Net Neutrality In A Nutshell

With the House Energy & Commerce Committee marking up the telecom reform package tomorrow and Wednesday, I have been getting a lot of questions from friends about Net Neutrality. Sadly, the left has taken up net neutrality as their cause du jour and together with a bunch of people who have a fundamental misunderstanding of the issue, have formed the “Save the Internet” coalition.

To shed some light on the issue, I’ve put together a little primer on Net Neutrality – what it is, and more importantly, what it’s not. The Google’s and Yahoo’s of the world have done a fairly effective job of clouding the issue by painting it as something very simple when it’s actually far from it.

I’ll explore:

The “Save The Internet” argument.

Why their argument actually has nothing to do with the debate.

What remedies already exist to address the claims they’re making

Why net neutrality is, at it’s heart, an exceedingly bad idea from the standpoint of guaranteeing the quality of the Internet

Why net neutrality is terribly unfriendly to consumers.

Don’t Block My Access

Advocates of net neutrality legislation have portrayed the fight as a simple battle between consumers and the big, bad, corporate interests of telcos and cable companies. They claim the Verizon’s and Comcast’s of the world want to block your access to Google (or at least slow it down enough) to make their offerings more appealing. They’ll give you lightning fast access to their content, and keep you from seeing anyone else’s stuff.

It’s a powerful argument, but it’ simply not credible. Given the competition for your Internet dollar, providers competing with a company that impedes traffic would make easy money by simply not doing so. If Verizon’s impeding access to Google, I’ll switch to the guy that isn’t in a heart beat.

The real debate is over management of private networks, quality of service, and the cost of providing service. In that way, this fight isn’t between consumers and telcos/cable companies. It’s a battle between those who built the networks and those who use them to provide a service.

Picture A Giant Hotel

I just came back from Atlanta and was struck by the sheer size of the Westin Peachtree hotel. It’s a 70 story tower in the middle of a skyline dominated by much smaller hotels. It made me wonder about the impact on the electric grid in the downtown area and that led me to an epiphany on net neutrality (hey, it’s how my mind works, don’t criticize.)

Let’s say you have a city like Atlanta and everything is humming along smoothly. All the people and businesses downtown have their needs met, and pay their electric and gas bills every month. A developer comes along and says, “Wow! Downtown Atlanta would be a fabulous place to build a 70 story hotel.”

The benefits of the hotel are significant, so the people are excited to have such a project. But then the practical logistics come into play.

In order to provide gas and electricity to the hotel, significant upgrades will be required for the electrical and gas lines. New transformers or switching stations or whatever it is that makes electricity work will need to be installed to handle the draw on the system.

The people will still pay their normal bills, and of course the hotel will pay its bills, once built, but who will pay for the upgrade to the grid?

Who Picks Up The Tab?

This is the basis of the current net neutrality debate.

The telcos and cable companies own the grid. The people who connect pay a fee and get their connection (unlike the electric grid, it’s a flat fee and not consumption based, but bear with me). The Google’s and Yahoo’s of the world pay for their connection to the Internet. So everything is fine, right?

Not quite.

Video traffic is a funny thing. It requires a very high connection quality. As it stands, that connection quality is maintained by the providers that are being accused of trying to gum up the works. Intelligent network systems allow the network to detect a video stream and prioritize that traffic (above e-mail or IM, for instance) so you get a better stream. It’s not a perfect solution, so you still get choppy video sometimes. It is, however, a lot better than you would get if the providers were forced to employ “dumb pipes” – network components that don’t assist your surfing.

In addition, the amount of bandwidth consumed by streaming video quickly begins to tax the grid just as the hotel would if it went online without any upgrades. Everyone in Atlanta would still be getting the benefit of the hotel – increased tourism, etc. – but they’d be plagued with brown outs or worse.

The same thing is expected from the Internet with a dramatic increase in video (which takes up a lot of space) on the net. There will have to be significant upgrades to the lines, routers/switches, etc. that power the Internet.

Cable companies and telephone companies don’t want to pass the cost of those upgrades on to consumers. They believe that the companies that are making all of that video available have a responsibility to cover some of the cost of the infrastructure. They have suggested some ways that could be done. One idea floated by the phone companies was a “tiered service”. They suggested that since it is the Google’s and Yahoo’s that receive the most traffic, and therefore have the most impact, they should pay providers for dedicated space (read: upgrades) to carry that traffic. In doing so, the regular traffic (like this blog) won’t be impacted by the clog created by millions of people watching Gilligan’s Island reruns on the net.

Dumb Pipes And Smart Networks

Now let’s go back to the idea of dumb pipes.

Many network neutrality laws have, at their core, a belief that providers should not be allowed to prioritize one bit of data over another. The trouble is they have to. As I mentioned, without that sort of rudimentary traffic routing and management, your video streams will degrade almost instantly because it will now be fighting with every piece of spam and every stupid chain letter on the net.

Creating a dumb network where all content is equal will have a significant negative impact on the material you access everyday.

How Do We Protect The Content Providers?

Ok, so if we don’t pass network neutrality, how will we guarantee that the access providers don’t block content?

Simple. We do it through the same channels we would use to address similar practices if they weren’t online. The trouble with network neutrality is it assumes the Internet is some mystical place where the realm of the real world ceases to exist. It’s not. The same laws apply here that apply in the domain of the real.

For instance, in the real world, if your competition is engaged in anti-competitive/predatory practices we have a whole government entity known as the Federal Trade Commission that handles such complaints. You remember them, right? They’re the guys that went after Microsoft for sticking it to damn near everyone else. Together with the Justice Department, they investigate and prosecute anti-competitive acts.

Rather than beginning a new era of regulating and taxing the Internet, why not simply expand their ability to investigate and enforce existing laws? Why must we create new government powers when we could, instead, use the ones we already granted to them?

Who Really Wins, Who Really Loses?

Despite the claims of the “Save The Internet” crowd, this is not a battle between the consumers and the greedy Internet Providers. This is a battle between content providers and access providers over which one will be forced to charge the consumer.

Just as that hotel won’t get built without significant upgrades to the electrical system, the additional capacity to host a new wave of content on the Internet will ultimately be paid for by someone. Now matter who wins, that someone will be you. You can either pay Google for the video, or cable and phone companies for your connection. But nothing is free.

The questions you have to ask, knowing that you’ll be picking up the tab anyway, are:

Do I want to significantly degrade my connection in the process by requiring dumb pipes?

Do I want to open the door to further Internet regulation like taxes on broadband connections and all online purchases?

Does the Federal Trade Commission have authority over competition online?

If so, do I really need to create more bureaucratic confusion by having the Federal Communications Commission and Federal Trade Commission duplicating work?

I know my answers. Hopefully, looking past the carefully crafted campaign message points, you’ll be able to answers these for yourself.