[iDC] Net Neutrality

Joel Slayton joel at well.com
Wed Jun 21 17:43:16 EDT 2006

Hello everyone,

Lawrence Lessig is a scheduled Keynote at ISEA2006 this year and will  
speaking on the subject Network Neutrality, August 9th 10-12.  There  
will be ample opportunity in the session for questions and discussion.

Hope to see many of you there.



On Jun 21, 2006, at 4:29 AM, Danny Butt wrote:

> Kia ora all,
> I thought that with all the recent coverage on Net Neutrality that  
> this list may find the following comment piece/summary of issues  
> might be of interest, would be interested in feedback from this group.
> Best regards,
> Danny
> ----------------------------
> Net Neutrality: No Easy Answers
> <http://www.dannybutt.net/digital/2006/06/21/net-neutrality-no-easy- 
> answers/>
> Comment piece for Media International Australia, June 2006. http:// 
> www.emsah.uq.edu.au/mia/
> Pre-print, please do not cite or quote without permission.
> Danny Butt, Suma Media Consulting
> The concept of "Network Neutrality" has received a great deal of  
> attention in the press recently, mostly due to so-far unsuccessful  
> US telecommunications legislation proposals that required Internet  
> Service Providers (ISPs) to carry any and all Internet traffic  
> equally, rather than being able to prioritise certain traffic or  
> charge differential rates for different kinds of content.
> For the proponents of Net Neutrality, there has been and should be  
> a clear separation between the provision of physical network  
> infrastructure and the provision of content. Much as in the  
> telephone system, the ISPs should be treated as "common carriers"  
> which are in the business of providing access to all content on the  
> Internet. In the U.S., for example, legislation until recently  
> required cable television providers to carry all content packages  
> and provide the latest technologies in all areas they served, even  
> if it would be more economically efficient to provide only those  
> content packages with which they had direct relationships. The  
> policy justification for legislating for this openness springs from  
> the limited competition in the telco/ISP/broadband area, meaning  
> that users don't have true competition due to high switching costs  
> and limited choice.
> Net Neutrality proponents wish to see something similar for the  
> Internet: a requirement that all ISPs provide access to all content  
> on the Internet without different charges or reduced performance  
> for content not approved or owned by the ISP itself. They want to  
> see ISPs continue to charge purely on speed and volume rather than  
> providing some services for free/cheap and making others more  
> expensive.
> At first glance, the issue seems like a straightforward benefit for  
> consumers, worthy of public policy interventions. But for the ISPs  
> and the providers of network services, different issues are at play  
> that make it less simple. The Internet has transformed from a  
> research network focussed on text and file transfer, to a highly  
> flexible media and communications platform capable of emulating  
> both the phone system and cable television. There are business  
> pressures for ISPs to implement differential provision policies for  
> Internet traffic for two reasons.
> Firstly, Quality of Service (QoS) policies are required to  
> prioritise important, time-sensitive traffic over less important  
> traffic, when there are more requests than there is bandwidth  
> available. For example, if you are video-conferencing, where  
> maintenance of a certain data rate is necessary for uninterrupted  
> viewing, under busy traffic conditions ISPs would like to be able  
> to ensure you can see your conference uninterrupted, even if it  
> slows down the person downloading a copy of a software programme  
> next door. Similarly, if you are using Skype or a similar Voice- 
> over-IP application to have an audio conversation, you would like  
> to think that this could work even if you next door neighbour is  
> downloading movies via a peer-to-peer file sharing application,  
> where a few seconds delay is not going to make a difference to  
> their experience. In Australia and New Zealand, a number of ISPs  
> have already undertaken "bandwidth shaping" trials, or limiting the  
> availability of bandwidth to traffic on common "ports" used by peer- 
> to-peer applications.
> In these examples, "non-neutral policies" that prioritise some  
> types of traffic over others are an essential part of giving the  
> customer what they want. The problem is that what constitutes  
> benefit for the customer and benefit for the ISP's bottom line  
> becomes blurred. This is the case when, for example, the ISP is  
> also a telecommunications provider, and the extensive use of VoIP  
> may be cannibalising their phone revenues, and the suppression of  
> this traffic for "QoS purposes" just happens to reduce take up of  
> VoIP. Or the ISP has a relationship with a content producer (e.g.  
> major record labels), in which case preventing peer-to-peer traffic  
> may play a role in encouraging users to download the music content  
> on the ISP's website.
> Differentiating between QoS discrimination for valid or anti- 
> competitive reasons becomes even more difficult when next  
> generation networks offer a "triple play" of voice, Internet, and  
> movies from one provider. In this case, the ability to deliver  
> specialised content services becomes part of the value proposition  
> for the network, and motivates the consumer to purchase these  
> services. Some ISPs argue that without the ability to guarantee  
> certain use patterns they will not be able to fund the new networks  
> and innovative services. For example, they would say, if you were  
> considering signing up with ISP X for voice/Internet/movies, but  
> read a review that their reliability on voice was not 100%, this  
> would inhibit takeup of these new services.
> While many small producers and consumer rights advocates (and large  
> web companies who are not reliant on deals with highly branded  
> content industries) have promoted Net Neutrality as equivalent to  
> the deals between cable television networks and content providers,  
> there are more complex interactions between content and  
> infrastructure as intensive interactive traffic becomes the norm.  
> In particular some of the new functionality such as that found in  
> interactive television and gaming relies on a sophisticated  
> relationship between content and hardware.
> A useful analogy can be seen in the gaming console market, where  
> the console manufacturers need to innovate at a hardware level as  
> well as negotiate deals with content providers to create a  
> portfolio of available titles [1]. By maintaining licensing control  
