Network Neutrality Impacts On Emerging Markets

The pros and cons on the issues regarding Network Neutrality as Internet is a free medium in context to content and services offered by internet. It further illustrates consumer and the business view of the impact of Network Neutrality regulations if they will be regulated or not.

Executive summary

This article provides both the views and concerns and issues raised by ISP’s and consumers and small businesses which directly face the context of Network Neutrality.

The largest cable and broadband service providers are willing to charge money for accessing Internet, for consumers and businesses that are using their network infrastructure or ‘pipe’ for accessing internet.

This article further discusses the innovative idea of earning revenue by these network giants who is willing to charge ‘Website operators, application providers, e-businesses, and device manufactures for the right to use their network.

The article further postulates the impact of these manifestations on consumers and businesses alike and their pledge to have network neutrality regulations passed in favor of them by the Congress.

In this article, few disputes originated by network neutrality debate are also discussed with the examples from real world business scenario with their impact on consumers and businesses. It also presents the scenario if the regulations of network neutrality will be abolished and their possible outcomes.

Issue

Network Neutrality (NN) follows the principle of transmitting content over a cable or telephone network in a neutral way ‘equally and without preference’. (Richman, 2008, Page 17).

Net neutrality is a government regulation which guarantees that Internet or Broadband service providers do not regulate the internet into ‘Fast Lane’ for Web-sites and ‘companies that pay premium’ and a ‘slow-lane’ for companies that do not. (Baumann,M, Information Today, 2006, Page 38).

The Federal Communications Commission (FCC) has banned Internet Service providers (ISP) from decreasing internet speeds to certain websites, but now Telecommunication companies are manifesting to regulate or block websites based on who pays the highest premium. (Baumann,M, Information Today, 2006, Page 38) For example, if Yahoo pay the highest premium to Broadband Service providers to block Google, which shifts the ‘balance of power’ to those who is willing to pay more.

(Baumann,M, Information Today, 2006, Page 38). Various forms of speculations has been proactive on the issues regarding Network Neutrality, such as Internet is becoming expensive with the advancement of technology implications, if ISP’s are not permitted to charge large companies for bandwidth then the toll will be diverted to consumers as they have to choose between ‘higher subscription fees’ and’ inferior quality of service’. (Baumann,M, Information Today, 2006, Page 38).

On the other hand, consumer federation of America has postulated that Network discrimination through a “tiered Internet” is going to hamper consumer rights as telephone and cable organizations is going to have a sturdy monetary incentive to warp the free internet for their own benefit in regards to own ‘content and services.’ (Scott B et.al, 2006, Page.9).

The fact sheet further concludes that ‘Network Discrimination’ is going to damage ‘innovation’, ‘investment’ and ‘competition’, as Internet is a free market place where ‘ innovators and entrepreneurs’ are constantly emerging and falling on their own merits. In the context of ‘tiered Internet’ the major players will surpass the market and the little players will be on mercy of these major competitors. (Scott B et.al, 2006, Page.10).

In oppose to the statement of network owners that they won’t be able to build high speed networks, if legalization is passed in favor of Network Neutrality, but consumer union has manifested that network owners will continue to ‘generate revenues ‘ by ‘monthly subscription fees’, ‘access rates from content producers’. (Scott B et.al, 2006, Page.12).

According to consumer union (CU), abolition of Network Neutrality is just an attempt to monopolize ‘rents from a new revenue stream.’ As said by, Edward Whitacre, AT&T CEO, the network companies should be able to do as they prefer with their pipes as they invested a large capital to build this infrastructure. (Scott B et.al, 2006, Page.19)

In proportion to this statement, consumer union has claimed that these companies have received ‘billions of dollars in public subsidies and incentives’ in order to build this network infrastructure.

CU speculated that if network owners return the received public money, they can build fiber network to each house in America. (Scott B et.al, 2006, Page.14) Further, Network owners speculate that there is plenty of competition in the broadband market (Gross G, Infoworld.com, 2006).

In response to this CU has facilitated that cable and DSL control 98 percent of broadband market share and major part of the country has only one broadband provider and if network owners choose to use their network to discriminate, the consumer has nowhere else to go but rather agree to their monopoly. (Scott B et.al, 2006, Page.16).

