classified as an information service. In re Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities, 17 FCC Rcd. 4798, 4802-4803, ¶9 (2002). The Supreme Court upheld the FCC’s decision in Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 125 S. Ct. 2688 (2005). The FCC subsequently lifted the requirement on telephone companies to open their DSL networks to ISPs. Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities, Federal Register, Vol. 70, No. 199, Oct. 17, 2005, at 60222, FCC 05-151, CC Docket No. 02-33 ¶ 4 (rel. Sept. 23, 2005).

20. Wikipedia, Tier 1 network, available at http://en.wikipedia.org/wiki/Tier_1_carrier (last visited Dec. 1, 2006).

21. Harold Feld and Gregory Rose, et. al., “Connecting the Public: The Truth About Municipal Broadband” (April 2005), available at http://www.freepress.net/docs/mb_white_paper.pdf (last visited Dec. 1, 2006).

22. Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, Federal Register, Vol. 70, No. 199, Oct. 17, 2005, at 60222, FCC 05-151, CC Docket No. 02-33 ¶ 4 (rel. Sept. 23, 2005).

23. Id.

24. Charles B. Goldfarb, Telecommunications Act: Competition, Innovation, and Reform, Congressional Research Service 13 (August 12, 2005), available at http://www.benton.org/benton_files/CRSTelecom%20Act.pdf (last visited Dec. 1, 2006) (hereinafter CRS Report).

25. Id.

26. See CRS Report, supra note 24, at 5.

27. Id., citing NCTA v. Brand X, slip op. at 3-4.