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If It's Not Neutral It's Not Internet

May 17, 2006 | Inside: Regulation & Policies

Definition: Internet - collection of all networks that choose to be interconnected by standard Internet Transport Protocol(s).
—Reference: David P. Reed

The success of a proposal by AT&T and Verizon to end net neutrality does not threaten the Internet. The broadband customers of AT&T and Verizon will just no longer have access to the Internet. The development appropriately creates alarm among AT&T and Verizon’s customers, but the combined customer bases of these companies represent less than 2% of the billion or so users of the Internet. The fact that access to the Internet requires net neutrality does not depend on laws passed by the US Congress or enforced by the FCC. Neutrality arises as a technical and business imperative facilitating the interconnection 250,000 independent networks that choose to participate in the Internet. Net neutrality will remain a requirement as long as it serves the interests of the global Internet community.

Nothing stops AT&T and Verizon proceeding with their non-neutral networks. They just can’t label their offers Internet access. We call non-neutral networks—private networks. There already exists a market for private connectivity serving needs not addressed by the public Internet. AT&T and Verizon can pitch their various ideas about quality of service to the providers of commercial Internet content like Google as well as their respective end user customers. AT&T and Verizon already have a portfolio of private network offers only the attempt to frame them as some sort of “enhanced” Internet access is new.

Selling private networks as Internet access amounts to false advertising of the type prosecuted by state AG’s and the FTC. The Federal Trade Commission Act requires advertising be truthful and non-deceptive. Advertisers must have evidence to back up their claims. The difference in the number of available end points makes it easy to distinguish between private networks and the Internet. Calling a service Internet access means providing full connectivity. The continuously expanding Internet presently reaches about 400 million computers even before considering end user devices. AT&T and Verizon may believe the owners of these computers should pay a toll for the privilege of reaching end users, but they still need to demonstrate sufficient value to justify these tolls. Any attempt at enforcement of gatekeeper status will inevitably leave their customers with limited connectivity to large swaths of the Internet not unlike people stuck behind the Great Firewall of China.

The present attempt to unwind Internet neutrality represents just the latest (and unlikely the last) of ongoing efforts by telephone companies to defend legacy revenue streams. AT&T resisted interconnection of the 56k modems associated with the original Internet links in the 1960’s until the arrival of intervention by the Department of Defense. The Bells complained bitterly (all the way to the bank) about modem traffic associated with the dial-up Internet in the 1990’s. The Bells resisted offering DSL and then worked to undermine the independent companies like North point and Covad that tried to deploy the service. Efforts to derail municipal broadband initiatives and now net neutrality all fit the same pattern. Claim rules leave no incentive to invest. Win regulatory concessions against competitive threats. Repeat. Hint: Incentive to invest = monopoly market power in Bell co speak.

These longstanding efforts have not achieved the goals of derailing the Internet or producing prosperity for the Bells, but they did manage to slow progress enough to allow a dozen countries pass the US in Internet penetration rates. The resolution of the policy issues in the net neutrality debate will determine the extent to which the US enjoys the benefits of the Internet, but the Internet as a global phenomena will proceed with or without the permission of the Bells, the US Congress, or the FCC.

The Internet certainly suffers from a range of maladies, but only companies with large at risk legacy revenue streams see the solution as discrimination by use and user. Network infrastructure companies like Cogent, Earthlink, Abovenet, Savvis, and Global Crossing accept neutrality as fundamental to the health of the Internet. There exist a number of forums for the Bells to pitch the merits of their ideas for improving the Internet. The fact they plan to proceed on a unilateral basis demanding a ransom for their customers reveals their true agenda.

The customers of AT&T and Verizon did not ask to get cut off from the Internet. Only the lack of alternatives (aka monopoly) will prevent a customer exodus with the loss of net neutrality. There exist no examples of success with the “walled garden” approach, because the nothing can match the breadth of content and innovation of capacity of the public Internet. The decoupling of connectivity from use and user associated with neutrality makes this breadth of content and innovation possible.

The opposition to net neutrality arises like all regulatory debates as the means to raise prices, but people in the US already pay more for less bandwidth than citizens of Europe and Asia. Communication serves as an input to all economic activity, so expensive communications drags on the economy in the same way as high energy prices. Policy makers must decide between protecting the Bells 20th century business model or working to make sure US enjoys the benefits of the Internet. Internet traffic outside the US already dwarfs the traffic from within the US, and the failure of policymakers to defend net neutrality will only continue the trend of the US toward third world status in connectivity.

This has been a featured post from Daniel Berninger, Technology Analyst. To visit the weblog maintained by Daniel Berninger click here.

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