Findings

Definition:

Network Neutrality lacks a universally accepted definition, although there are numerous "more popular" options that serve well to describe the concept.  The first of these is that "Network neutrality is best defined as a network design principle. The idea is that a maximally useful public information network aspires to treat all content, sites, and platforms equally."  In the United States we see network neutrality being described with limited discrimination, but the ability to charge based upon quality of service.  This is more easily explained by Tim Berner-Lee's quote, "If I pay to connect to the Net with a given quality of service, and you pay to connect to the net with the same or higher quality of service, then you and I can communicate across the net, with that quality of service." and, "[We] each pay to connect to the Net, but no one can pay for exclusive access to me."  When we look at it from a packet priority standpoint, Professor Susan Crawford states that, "a neutral Internet must forward packets on a first-come, first served basis, without regard for quality-of-service considerations."  Between these definitions we get a clear picture of the broader concept that is Network Neutrality. It appears the be the concept of a level playing field without the obstruction of harmful and anti-competitive behavior.

The Argument For Net Neutrality:

Proponents of net neutrality fall under the major category of protecting freedom of information and the processes that allow it to happen.  Most arguments for net neutrality are a more detailed branch off of these ideas.  The biggest issue is the idea of gatekeepers and the control of data.  Proponents believe that major ISPs should not be allowed to discriminate amongst data.  They should not be allowed to screen data and determine which information can be sent and which is hidden.  They believe in the freedom of information and the rights of citizens to have access to all lawful content, not just lawful content that an ISP believes they should be able to see.  It is this freedom of information and connection that leads to the next major argument for net neutrality, the preservation of competition and innovation.  The openness and freedom of the internet and the ability to share data is one of the cornerstones to its ability to foster innovation.  Attempts by ISP to block others only leads to a decrease in information, a decrease in competition, and through these channels a decrease in innovation.  Supporters of this idea are looking at an overall social welfare issue, not just the performance of a few companies.  Others argue that net neutrality is required in order to preserve the structure and efficiency of the internet.  From a technical standpoint, discrimination and filtering of packets in a non-neutral way can cause transmission and performance issues on the network.  At the same time, the idea of a "dumb network" enhances the idea of network neutrality as its proponents believe the network should only serve as a mode of transportation, not as a way to filter or discriminate against information and its source.  The network should be dumb, knowing only how and where to send something, while the end users should be the deciders of what to send and what to receive. 


The Argument Against Net Neutrality:

The opponents of net neutrality take a business approach to the issue.  Their main argument is the idea of recoupment of investments and the lack of innovation generated by poor investments.  The infrastructure of the internet takes massive amounts of capital to create, maintain and expand.  This capital is provided as an investment with the intent on making a profitable return on that investment, its the basic idea behind all business.  In order to meet the growing demands of consumers and the growing pace of internet traffic investments must be made in the networks.  Opponents of network neutrality argue that create tiered services, discriminating against packets, and charging for different usages protects their investments.  Without these protections they fear the free-rider problem will allow competitors to take advantage of their investments, causing them to receive a lower return, making it illogical for them to invest in the projects.  They argue that the innovation of the internet is hurt by a pure idea of network neutrality as continued innovation requires continued investment.  This investment is not possible if their is no protection for it.  The opponents of net neutrality argue that some traffic is different and must be treated differently.  As an example, the massive usage of YouTube can easily clog an ISP's bandwidth, resulting in an unfair amount of resources going to this simply because of the type of content not because of the number of users.  By creating discrimination and differentiating pricing they provide a more fair access to bandwidth as well as the capital required to promote the continued growth of the internet and associated technologies.


Laws Surrounding Net Neutrality:

In the United States we see that net neutrality is a significant legal issue.  Numerous cases and actions from the FCC have pushed for a more neutral net and to help regulate competition in the industry.  In many cases we have seen these rulings overturned, and even in some cases a complete questioning of the FCC's ability to rule.  Along these lines, in 2010 District courts ruled that the the FCC lacks jurisdiction to force providers to allow access to all forms of content and services.  For multiple years the FCC and other bodies have worked to establish acceptable rules to promote competition and innovation while refraining from infringing upon business and individual rights.   Most recently, in September of 2011 the FCC released its final version of its rules regarding a free and open internet.  These rules require transparency while prohibiting blocking of lawful traffic and unreasonable discrimination in other traffic. 


