IP Democracy: Public Knowledge Proposes Guidelines for Net Neutrality Rules

Last night, on the eve of today’s Senate Commerce Committee hearings on network neutrality, Public Knowledge, a self-described “group of lawyers, technologists, lobbyists, academics, volunteers and activists dedicated to fortifying and defending a vibrant information commons,” issued a white paper making the case for network neutrality rules and proposing a basic outline for such rules. The paper’s author, John Windhausen, Jr., is a former president of the Association for Local Telecommunications Services (ALTS).

After spending most of the paper presenting a basic rationale for imposition of net neutrality rules (more on that below), Windhausen concludes by outlining an approach to such rules that would be based on “three relatively straightforward provisions.”

1. A statement of the network operators’ obligations on a nondiscriminatory basis to carry any traffic, to permit any use and provision of any applications and services, and to allow the use of any equipment.

2. A statement that recognizes the legitimate needs of the network operator to prevent harm to the network, comply with laws regarding access to unlawful content, and engage in legitimate network management.

3. A statement that the principle in 1. shall be enforced through a complaint process and that the network operator has the burden of proof of justifying within a few days of a complaint being filed that any blocking or discrimination is necessary to comply with 2.

Windhausen contends that “the responsibilities…recognized in Statement 2 are not exceptions to the principle in Statement 1 because they are not inconsistent.” He also cautions that “the scope of the network management authority recognized in Statement 2 must not be drafted so broadly as to undermine the principle set forth in Statement 1.”

As to why network operators should bear the burden of proof in responding to complaints, Windhausen says:

Without such a burden, network operators might be emboldened to discriminate based on a purported need for network management when its real purpose might be to discriminate against a competitor. Placing the burden of proof on the consumer or on-line service provider is unworkable because the complaining party generally does not have access to the information to determine whether or not the blocking was justified. Furthermore, by the time the FCC could gather this information through its investigative process, the harm to the consumer or service provider may be irreparable. In the fast paced world of the Internet, a service that is shut down for 60 or 90 days could well be put out of business. Placing the burden of proof on the network operator to demonstrate the need for the blocking within a short amount of time (i.e. 3-10 days) places the burden on the party with the best ability to provide an explanation for the blocking.

Not surprisingly, the paper seeks to address the commonly heard (from incumbents) argument that network neutrality is “a solution in search of a problem.”

While the openness of the Internet is universally praised, it is no longer guaranteed, at least for broadband services…Broadband providers now have the…authority…to act as gatekeepers[, to] choose which services and equipment consumers may use. Network operators can adopt conflicting and proprietary standards for the attachment of consumer equipment, can steer consumers to certain web sites over others, can block whatever Internet services or applications they like, and make their preferred applications perform better than others.

This concern is not just theoretical - broadband network providers are taking advantage of their unregulated status. Cable operators have barred consumers from using their cable modems for virtual private networks and home networking and blocked streaming video applications. Telephone and wireless companies have blocked…VoIP…traffic outright in order to protect their own telephone service revenues. Equipment manufacturers are marketing equipment specifically designed to “filter” out (i.e. block) VoIP traffic. Wireless companies often write limitations into consumers’ service agreements that have nothing to do with excessive bandwidth consumption.

The problem is likely to become worse in the near future. One telephone company executive threatened to put a stop to on-line providers that use the telephone network “for free” (even though on-line providers pay to connect to the network). Another telephone company executive openly announced that his company intends to establish a higher-priced “tier” of service reserved exclusively for content providers chosen by the network operator. This raises the concern that consumers and start-up application providers will be relegated to the “slow lane” on the information superhighway.

Windhausen then makes an argument typically dismissed by cable and telco spokespersons, that “network operators have economic incentives to discriminate.”

Network owners today are more than just passive providers of transmission capacity (the “conduit”); they also own and provide services, applications and equipment (the “content”). By giving their own (or their affiliated) applications and content preferential access to the network, they can extract greater profits than if they operate the network on a non-discriminatory basis.

In arguing for a network neutrality rule, Windausen points to “the enormous societal and economic benefits of keeping the broadband Internet network open to all users.”

Broadband networks are fast becoming the essential lifeline of our economy and society, carrying on-line commercial transactions, current events, local and national advertising, telemedicine and distance learning, music and entertainment, interactive games, and videoconferencing. Allowing the increasingly concentrated cable and telephone industries to have unchecked control over our access to these sources of information, entertainment and commerce is cause for great concern.

Net Neutrality is also important for our high-tech manufacturing industry. Billions of dollars are invested every year at the “edge” of the network by the high-tech computing industry, the on-line commerce industry, the gaming industry, the news and information industry, and the research community. A statutory Net Neutrality rule will give investors the confidence to support new, innovative applications. On the other hand, giving network operators the potential to block competing applications from getting on the network may be enough to frighten investors away from otherwise worthy new Internet applications.

In terms of balancing overall costs and benefits, Windhausen contends that net neutrality is a clear winner:

In short, open broadband networks are vitally important to our society, our future economic growth, our high-tech manufacturing sector, and our First Amendment rights to information free of censorship or control. Even if an openness policy imposes some slight burden on network operators, these microeconomic concerns pale in comparison to the macroeconomic benefits to the society and economy at large of maintaining an open Internet.

Windhausen attempts to refute network operator claims that network neutrality will interfere with their ability to manage their networks and prevent spam, viruses and other unwanted aspects of the open Internet. As evidence to the contrary, he cites the fact that “[t]elephone companies have always managed their networks to protect against unlawful use even under a much more onerous common carriage regime.”

In response to arguments that network neutrality would interfere with operator’s ability to earn a return on their broadband investments and therefore stifle such investment, Windhausen contends that:

In fact, Net Neutrality promotes broadband deployment because it increases the value of services and applications over the Internet, which increases consumer demand for broadband networks. The greater the demand, the more network operators will invest in broadband to meet it. Furthermore, there remain many opportunities for network operators to profit from their broadband investment that do not involve blocking or discrimination. For instance, network operators can continue to develop their own content and/or enter joint marketing arrangements or other promotional arrangements with other content providers.

Windhausen also claims that operators could still offer customers higher-performance service tiers, even if subject to net neutrality rules:

Net Neutrality does not necessarily prevent network operators from offering levels of access, at higher rates, as long as the tier is offered on a nondiscriminatory basis to every provider and as long as all broadband customers are offered a minimum level of broadband service. A Net Neutrality principle does, however, prohibit the creation of a “private Internet” that grants exclusive access to the higher bandwidth levels to certain providers selected by the network operator.

Posted by Mitch Shapiro on February 7, 2006 2:44 PM to IP Democracy