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Tag: net neutrality

My Take on Google/Verizon’s Net Neutrality Proposal

If you’ve been following the tech news at all, you’ll know about the great controversy surrounding the joint Google/Verizon proposal for net neutrality. Recently, Google came out with a defense of its own actions, and I thought I’d weigh in.

First, I think the community overreacted. There is a lot to not like about Google’s stance, but I think there are a few things to keep in mind:

  1. There are political limits to what strict net neutrality promoters can achieve. Its a fact of life that the telco providers have deep pockets (part of their having government-granted monopoly status) and stand to gain or lose a great deal from the outcome of net neutrality legislation and thus wield enormous influence over broadband legislation. Its also a fact of life that the path towards net neutrality is more easily served by finding common ground which preserves the most important aspects of net neutrality than it is to fight the telco providers kicking and screaming the whole way. What I mean to say is: we should not criticize Google for dealing with a telco or with making compromises on net neutrality. That’s an unreasonable stance typically held by people who don’t have to actually make policy. With that said, we should criticize Google for making the wrong compromises.
  2. I don’t think Android was the issue here. Many people may disagree with me here, but I don’t believe Android has much direct impact to Google’s bottom line. From my perspective, Google’s commitment to Android is about two things: (a) preventing Apple from dominating the smartphone market (and potentially the mobile ad market) by empowering a bunch of phone manufacturers to provide devices of comparable (or better) quality and (b) forcing all mobile phone platforms to have decent-enough web surfing/app-running capability (by providing a free alternative which did) so that Google can provide its services effectively on those platforms and serve more ads. If anything, Google’s incentives here are better aligned with net neutrality than most companies: it benefits the most if there are more people using the web, and the best way to push that is to encourage greater content diversity. While Google TV may change Android into a true profit center, it wouldn’t be for several years, and so I think it’d be a stretch to say it is a big enough deal to significantly impact Google’s political policy moves. I can buy the argument that Google pushed a deal with Verizon because they have a closer relationship via Android, but I think suggesting that Google subverted net neutrality as a concession to Verizon on Android is taking it too far.
  3. I think Google did a good job of emphasizing transparency. The proposal emphasizes that telcos need to be held to higher standards of transparency, something which is sorely lacking today, and something which we definitely want to and need to see in the future.

With that said, though, there are definitely things to criticize Google’s agreement on:

  1. Wireless: I can sympathize with the argument that wireless is different from wired networks and could require more aggressive traffic management. I even went so far as to call that out the last time I talked about this. But, given the importance of wireless broadband in the future, it doesn’t make any sense to exclude explicit protections around neutrality for wireless. The arguments around competition and early development strike me as naive at best and Verizon PR at worst – whatever provisions exist to protect neutrality for wired networks should be applied in the wireless space. Competition and the development of more open gardens make it possible to compromise, but not necessarily throw caution to the wind.
  2. Wording weirdness: I’m concerned that the proposal contains phrasings which seem to give avenues for telcos to back out of neutrality like “prioritization of Internet traffic would be presumed inconsistent with the non-discrimination standard, but the presumption could be rebutted” without clearly explaining what are reasonable grounds for rebuttal. Even parts of the compromise which I accept as valid (i.e., letting telcos do basic network quality of service management, prioritize government/emergency traffic, fight off malware/piracy, etc.) were framed in terms of what telco’s were permitted to do, but not without clearly laid out restrictions (i.e., network service quality management must be subject to FCC review). For a document meant to safeguard neutrality, it sure seems to go out of its way to stipulate workarounds…
  3. “Additional online services”: I understand (and agree with) the intent – carriers may want to provide special services which they want to treat differently to meet their partners’/customers’ needs like a special gaming service or secure money transfer. The language, however, is strange and not imminently clear to me that there aren’t “back doors” for the telcos to use to circumvent neutrality restrictions.

Truthfully, I think most of the document rings true as a practical compromise between the interests and needs of telcos (who would bear the brunt of the costs and should be incentivized to improve network quality and provide meaningful services and integration) and the interests of the public. But, I would ask Google or whatever legislator/FCC member who has a voice on this to do two things:

  • Not compromise on content neutrality on any medium. The value of the internet as a medium and as a platform of innovation comes from the ability of people to access all sorts of applications and content without that access being discriminated against by the network operator. Not sticking to that is risking slower innovation and choking off a valuable source of commentary/opinions, especially in a setup where large local players hold enormous market power because of their government-granted monopoly status.
  • Create clear (but flexible enough to be future-proof) guidelines for acceptable behavior with clear adjudication and clear punishments. No squirrely word weirdness. No “back door” language. You don’t need to browbeat the telco’s, but you don’t need to coddle them either.
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Net Neutrality 2.0

If there is one consensus in the very polarized technology world, it is that more and more people and more and more devices will be connecting to the internet. Consequently, the amount of internet traffic that will be delivered over these networks will explode – estimates by Cisco suggest that total internet traffic will grow on average 41% every year resulting in an almost inconceivable 327 exabytes per year in 2012. To put that into context, that’s the equivalent of ~84 billion DVDs!

The growing size and importance of the internet has pushed regulators and activists to advocate for new rules and regulations to preserve the internet’s independence and neutrality from political and corporate interests. This movement has been called “Net Neutrality” and seeks to make it impossible for network owners to gain too much power over the content and information that a consumer can access.

Now, I am a firm believer in the aspirations of net neutrality – I am no fan of “walled gardens” and am even less a fan of Comcast/Verizon/AT&T throttling access to content they don’t approve. I am also well aware that major network owners, at least those in the US, are granted public licenses by the FCC to operate, and thus have a moral and legal obligation to provide a public and valuable service. But, aspirations and obligations without a realistic assessment of technological and economic realities are meaningless, and I suspect, based on many of the arguments I’ve heard on the internet, that many net neutrality proponents don’t have a good grasp of why their Eden-esque visions of net neutrality may be missing some of the bigger picture needed to make sure their implementation is more effective than naive.

