NET NEUTRALITY UNDER ATTACK

BY: Ferdinando Pennarola

http://www.viasarfatti25.unibocconi.eu/notizia.php?idArt=4198

In a neutral network, all content traffic is charged the same. Telecoms don’t like this, but they’re likely to be wrong. The existing principle of network neutrality makes sure that users access the Net without any limitations or additional costs dependent on the type of traffic they generate. The telecoms which oppose network neutrality instead think that traffic should be prioritized according to the content in question

„Regulating the Internet? You must be nuts!“, I can already hear a thousand bloggers screaming. The issue of network neutrality, expression coined by Tim Wu, Professor at Columbia Law School, in 2003, has been under the limelight for a while and is of particular interest for national and international market regulators.

Let’s see the terms of the debate between those who favor and those who oppose network neutrality. Those who want to uphold the existing principle of network neutrality think that users must be able to access the Net without any limitations or additional costs imposed which are dependent on the type of traffic they generate. Those who oppose network neutrality instead think that service provision should be made conditional on the content in question: live video streaming should be priced differently than, say, an e-mail attachment containing a radiogram sent by a doctor to her patient.

Major producers of content side with neutrality: from day one, they have been opposed to differential access to the Internet. For them and the majority of users, the neutrality of the Net is a guarantee for preserving the original libertarian spirit behind the Internet, which has produced so many radical innovations in recent years. For instance, small Web start-ups would be unable to pay for access to content, since their stream of revenues in non-existent. Some venture capitalists have even argued that abandoning net neutrality would be a major barrier to entrepreneurial innovation, thus endangering a nation’s competitive capabilities. Vint Cerf, one of the Internet’s founding fathers, argues that a system where you pay for content would transform the Internet in one of the many mass media that are controlled by a central authority. Tim Berners-Lee, who established the World Wide Web, thinks that the Net is the basic technology that alone can ensure a veritable market economy.

The bulk of opponents is constituted by Internet access providers, i.e. by telecom giants. The world’s mighty telcos have been displaced by the advent of the Net (and are still angry about it): in the new IP world, telecom operators simply manage a transport infrastructure, without consideration about whether data packets contain graphite or diamonds. The telecoms present their case as follows: without being able to discriminate traffic by charging for content, there wouldn’t be the additional resources needed to complete the laying of broadband networks for all users, reducing and/or eliminating the digital divide.

But who’d be the winners and losers, if the principle of net neutrality were to be abolished? Would collective well-being be augmented because of it? Is it really true that broadband capacity is lower and the digital divide higher in a neutrality regime? A recent study by three researchers of the University of Florida – Cheng, Bandyopadhyay, and Guo – has demonstrated that the incentive for telcos to expand their networks is largely greater in the case of net neutrality than otherwise. This apparently counterintuitive result was obtained by acknowledging and weighing in the various forces acting in the new environment: the market shares of content producers, the monopolistic market power of telecom operators over local markets, the diffusion of a business model based on free content and services but supported by advertising revenues.

Summing up, the debate on net neutrality can be safely shelved until the ecosystem of contents and network infrastructure continues to develop unabated, as it has done over the last decade.