Network owners speculate that increased bandwidth is required in order to rectify network congestion problems, so they need to regulate the bandwidth whenever they want, and in whichever way they desire, but CU says that they can ‘accommodate all content providers on an equal basis’ or ‘they can charge providers’ as a advantage of ‘getting through bottlenecks’. But in absence of Network Neutrality, network owners have an ‘economic incentive’ of ‘not to relive the congestion’.

(Scott B et.al, 2006, Page.18) Network owners intend to discriminate the ‘content and service’ of their competitors who don’t pay for use of service, but due to this discrimination and in the nonexistence of network neutrality, consumer has to suffer and have nowhere else to go. (Scott B et.al, 2006, Page.19).

The present House (COPE Act, HR 5252and Senate (ATOR Act, S 2686) telecom bills do not adhere to non discrimination and do not facilitate FCC from preventing it. (Scott B et.al, 2006, Page.20). Several laws have been introduced in congress regarding Net neutrality such as Internet Non-Discrimination Act of 2006, which prohibits blocking or modification of data, Network Neutrality Act of 2006, to make Net Neutrality rules stringent, Communication Consumer Choice and Broadband Development Act of 2006, to aid FCC to study of abusive Internet business practices, Internet Freedom and Nondiscrimination Act of 2006 for broadband providers in order to obstruct them from blocking Internet traffic and content in terms of network traffic priority, and Internet Freedom Preservation Act ‘introducing a ban on the blocking of lawful content, for bidding and banning quality of service deals between network providers and specific content providers’.(Richman 2008, Page 17).

Supporters from across the globe are joined together to save “consumer choice’ and ‘Internet freedom’ in order to contradict the issues raised by network owners. (Scott B et.al, 2006, Page.22)

Save the Internet, an organization advocating Net Neutrality debate has allude to various examples of discrimination by ISP’s in recent years:

In 2005, Telus, a Canadian telephone company has blocked more than 600 Websites for posting pictures of their employees traversing the picket line during labor dispute. (Richman, 2008, Page 18)

The blockage of emails opposing the AOL’s pay-to-send-email scheme has received a momentarily hype, when Time Warner’s AOL blocked all emails containing information of website addressing the same issue, in 2007. (Richman, 2008, Page 18)

In September 2007, during a public demonstration by pro choice organization, Verizon Wireless blocked text messages to its members. (Richman, 2008, Page 18)

The most exposed development of discrimination was in October 2007 from Comcast. The continuous reports from Comcast users has predicted that ‘Comcast was blocking traffic for Bit-Torrent, a peer-to-peer file sharing program especially used for transferring content requiring high bandwidth. (Richman, 2008, Page 18) Comcast user noticed that their file transfers has been completely cut off or lower than a normal speed. Comcast declined that they weren’t filtering any traffic on the network. (Richman, 2008, Page 17).

The anecdote further facilitated Associated Press to perform test that confirmed that Comcast is blocking some Internet Traffic. The test included transferring of the ‘King James Bible’ through Bit-Torrent on ‘Time Warner Cable, Cablevision, AT&T and two Comcast connections which shows that the transfer is feasible on all other networks except Comcast. Comcast was using an interference technique which gets triggered when one Bit-Torrent user attempts to share file with another user.

The interference technique poses Comcast as another user. After public demonstration of Associated press report, Comcast acknowledge of delaying some traffic due to high network congestion but not blocking it completely as said by Mitch Bowling, senior vice president of Comcast Online Services. (Richman, 2008, Page 18).

In context of this issue FCC has acknowledged that Comcast had been violating the Net Neutrality principles by interfering with specific customer traffic and told it to be beware in the future. (Bradner, www.networkworld.com , 2008). On Aug 1, FCC commissioners voted 3 to 2 in order to find violation of FCC’s Internet Policy Statement and ordered Comcast to reveal the truth. (Bradner, >www.networkworld.com , 2008).