> over who can develop titles, console manufacturers are able to  
> capture up to a third of the retail value of each game sold, and  
> this is integral to their profits. This is crucial because price  
> pressure on consoles means that the profit margin on the hardware  
> console is low. For console manufacturers, a suggestion that they  
> should all be able to play each others' games is infeasible.
> The Internet, and the World Wide Web in particular was developed  
> around a separation of traffic protocols, user environment, and  
> content formats. Part of what made the web so ubiquitous was that  
> you could view content on any operating system (Windows, Unix,  
> Mac), via any browser (Netscape, Internet Explorer), over any kind  
> of Internet connection (modem, LAN, wireless). This is what allowed  
> the network to have a sense of neutrality.
> However, the shift in the web from a predominantly text-based  
> asynchronous information exchange platform, to sophisticated real- 
> time applications (audio-visual media in particular), have resulted  
> in more diverse, often proprietary platforms that link content,  
> transport, and interface in new ways. Examples include Windows  
> Media Center, or Apples FairPlay DRM format/iPod hardware/iTunes  
> software. This shift is driven by a combination of user-experience  
> requirements (users expect integration) and an attempt to gain  
> control of the hardware-software environment for areas of growth  
> content to allow multiple revenue streams and brand control, along  
> the lines of the console model. The degree to which this is a  
> prerequisite for network innovation or constitutes anti-competitive  
> behaviour is an policy question whose dimensions are complex and  
> with remedies which are unclear.
> A further complicating factor is that the highly branded content  
> (music, movies) that is driving uptake of high-speed data services  
> predominantly comes from offline sources where distributors not  
> only controlled, but usually financed production. This is a very  
> different model from the early Internet, where content was  
> sometimes funded by ecommerce or advertising, but more commonly  
> produced on a non-commercial basis. Or to put it another way, you  
> can't charge people a premium for much of the text-only internet,  
> but you can for episodes of Desperate Housewives. And if you're an  
> ISP charging for access to those episodes, you're probably paying a  
> lot of money for the rights to show them, so you are going to want  
> to prioritise access to those over other video content.
> The question of what viable economic models will look like under  
> next-generation networks is central to the Net Neutrality debate.  
> On one hand, it seems unrealistic to expect that the vertically  
> integrated content & distribution model has no place on the  
> Internet - to exclude it by legal means will probably delay the  
> introduction of new, efficient distribution models that users want  
> (see, for example, the role of iTunes in kick-starting the digital  
> music downloads business). But it is also true that the public  
> policy implications of Internet and telephone connectivity are much  
> more substantial than those of a console operator or movie theatre:  
> when people discuss the importance of information-literacy they are  
> not usually talking about access to playing games on an X-Box or  
> being able to watch a Disney film. There is a genuine public need  
> for effective access to email and Internet communications.
> Yet in the new Internet networks all these kinds of information are  
> delivered through the same mechanism. A large part of the problem  
> is that people in the US (in particular) assumed that the Internet  
> was public because the protocol for transferring information is  
> public. But the actual physical networks are owned primarily by  
> private entities who interconnect via market transactions and they  
> have many incentives to recoup their investment/seek profit by  
> tying their access offering to what people actually want, i.e.  
> content. Especially when, as Richard Bennett has noted, there is no  
> money to be made in being an ISP without those services, and the  
> Internet backbone providers are almost always telcos who are  
> offsetting their costs with voice services [2].
> The business models were different back in the early 1990s when it  
> was primarily research institutions who owned the pipes, but that's  
> not "neutral" or "public" in the way a government service is  
> public. At least part of the blame for the current predicament can  
> be laid at the feet of the "traditional Internet folks" who avoided  
> government involvement in the Internet like the plague, and  
> believed that a free market was the only way of preserving freedom  
> of expression. A review of the history of other public utilities  
> shows that in a market environment, governments might be the only  
> mechanism that can realistically be subject to effective political  
> influence in the public interest.
> In summary, the Net Neutrality issue is not as simple as it might  
> first appear. There could be genuine suppression of innovation from  
> simplistic anti-discrimination legislation, yet imperfect  
> competition is a feature of these networks which requires public  
> policy remedies. The most important activity over the next few  
> years will be clarifying what the most important public benefits of  
> network access are, and developing mechanisms for supporting those  
> benefits. In a rapidly changing network environment, these will  
> need to be more sophisticated than simply arguing for a status quo,  
> or worse, implementing poor legislation that is unresponsive to the  
> business models that will shape the Internet's future.
> Danny Butt  <http://www.dannybutt.net> is a consultant in new  
> media, culture, and development, and partner at Suma Media  
> Consulting <http://www.sumamedia.com>.
> [1] For an excellent overview of the value chains in this sector,  
> see Johns J. (2006)"Video games production networks: value capture,  
> power relations and embeddedness." Journal of Economic Geography 6 
> (2):151-180; doi:10.1093/jeg/lbi001
> [2] See comment on Tim Berners-Lee's weblog: Berners-Lee, T. (2006)  
> "Neutrality of the Net" , Accessed 27th May 2006.
> -- 
> Danny Butt
> db at dannybutt.net | http://www.dannybutt.net
> Suma Media Consulting | http://www.sumamedia.com
> Private Bag MBE P145, Auckland, Aotearoa New Zealand
> Ph: +64 21 456 379 | Fx: +64 21 291 0200
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Joel Slayton
Chair, ISEA2006 Symposium +
ZeroOne San Jose: A Global Festival of Art on the Edge

August 7-13, 2006 | 8 WEEKS TO GO
Early bird discount tickets through June 30 only:

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