Conclusions:

From looking at the two arguments above it is clear that a middle ground must be found.  Freedom of information and access to that information is key to progress and innovation, but this innovation is useless without the infrastructure to support it.  With the recent legislation in the United States we see that this healthy medium is being sough after.  By prohibiting the complete blocking of traffic we allow information to disseminate amongst the masses, a key aspect of the internet as we know it.  At the same time we see the possibility of some discrimination, leaving room for service providers to gain returns on their investment and continue investing in increased infrastructure and technology.  If we look at these two arguments as consumers and producers, with consumers being the everyday individual who would support network neutrality, and producers being the major ISPs we can see that this outcomes works towards maximizing total surplus in the figurative economy that is the network.  By maximizing total surplus as opposed to consumer or producer surplus we are working towards a more efficient overall outcome.  Finding this efficiency will help to promote both the rights of all those using the internet, as well as the providers who make it possible.





Sources:

Berners-Lee, Tim.  "Net Neutrality: This is Serious" http://dig.csail.mit.edu/breadcrumbs/node/144 June, 2006.
Berners-Lee, Tim.  "Neutrality of the Net."  http://dig.csail.mit.edu/breadcrumbs/node/132 May, 2006. 
Davidson, Alan. "Vint Cerf speaks out on net neutrality". The Official Google Blog.
Gross, Grant. "Court rules against FCC's Comcast net neutrality decision". Reuters. April 2010.
Isenberg, David. "The Rise of the Stupid Network"  August 1996.
Lawrence Lessig & Robert W. McChesney. "No Tolls on The Internet". Columns (Washington Post). June 2006.
Meza, Philip E. Coming Attractions?. Stanford University Press.  March 2007.
Mohammed, Arshad. "Verizon Executive Calls for End to Google's 'Free Lunch'". Washington Post.  February 2007.
Preserving an Open Internet. FCC.  September 2011. http://www.gpo.gov/fdsys/pkg/FR-2011-09-23/pdf/2011-24259.pdf
Swanson, Bret. "The Coming Exaflood". The Wall Street Journal.  January 2007.
Uhls, Anna. "Digital Divide: The Issue of Net Neutrality". Imprint Magazine. April 2007.
Wu, Tim.  "Network Neutrality FAQ."  http://timwu.org/network_neutrality.html
Wu, Timothy . "Why You Should Care About Network Neutrality". Slate. May 2006.

Updates

When looking into legislation we see that the issue of Net Neutrality is a hot topic among politicians, especially in the coming election year.  Net Neutrality deals with major corporations in the United States and abroad.  In November 2011 the Senate made headlines by passing legislation aimed at preserving a neutral net, but the ruling was quickly opposed by major service providers and the outcome is unclear. 

In reference to earlier issues discussed, we see that legislation has been already passes preventing ISPs from blocking competitors traffic, such as traffic for Netflix.  Unfortunately, this legislation did little to address concerns regarding internet speeds as well as pricing for different speeds. 

http://en.wikipedia.org/wiki/Network_neutrality
http://articles.latimes.com/2011/nov/11/business/la-fi-net-neutrality-20111111
http://www.eweek.com/c/a/Government-IT/FCC-Sued-for-Net-Neutrality-Regulations-304746/

Summary of Findings

My topic is the impact of Net Neutrality on E-commerce from the consumer and producer perspectives.

When we look at net neutrality from the consumers side we see the need for equal access to information as well as equal speed of access to these materials.  In order to increase overall consumer welfare there needs to be no obstacles to accessing information or the speed at which this information is accessed.  ISPs attempt to obtain competitive advantage by inhibiting access to their networks or over their networks by consumers of alternate ISPs.  In response other ISPs do this in order to compete, leading to a competition based upon network effects that results in lower consumer welfare as a whole and a more complex, congested network.  Free access to information and data speeds is essential to promoting growth in the industry and in modern society.

From the producers perspective we see net neutrality concerns arising from heavy bandwidth usage as well as usage for services that compete with ISPs or their partners.  High bandwidth usage services are often the victims of limiting by ISPs in an attempt to speed up their networks.  This leads to issues of packet priority and essentially, a non-neutral network.  This non-neutral network adds extra barriers to entry and anti-competitive obstacles to the industry and the well established ISPs have the ability to block out smaller start ups hoping to utilize the already existing infrastructure of these ISPs.  When we look at competing services we see similar problems.  ISPs can easily provide their services with as much bandwidth as needed, while limiting competitors bandwidth availability or the speed at which their packets travel over their network.  In an industry that relies on how fast you can deliver content, these restrictions can create a significant anti-competitive advantage for established ISPs over new entrants and less capital intensive companies.

I plan to dig deeper into these two areas while also looking at what regulations are in place, or should be in place to help create a more neutral net.  I also hope to investigate the impact of existing companies who have a business model centered around supplying faster data access by consumers to producers content through the use of advanced and strategically placed server systems that most companies wishing to start up an e-business do not have access to.

Basic Topic Outline

My blog with discuss the topic of Net Neutrality with a focus on its impact on E-Commerce. 

Some areas of interest that will be covered:

• Customer access to web content.
• Seller's access to consumers
• Speeds associated with different ISPs
• Relevant legislation
• and More!