But in scarcity of proper regulations and laws, and if Comcast choose to go to the court, the court will tell the FCC it does not have the authority. The responsibility lies in the hands of Congress to write rules which will help FCC to maintain Network Neutrality. (Bradner, >www.networkworld.com , 2008). As speculated by Bradner, about FCC incompetence in demanding disclosure of Comcast Network Management policies public, Comcast has recently appealed in U.S court in Washington D.C. Comcast further demonstrates that the nature of such demand requires FCC to have an authority. (Bosak, B. 2008, NewsFactor.com)

Implications

As the proceedings of congress arguments on pros and cons of network neutrality is taking place, many businesses on internet feel their future may be at stake. (Gross G, infoworld.com 2006). According to Dave Greeves, owner of Denver based advertising company focused on online campaigns, speculate that ‘if ISP’s are allowed to give preferential treatment to some Web traffic, businesses using competing tools will find themselves in the slow lane’. (Gross G, infoworld.com 2006).Further he says, ‘a broadband provider can block Google in favor of its own, or a partner search engine’. (Gross G, infoworld.com 2006).

The Network Neutrality issue has created a huge gap between ‘consumers groups and large internet based companies such as Amazon.com, e-Bay and Google’. (Gross G., infoworld.com 2006). As said by broadband provider that new regulatory laws will expand the horizons for the Internet as a way to pay for ‘next generation broadband networks’. (Gross G., infoworld.com 2006) and network owners should be allowed to regulate bandwidth ownership to offer new services as television over IP. (Gross G., infoworld.com 2006). According to BellSouth and AT&T, they are planning to charge e-commerce companies for ‘preferential routing for traffic to their sites’. (Gross G., infoworld.com 2006).

In November 2006 AT&T CEO Whitacre publicly acclaimed that Google and VoIP provider are using their pipes for free. (Gross G.,infoworld.com 2006).

In response to this statement Google and Amazon.com executives say that they pay ‘millions of dollars in Internet fees each year’. (Gross G., infoworld.com 2006). In August 2005, the FCC allowed DSL providers from ‘sharing their lines with competitors. The Supreme Court denied ISP’s to share the lines of cable broadband providers, which resulted in blockage of web content by broadband providers from competitors such as independent VoIP or video providers. (Gross G., infoworld.com 2006).

According to Paul Misener, vice president of global public policy for Amazon.com, the free market can only work if there is a ‘healthy competition’ between multiple providers of pipelines for Internet. (Gross G., infoworld.com 2006).

Further, Broadband providers has continuously speculated that they will not block their customers from accessing ‘web content or services’. (Gross G., infoworld.com 2006). In response to this speculation, an independent tele-com provider based in Stockton, California has said that deficiency of network neutrality laws will result in blockage of Internet traffic from smaller providers. This will be the end of small providers and internet will be handled by few large service providers. (Gross G., infoworld.com 2006).

As the present market of broadband providers, in addition with telecom carriers AT&T, BellSouth and Verizon controls ‘70 percent of Internet Backbone’ and with advancement of non-net-neutrality laws will further enhance the monopoly of these providers and they are going to crush all competition. (Gross G., infoworld.com, 2006).

Moreover, network equipment vendors such as Alcatel, Cisco, Corning and Qualcomm with others are asking Congress to reject network neutrality laws by saying that there is no tangible evidence that broadband service providers will regulate the bandwidth or block content for their own benefit. (Gross G., infoworld.com 2006). They further speculated as said by Mike McCurry, co-chairman of the Hands Off the internet coalition representing AT&T, BellSouth, and other Net Neutrality opponents, with net neutrality laws in place will prevent broadband service providers to separate service like Video over IP.

According to him, broadband service providers want ‘to make internet into dumb pipe’ and with these laws,’ there will be no room for innovation’ and further ‘decrease the investment in broadband providers’. (Gross G., infoworld.com 2006). But the new development as in the case of Comcast, has raised issues regarding the credibility of their statements. (Personal comment)

Likely Outcomes

The advancement of these findings has made us to think, as these justifications are just speculations or they have concrete evidence regarding the debate of net neutrality. These companies have planned to discriminate internet, their recent statements such as

‘William L. Smith, chief technology officer for Bell South Corporation, told reporters and analysts that an Internet service provider such as his firm should be able, for example, to charge Yahoo Inc. for the opportunity to have its search site load faster than that of Google Inc.’ (washingtonpost.com, Krim J., 2005).

