Overview of Network Overview of Network NeutralityNeutrality

Kyle D. DixonKyle D. DixonSenior Fellow & Director, Federal Institute for Regulatory Law & Senior Fellow & Director, Federal Institute for Regulatory Law & EconomicsEconomicsThe Progress & Freedom FoundationThe Progress & Freedom Foundation

Presented to the California Foundation on the Environment and the Presented to the California Foundation on the Environment and the Economy Roundtable Conference on Telecommunications and Economy Roundtable Conference on Telecommunications and Advanced TechnologiesAdvanced Technologies

May 4-5, 2006 May 4-5, 2006

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Overview of Network NeutralityOverview of Network Neutrality

What is network neutrality?What is network neutrality? Increasing complexity of the conceptIncreasing complexity of the concept Public policies and proposalsPublic policies and proposals

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What is Network Neutrality? – Out with What is Network Neutrality? – Out with the Oldthe Old

Traditional Communications Networks

Telephone Cable Video Broadcast

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What is Network Neutrality? – In with the What is Network Neutrality? – In with the NewNew

Network Infrastructure

Internet Protocol

Applications, Content and Devices

Broadband IP (“Edge”) Networks

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What is Network Neutrality? – The What is Network Neutrality? – The OpportunityOpportunity

TraditionalTraditional

NetworksNetworksBroadband IPBroadband IP

NetworksNetworks

IntramodalIntramodal

CompetitionCompetition

E.g., telecom E.g., telecom resale, UNE-p, resale, UNE-p, leased accessleased access

E.g., voice, E.g., voice, video or data video or data

content, content, applications, applications,

etc.etc.

IntermodalIntermodal

CompetitionCompetitionMinimalMinimal Existing and Existing and

potentialpotential

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What is Network Neutrality? – Early What is Network Neutrality? – Early ConceptionConception

Origins in “open access” debate (i.e., Origins in “open access” debate (i.e., choice of ISPs on cable modem service)choice of ISPs on cable modem service)

Consumer perspectiveConsumer perspective: freedom to use : freedom to use broadband to access content, broadband to access content, applications and devices of their choiceapplications and devices of their choice

Company perspectiveCompany perspective: broadband : broadband networks may not “discriminate” in networks may not “discriminate” in favor of their own or affiliated content, favor of their own or affiliated content, applications or devicesapplications or devices

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Increasing complexity – Increasing complexity – Blocking/DegradationBlocking/Degradation

BlockingBlocking – not allowing certain data – not allowing certain data traffic to reach end user (e.g., blocking traffic to reach end user (e.g., blocking voice packets or ports)voice packets or ports)

Denying interconnectionDenying interconnection – refusing to – refusing to link networks physicallylink networks physically

Re-routingRe-routing – manipulating routes taken – manipulating routes taken by certain data trafficby certain data traffic

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Increasing complexity – Network Increasing complexity – Network ManagementManagement

Quality of serviceQuality of service – adjusting network – adjusting network performance for specific applicationsperformance for specific applications

SecuritySecurity – preventing viruses, spam, etc. – preventing viruses, spam, etc. Spectrum reservationSpectrum reservation – on broadband – on broadband

connection for affiliated content, applicationsconnection for affiliated content, applications Traffic shapingTraffic shaping – limiting bandwidth available – limiting bandwidth available

for specific applications or end usersfor specific applications or end users ““Acceptable useAcceptable use” policies” policies ““CachingCaching” – storing content nearby” – storing content nearby

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Increasing complexity – Premium Service Increasing complexity – Premium Service FeesFees

PrioritizationPrioritization – speeding delivery of data – speeding delivery of data for extra fee to consumer or service for extra fee to consumer or service providerprovider

Tariffed tieringTariffed tiering – offering – offering content/applications providers fee content/applications providers fee schedule for improved deliveryschedule for improved delivery

““Access chargesAccess charges” – charging ” – charging content/applications providers to deliver content/applications providers to deliver traffic to end users over “last mile”traffic to end users over “last mile”

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Increasing complexity – Limits on Increasing complexity – Limits on NetworksNetworks

Technical feasibilityTechnical feasibility Commercially sustainable (e.g., Commercially sustainable (e.g.,

avoiding “bypass” on other networks or avoiding “bypass” on other networks or dodging intended constraints)dodging intended constraints)

Acceptance by governmentAcceptance by government

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Increasing complexity – Limits on Increasing complexity – Limits on NetworksNetworks

Likely to Prohibit:• Blocking• Denial of interconnection

• Re-routing traffic• Access charges

Case By Case:• Virus, other security• Spectrum reservation• Traffic shaping

• “Acceptable” uses• Caching

Probably Allow:• Quality of service• Prioritization of traffic

• Tariffed tiering

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Public Policies and Proposals – The FCCPublic Policies and Proposals – The FCC

Net Neutrality Policy StatementNet Neutrality Policy Statement Codifies commitment to openness Codifies commitment to openness andand

competition among broadband networkscompetition among broadband networks Limited where harm to network, law Limited where harm to network, law

enforcement needsenforcement needs Rejects industry-wide rules at this timeRejects industry-wide rules at this time

Bell Merger ConditionsBell Merger Conditions Temporary, limited to merging Temporary, limited to merging

companiescompanies

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Public Policies and Proposals – The FCCPublic Policies and Proposals – The FCC

TraditionalTraditional

NetworksNetworksBroadband IPBroadband IP

NetworksNetworks

IntramodalIntramodal

CompetitionCompetition

E.g., telecom E.g., telecom resale, UNE-p, resale, UNE-p, leased accessleased access

Voluntary Voluntary access to access to content; content;

agency can agency can intervene if intervene if necessarynecessary

IntermodalIntermodal

CompetitionCompetitionMinimalMinimal

Regulation Regulation could thwart could thwart investment, investment, consumer consumer

choicechoice

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Public Policies and Proposals – CongressPublic Policies and Proposals – Congress

CongressCongress Several bills address net neutralitySeveral bills address net neutrality Approaches vary: Approaches vary:

monitoring/enforcement of Policy Statementmonitoring/enforcement of Policy Statement abuse of “market power” testabuse of “market power” test specific prohibitions with exceptions reflecting specific prohibitions with exceptions reflecting

evolving concept of “neutrality” his timeevolving concept of “neutrality” his time Division on this issue may complicate Division on this issue may complicate

statutory reform generallystatutory reform generally

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Stay tuned . . .Stay tuned . . .

Kyle D. Dixon, Senior FellowThe Progress & Freedom FoundationPhone: 202-289-8928kdixon@pff.org