Reference no: EM131230346

THE BATTLE OVER NET NEUTRALITY

What kind of Internet user are you? Do you primarily use the Net to do a little e-mail and look up phone numbers? Or are you online all day, watching YouTube videos, downloading music files, or playing online games? If you have a smartphone, do you use it to make calls and check the Web every so often, or do you stream TV shows and movies on a regular basis? If you're a power Internet or smartphone user, you are consuming a great deal of bandwidth, and hundreds of millions of people like you might start to slow the Internet down. YouTube consumed as much bandwidth in 2007 as the entire Internet did in 2000, and AT&T's mobile network will carry more data in the first two months of 2015 than in all of 2010. If user demand for the Internet overwhelms network capacity, the Internet might not come to a screeching halt, but users would be faced with very sluggish download speeds and slow performance of Netflix, Spotify, YouTube, and other data-heavy services. Heavy use of iPhones in urban areas such as New York and San Francisco has already degraded service on the AT&T wireless network. AT&T reports that 3 percent of its subscriber base accounts for 40 percent of its data traffic. Some analysts believe that as digital traffic on the Internet grows, even at a rate of 50 percent per year, the technology for handling all this traffic is advancing at an equally rapid pace. But regardless of what happens with Internet infrastructure, costs for Internet providers will continue to increase, and prominent media companies are searching for new revenue streams to meet those costs. One solution is to make Internet users pay for the amount of bandwidth they use. But metering Internet use is not universally accepted, because of an ongoing debate about network neutrality. Network neutrality is the idea that Internet service providers must allow customers equal access to content and applications, regardless of the source or nature of the content. Presently, the Internet is indeed neutral: all Internet traffic is treated equally on a first-come, first-served basis by Internet backbone owners. However, this arrangement prevents telecommunications and cable companies from charging differentiated prices based on the amount of bandwidth consumed by content being delivered over the Internet. These companies believe that differentiated pricing is "the fairest way" to finance necessary investments in their network infrastructures. Internet service providers point to the upsurge in piracy of copyrighted materials over the Internet. Comcast, the second largest U.S. Internet service provider, reported that illegal file sharing of copyrighted material was consuming 50 percent of its network capacity. In 2008, the company slowed down transmission of BitTorrent files used extensively for piracy and illegal sharing of copyrighted materials, including video. The Federal Communications Commission (FCC) ruled that Comcast had to stop slowing peerto-peer traffic in the name of network management. Comcast then filed a lawsuit challenging the FCC's authority to enforce network neutrality. In April 2010, a federal appeals court ruled in favor of Comcast that the FCC did not have the authority to regulate how an Internet provider manages its network. This was a considerable blow to net neutrality. In late 2010, Comcast reportedly began charging Level 3 Communications, which helps stream Netflix's movies, an additional fee for continued normal service. Level 3 asked the FCC to investigate the action. Groups favoring net neutrality are pushing Congress to find ways to regulate the industry to prevent network providers from adopting Comcast-like practices. The strange alliance of net neutrality advocates includes MoveOn.org, the Christian Coalition, the American Library Association, every major consumer group, and a host of bloggers and small businesses, as well as streaming-video services like Netflix. Net neutrality advocates argue that the risk of censorship increases when network operators can selectively block or slow access to certain content such as Netflix video streams or access to competing low-cost services such as Skype. Proponents of net neutrality also argue that a neutral Internet encourages everyone to innovate without permission from the phone and cable companies or other authorities, and this level playing field has spawned countless new businesses. Allowing unrestricted information flow becomes essential to free markets and democracy as commerce and society increasingly move online. Network owners believe regulation to enforce net neutrality will impede U.S. competitiveness by stifling innovation, discouraging capital expenditures for new networks, and curbing their networks' ability to cope with the exploding demand for Internet and wireless traffic. U.S. Internet service lags behind many other nations in overall speed, cost, and quality of service, adding credibility to this argument. And with enough options for Internet access, regulation would not be essential for promoting net neutrality. Dissatisfied consumers could simply switch to providers who enforce net neutrality and allow unlimited Internet use. In December 2010, the FCC approved measures that would allow the federal government to regulate Internet traffic. Broadband providers would be required to provide information regarding Internet speeds and service to their subscribers, and they could not block access to sites or products that compete against their own products. However, the regulations did not officially safeguard net neutrality, and wireless providers may block applications that use too much bandwidth. Wireless providers have already moved to develop tiered plans that charge heavy bandwidth users larger service fees, and online content providers have struck exclusive deals with distributors that leave their competitors at a disadvantage. For example, in 2012, Comcast struck a deal with Microsoft to provide streaming video via its Xfinity TV service hrough the Xbox 360 that does not count against its broadband data cap of 250 gigabytes per month. This gives Comcast's television programming an edge over rival streaming shows, which will consume subscribers' data allotment. Netflix and other competitors are incensed, arguing that this flies in the face of the concept of net neutrality and represents an anti-competitive practice. In 2011, nearly every broadband provider instituted a cap on data, charging additional fees to users that go over that limit. Many analysts have long argued in favor of these caps, but deals like those between Comcast and Microsoft are likely to draw the ire of the FCC going forward. Currently, the net neutrality laws on the books are riddled with loopholes. For example, they allow broadband providers to allocate portions of their networks for special "managed" services. Still, public sentiment in favor of net neutrality is still strong.

Case Study Question

1. What is network neutrality? Why has the Internet operated under net neutrality up to this point in time?

2. Who's in favor of net neutrality? Who's opposed? Why?

3. What would be the impact on individual users, businesses, and government if Internet providers switched to a tiered service model?

4. Are you in favor of legislation enforcing network neutrality? Why or why not?