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What Airlines, The Mafia And The Law Of Unintended Consequences Can Teach Us About Net Neutrality

Mar 7 2014, 8:47am CST | by

`Net neutrality’ is a loaded term that means different things to different people. For companies whose business model relies on using somebody else’s Internet network as a distribution system, it...

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19 weeks ago

What Airlines, The Mafia And The Law Of Unintended Consequences Can Teach Us About Net Neutrality

Mar 7 2014, 8:47am CST | by

`Net neutrality’ is a loaded term that means different things to different people. For companies whose business model relies on using somebody else’s Internet network as a distribution system, it means maintaining the Web as a common carrier like the old long-distance telephone system. For companies like Comcast, it means heavy-handed regulation that stifles investment in faster networks. For engineers, it can all seem like a distraction from the real job of getting America up to the gigabit speeds of other nations like Korea. This guest post is by Leonard A. Giuliano, a Working Group chair at the Internet Engineering Task Force (IETF), coauthor of “Interdomain Multicast Routing: Practical Juniper Networks and Cisco Systems Solutions” (Addison-Wesley 2002) and a Distinguished Engineer at Juniper Networks.  Giulano’s modest proposal is that carriers simply pick one way of carrying traffic and disclose it. The opinions expressed in this work are solely those of the author and do not reflect the position and was not approved, authorized or in any way sanctioned by any of the organizations with which he is affiliated.

By Leonard A. Giuliano

The most interesting aspect of the Net Neutrality debate is that both sides are essentially right.  Large carriers argue that differentiating traffic is vital to provide a good customer experience- treating voice and video differently than bulk data transfers, for example, is a fundamental precept in good network design.  After all, airlines offer priority class services to customers willing to pay a premium for which they receive a larger seat and a friendly flight attendant eager to deliver a refreshing glass of champagne and a warm towel (and in the process, cross subsidizing lower fares for coach class passengers).  But there are other models for service differentiation.  The Mafia, for example, offers “priority protection services” to customers with the implication that refusing to pay may result in bodily harm.  Carriers claim they should be able to provide the same type of service differentiation that airlines provide.  Content providers fear those differentiation services will inevitably evolve to resemble the Mafia model, where carriers will demand “protection money” to prevent their packets from being kneecapped.  Service differentiation could bring more choices, lower prices and a better experience for consumers… or it could bring an end to the Open Internet as we know it.

Worse yet, any solution of new rules or guidelines, whether enforced by the FCC or legislated by Congress, will most likely render the Neutrality medicine worse than the disease.  Even with the purest, most benevolent intentions, it is practically impossible to construct verbiage that wouldn’t have either the worst of unintended consequences or be totally meaningless.  Armies of lawyers on all sides stand at the ready to exploit any new rule or law along these two extremes.

One simple alternative that avoids these risks is transparency.  Carriers should be allowed to differentiate traffic however they desire as long as they disclose exactly what they are doing.  Additionally, carriers must provide a uniform policy of differentiation in all markets.  With these two simple rules, consumers will be empowered to decide the matter themselves.

Guidelines for transparency actually do exist and indeed were upheld in a recent court ruling .  But disclosure alone is insufficient without service uniformity do to the current competitive landscape for broadband services throughout the US.  In most markets, there are two broadband options, typically provided by the traditional phone company and the traditional cable company.  However, these carriers do not overlap in all areas.  For example, in some markets, Comcast competes with Verizon for broadband subscribers, while they compete with AT&T in other markets.  Likewise, Verizon competes with Comcast in some markets and Cox in others.  Further, in some markets only one broadband provider exists.  By mandating a carrier must provide a uniform set of traffic differentiation policies in all markets in which they operate, a carrier is prevented from offering a predatory differentiation policy in an area in which they might be the only game in town.  With this requirement, all carriers essentially compete with all other carriers, rather than the current monopoly/duopoly situation that exists in the vast majority of markets today.

Competition and a truly free market can only exist if consumers are informed and empowered to decide amongst competing providers.  To illustrate how this would work, imagine Carrier A competes with Carrier B in a particular market.  Carrier A decides to start throttling the throughput of popular third-party services like Netflix and Vonage, perhaps to bolster their own competing video and phone offerings.  With disclosure of such throttling, Carrier B can now attract Carrier A’s customers in this market with the promise of offering unfettered access to Netflix and Vonage.  Of course, Carrier B could also collude with Carrier A and deploy the same throttling policies, but Carrier C, which competes with Carrier B in a different market, could then steal Carrier B’s customers away.  In this way, Carrier A and Carrier C (and indeed all other carriers) compete with one another even though they may not be present in any of the same markets.  Again, there is the theoretical possibility that all carriers could collude and deploy the same throttling policies, but the number of broadband carriers, while most agree is smaller than ideal, is still large enough to make this unlikely.  The incentives are far stronger for, say, smaller carriers desperate to steal customers away from much larger carriers, to tout their ability to deliver the best experience for Netflix and Vonage users.  Finally, carriers may find dubious (shady) policies are not worth the negative publicity they may generate when they are disclosed, and thus prevent their practices in the first place.  “Sunlight is said to be the best of disinfectants.”

Of course, when it comes to transparency, the devil is in the details.  For disclosure to be of any value, it must be clear, simple and meaningful to typical consumers.  Meaningful disclosure might look something along the lines of “We place Netflix traffic in a special class which receives lower priority for bandwidth resources than the class used for standard Internet traffic.”  Transparency in these clear and simple terms would provide the consumer a basis for comparing services between different carriers.   From a technical perspective, the mechanisms operating under the covers to provide traffic differentiation and prioritization can be extremely complex, however, the resultant behaviors can generally be explained in the kind of clear and simple terms described in this example.  Some carriers may claim that such information is proprietary and divulging these details puts them at a competitive disadvantage.  However, explaining to customers what terms of service they can expect, especially with regard to thorny issues that approach the boundaries of predation, should not be considered a competitive disadvantage.  It can also provide carriers inoculation from false claims that they discriminate against certain traffic when in fact other conditions like network congestion or overloaded servers run by content providers are to blame for poor performance.  Moreover, this level of disclosure is far less onerous and potentially harmful to their business than some of the legislative options being pondered, especially given that all their competitors would follow these same rules.

“Don’t be evil” has become a popular motto, but the line between sound network design that provides the best experience for users and evil predatory practices can become blurry and difficult to judge.  With the simple requirements of transparency and service uniformity, the most powerful and just judge of all, the consumer, would get final say over the matter.

Source: Forbes Business

 
Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
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6 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

Previews-20th Commonwealth Games 2014
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robber ...
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Update
8

6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

The Prince Of Wales Visits The Royal International Air Tattoo
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

6 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 mill ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

6 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

6 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involvin ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

6 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 2 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

6 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 bill ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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