The fundamental reality around the economics of network construction is, in short, that it is expensive as hell. There are enormous upfront costs that need to be recouped, and there are plenty of maintenance costs and challenges. This has two direct consequences:

  • Network providers tend to be large
  • The cost of an incremental byte of data transmitted is marginal (because the equipment is already there), but the cost of incremental capacity is extremely high (because the provider has to buy new equipment, contract new construction/digging, bring it online, etc.)

What does this mean for net neutrality? The cynical view would be that the network providers are primarily interested in minimizing new capacity investments/maintenance costs and in finding ways to “jack up” prices on data transferred, for example by only allowing content and devices where the content providers/device manufacturers pay the network owner a handsome reward. There is no doubt that network carriers can be guilty of this mindset, but the carrier’s current reaction to the smartphone revolution by opening up their formerly “closed gardens” and the failure of walled gardens like AOL to dominate the internet service provider space suggests that something else is at play. In my mind, what will dominate the business priorities of the network providers as time goes on is one question: how will network carriers profitably provide access for the exabytes of content that will be traveling through their networks?

The best example of what may come is in the mobile phone space where AT&T has been caught off guard with the enormous network demands from Apple’s iPhone. It seems the general consensus is that AT&T has been behind on its network infrastructure investments, but the fact of the matter is it will be increasingly difficult for network providers to keep pace with the investments in capacity necessary to maintain service quality for its users. This is especially complicated in the mobile phone space because of three things:

    1. the amount of wireless spectrum available for use is being consumed faster than it is being made available (although this could be alleviated by new regulatory policies)
    2. the quality of network service is dependent on more than just the wireless spectrum, but also an extremely expensive-to-upgrade, rapidly saturating “backhaul” network
    3. the spectral efficiency (how much data you can cram down a particular wireless pipe) is reaching the theoretical limit defined by Shannon’s Law (chart below)

I’ll admit I haven’t fully crunched the numbers (its been my experience that its pretty difficult for a casual observer to find good data on the costs of upgrading network capacity or on the ability of femtocells/network topology changes to help carriers cope with new data demands), but I suspect that network carriers will soon hit a real wall in terms of their ability to profitably expand their networks to meet new demands. If this is true, then there really are only four options open in the long run for profit-seeking network carriers:

  1. Dramatically increase cost of network service – Ending “unlimited access” plans and increasing the average monthly service costs and cost per byte transmitted could alleviate the profitability constraint in the short-run; but, depending on the economics involved, if the network service reached a high enough price, new users would be deterred from using the service, resulting in user attrition for the service provider and the loss of a potentially valuable network access for society
  2. Introduce tiered traffic and practice heavy network management – Allowing the carrier to preference certain traffic (e.g., to users/businesses or content providers/application developers who have paid more, or to preference emergency/government network traffic, etc.) and practice heavier handed network management could alleviate the network traffic constraint without dramatically changing the cost of network access
  3. Some combination of (1) and (2)
  4. Government bailout

None of these options (especially #4) are especially attractive, but it is important for regulators and activists to keep these potential futures in mind when considering their proposals. I fear that the strict form of net neutrality espoused by many would drive carriers to adopt course #1: something which could cut short the full potential of the internet to only wealthy individuals and businesses. This blogger’s humble opinion is that the best outcome would be to use regulation to pursue a variant of #2 for the following reasons:

  • AOL 2 is unlikely to happen: To believe that network carriers absent strongly worded neutrality regulations will rapidly clamp down on access is to believe that the failure of AOL’s walled garden and Verizon allowing Skype and Android on its network are flukes. The value from the openness of the “full Internet” is not trivial and no longer something that major network providers can ignore. And, based on Verizon’s recent promotion of the Droid by harping on problems with the closedness of Apple’s iPhone App Store, is something carriers have learned to use for their own purposes.
  • Regulations can be implemented just around content neutrality: Of all the concerns that I have about network neutrality, the one that matters the most to me is equivalent treatment of content. After all, the internet in the US would suffer a great deal if every ISP/carrier only provided content sanctioned by just a single political party. The remainder of the provisions (universal device access, universal platform access, ability of third party networks to piggyback off of the main network) are much less important, especially if content neutrality is mandated, and implementation of them may even weaken the ability of the industry to create high-quality integrated/tailored products (e.g., requiring AT&T to allow the iPhone to access Verizon’s network as well would have significantly delayed the iPhone’s release and probably would have worsened its battery-life and introduced additional problems). Furthermore, the cost of implementing content neutrality is likely minimal, whereas the cost of requiring networks to support every possible platform/device/third-party are likely to be significantly more prohibitive.
  • Enabled tiering/network management allows network providers to manage networks for higher quality experience: Strict network neutrality could limit the ability of network providers to manage the traffic on their networks, especially in times of peak demand, likely reducing quality of service for all parties. It also limits the ability of network providers to prioritize traffic that should be prioritized (e.g., emergency/government communications, traffic which businesses have network providers manage for them, or even packets related to keeping tabs on the network service quality or devices on the network) and potentially do basic things like block spam/DDoS attacks or manage the quality of internet experience by traffic type (the demands for web page viewing are very different from the demands of internet video and internet telephony).

I won’t claim to be the policy expert that knows what the right solution or sets of costs and tradeoffs are, but hopefully this gives a sense of some of the nuances behind the network neutrality debate.

(Image credit) (Chart credit – Qualcomm whitepaper)

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