Are we the Internet?

I feel that the issue of net neutrality and its political, social and cultural implications have not been taken too seriously by the general public here in the US. What started out as a Government funded project to ensure that communications lines stay open in the event of an emergency, has now been handed over to service providers with the intentions that the free market would do a better job at allocating this resource which was developed with public money. While I understand the logic and wisdom of doing that. What I don't understand is how we got to a stage where service providers, who claim operating losses, want to distinguish web content and develop a two tiered system where those who pay more get to sue the higher bandwidth. I know that the issue is a little more complex than that, and below I attach an essay that I wrote for a class as an initial foray into the issue. In addition, there is a group called "We Are the Web"who have just released the following video in support of net neutrality. Somehow, I am not sure how Robin Hood, BAAAAAD dancing, Tron guy and Leslie Hall are going to help the cause... Maybe the point is to frighten, annoy and repulse the powers that be into submission. You've got to watch the video to know what I mean...



Essay on net neutrality:
Net neutrality, or the principle that all Internet traffic should be treated the same regardless of the recipient, sender or the type of information, has been the subject of much recent controversy. Telecommunications company, Verizon, has recently called for tariffs to be imposed on Internet firms like Google and Yahoo. [1] Their argument is that Internet content providers have been “freeloading” on the expensive infrastructure developed by telecommunication firms. Ostensibly the tariffs charged would aid in recouping the costs incurred for infrastructural development. This argument seems to be based on the notion the telephone companies, who own the lines through which all Internet traffic is routed, can and should discriminate the bandwidth they provide for financial gain. However, I believe that Verizon’s arguments for “increasing excludability” to its infrastructure is not justified. [2] This is because Verizon is discriminating the usage of its bandwidth because it can and not because it is experiencing extra costs because of the large amount of traffic attributed to popular websites. Using this example as a starting point, this paper will further elaborate on the issues raised by the net neutrality debate and attempt to present a scenario when it be would be justified to allow the usage of the Internet to take place freely.

A frequently cited argument for net neutrality has been that the free access of all users to online content and services is the reason for much of the innovation on the Internet. This notion rests on the assumption that the Internet is a public good that should remain neutral to the type of information that is transmitted. This argument has some economic merit because, like most information goods, the costs incurred in maintaining the network is independent of the level of usage. The bulk of the cost comes from investments made to infrastructure development and the cost of sending an additional packet of information on the Internet is essentially zero. [3] What this highlights telephone companies can and should charge users and content providers a fixed connection charge for providing access to their network. This will help recoup a portion of their costs in developing the network. However, the notion of the Internet as a public is dependant on the fact that there is sufficient bandwidth for everyone and little congestion on the network.

Another argument for why traffic over a company’s infrastructure should remain free is that the bandwidth of the Internet’s backbone is inherently a shared resource. This is mainly due to the end-to-end or “connectionless design of the Internet. [3] Utilizing the TCP/IP protocol and packet routing technology for transporting information across the Internet. The design of this technology is reliant on interconnectivity between the various networks as information packets are routed across the most efficient networks regardless of their ownership. [4] Thus if a telecommunications company resorts to discriminating against traffic from certain websites by charging tariffs, what results is the breakdown of cooperation between the networks to carrying information across their lines regardless of origin and purpose.

However, one problem with treating the Internet like a public good is that it may be subject to the “tragedy of the commons”. This describes the phenomenon where unrestricted use of common pool resources, like bandwidth, would ultimately result in the “overgrazing” of these resources. The problem with free access to the Internet by the end users, such free usage of bandwidth may cause network congestion and a social cost being imposed on the users by way of degraded service, delays and dropped packets. [3] Thus some mechanism for congestion control of the network bandwidth is needed. A highly persuasive way to do this is through the use of pricing. The rationale here is that pricing allows for the efficient allocation of bandwidth as it makes users decide for themselves whether their packers are more or less valuable than the cost of the service. [3] Additionally, pricing avoids the problem of having the provider decide whose and what information should be charged for using the network. Instead, pricing allows the “invisible hand” of market mechanisms make socially optimal decisions of whose information deserves priority in times of traffic congestion on the Internet.

This paper thus outlines an approach to regulating the use of network infrastructure that views net neutrality as a design problem. [5] Using economic principles and mechanism design approaches allows future policy makers to regard bandwidth on the Internet as a scarce resource that must be regulated through pricing mechanisms.

References:
[1] Mohammad, A. Verizon Executive Calls for End to Google's 'Free Lunch', The Washington Post, Tuesday, February 7, 2006; Retrieved on April 16th, 2006, from http://www.washingtonpost.com/wpdyn/content/article/2006/02/06/AR2006020601624.html

[2] DeLong, J. B. and Froomkin, A. M. (1999). Speculative Microeconomics for Tomorrow's Economy. First Monday 5(2), 2004, p1-29. Retrieved on April 16h, 2006 from http://www.firstmonday.dk/issues/issue5_2/delong/

[3] MacKie-Mason, J. K. and Varian, H. R. (1995). Pricing the Internet. In Public Access to the Internet. Edited by B. Kahin and J. Keller. Cambridge, MA, MIT Press: 269-314.

[4] Tanenbaum, A. S. (1996), Computer Networks, 3rd ed., Prentice Hall. Chapter 1. (p1-76).

[5] Roth, A.E. (2002)'The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design" Fisher-Schultz Lecture - Econometrica, 2002. http://www.ww.uni-magdeburg.de/vwl2/teaching/DownloadablePapers%5Croth_2001.pdf