The new statement by Verizon’s Ivan Siedenberg as told to Wall Street Journal, ‘We have to make sure they don’t sit on our network and chew up our capacity. We need to pay for pipe.’ (Wall Street Journal, Searcy et.al, 2006).

Such statements make us aware of true intentions of these companies in regulating bandwidth allocation and blocking web content according to their own use. (Personal Comment). The small businesses will be left in ‘slow-lane’ with mediocre Internet service and they won’t be able to compete. (Save the internet.com).

The innovators and entrepreneurs won’t be able to emerge in the e-business context as the market is ruled by ISP’s facilitating businesses who is willing to pay them premium for faster loading of their websites. (Save the internet.com) The political organizations will be handled by these providers (Save the internet.com), the idea of e-government in order to provide better facilities to citizens will be on mercy of these ISP’s who is asking for revenue for allowing these websites to run. (personel comment)

The non-profit organizations working for the benefit of society will be at stake of these ISP’s as well as they cannot pay these ISP’s to be in the fast lane. (Save the internet.com) The conception of free press by citizen or freedom of speech which is the first amendment of conception of Internet will be violated as bloggers will have to pay to post their comments and views (Personal Comment) and further, the blogging websites has to pay to be in the fast lane. In consumerism context, IPod listeners, will be pushed to use a higher priced music service owned by ISP’s other than iTunes itself. (Save the internet.com).

Moreover, online shopping will be regulated as the companies could pay to make their online transaction process faster than competitors who are offering low prices-which further make availability of less choices for consumers. With advancement of non-net neutrality regulations, consumer cannot choose from reasonably priced options for ‘online shopping, online video, Tele conferencing, Internet phone calls etc from the most expensive ones. (Save the internet.com) The other services such as online banking, health care information, posting photos, planning vacations’ would be on mercy of ISP’s offering fewer choices.

The last but not the least, ‘the end of internet’ (Save the internet.com), the internet we know is going to be a history. But if the ISP’s stays firm on the context of not blocking web content or decreasing bandwidth according to their preferential customers in business to business context, internet would be a better place with better services in structure and application. (Personal comment).

References

Baumann,M., (2006), “Information Today, The Newspaper for Users and Producers of Electronic Information Services”, Vol. 23 Issue 8, p1-59, 3p, ISSN: 87556286.
Bradner, S., (2008), “Unhappy the FCC supported net neutrality”, Network World; 8/11/ 2008, Vol. 25 Issue 31, p26-26, 1/2p, ISSN: 0887-7661.
Gross G., (2006), “ Net Neutrality Debate Rages”, InfoWorld; 7/10/2006, Vol. 28 Issue 28, p9-13, 3p, ISSN: 01996649
Krim J., (2005)“Executive Wants to Charge for Web Speed”, WashingtonPost.com, Dec 1, Available Online: http://www.washingtonpost.com/wpdyn/content/article/2005/11/30/AR2005113002109_pf.html , [Accessed 7 th September 2008]
Scott B., Cooper M., Kenney J.,(2006), “Why Consumers Demand Internet Freedom, Network Neutrality: Fact vs. Fiction’,
Available Online: http://www.freepress.net/files/nn_fact_v_fiction_final.pdf [Accessed 7 th September 2008]
Searcy D., Schatz A., (2006), “Phone Companies Set Off a Battle over Internet Fees”, Freepress, Jan 6, Available online: http://www.freepress.net/news/13218, [Accessed 7th September 2008]
Save the internet.com, (2008), “The Threat is Real”,
Available Online: http://www.savetheinternet.com/=threat#abuse, [Accessed 7 th September 2008]
Save the internet.com, (2008), “Net Neutrality 101”,
Available Online: http://www.savetheinternet.com/=threat#abuse, [Accessed 7 th September 2008]
WuT., “Network Neutrality”,
Available Online: http://www.bookrags.com/wiki/Network_neutrality , [Accessed 7 th September 2008]
Bosak, B. (2008) ‘Comcast Challenges FCC’s Authority to Order Neutrality’, NewsFactor.com, Available online: http://www.newsfactor.com/story.xhtml?story_id=0110010E86OH&nl=2 [Accessed 8 th September 2008]