Pitting the Web's Users Against Its Gatekeepers - NYTimes.com

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By KEVIN J. O'BRIEN

BERLIN — With the majority of Internet traffic expected to shift to congestion-prone mobile networks, there is growing debate on both sides of the Atlantic about whether operators of the networks should be allowed to treat Web users differently, based on the users’ consumption.

Proponents of the current system — called network neutrality — see that principle as a kind of civil rights declaration of the digital age, one that requires the gatekeepers of the global Internet to treat all users equally, regardless of application, source or download limit.

While operators have never been required to maintain neutrality, the industry has created that expectation largely by charging users a flat rate for unlimited Internet access.

But there is a big flaw in the concept, according to the operators: Networks have never been neutral. They have always been actively managed to some extent since their inception in the 1980s to ensure that all customers get a basic “best effort” level of service.

If an operator could not restrain bandwidth hogs, who typically make up 15 percent of customers but who generate 80 percent of the traffic, most Internet users would experience poor service.

“The Internet has never been a neutral environment left to develop freely on a first-come, first-serve basis,” said Stuart Orr, the head of the telecommunications group in Europe, Africa and Latin America for Accenture, a U.S. software services consultant.

The arcane issue of network management, and the free speech and competition issues it raises, has taken on broader political importance as operators have increasingly micromanaged the flow of data, favoring some users over others as they have sought to handle exploding levels of traffic or deliver premium broadband service at guaranteed speeds to heavy users and businesses.

In the United States, users of the BitTorrent file-sharing service, a large generator of broadband traffic, last year challenged a cable operator, Comcast, that had blocked the service by identifying and disabling a common protocol used by BitTorrent users.

The Federal Communications Commission ordered Comcast to stop the blocking. Comcast challenged the ruling. On April 6, an appeals court in Washington sided with the operator, saying the F.C.C. could not tell Comcast how to manage its network.

In Brussels, the European commissioner for the digital agenda, Neelie Kroes, plans to hold a public consultation on net neutrality this summer, which could lead to a push for new laws or regulations for operators.

Earlier this year, Ms. Kroes warned mobile operators not to block or hinder Internet voice services like Skype from their networks.

Operators are worried that any rigid legal mandate that forced them to observe net neutrality standards would be unworkable and make the economics of high-speed wireless broadband less attractive, which could limit future investment and improvement to the networks.

“We have no interest as an industry in policing individual surfing habits or acting as the gatekeeper for information,” said Frederic Gastaldo, the head of strategy and innovation at Swisscom. “Historically, our industry has resisted attempts to force operators to act as the personal gatekeepers of information. That would be a very negative marketing approach. However, customers who do excessively use our data network are a big challenge for us.”

Congestion is more problematic for mobile than landline broadband operators because wireless broadband capacity is limited by the ability of individual base stations to process the Web activities of hundreds of users simultaneously. The more users per station, the less performance for each user.

To avoid bottlenecks, operators use techniques like “traffic shaping,” which sorts traffic to ensure basic service for all, or “throttling,” which applies a general brake on large streams of data.

Kabel Deutschland, the largest German cable TV operator, has one million broadband customers. Its coaxial and glass-fiber network is so far able to satisfy all customers without restrictions, said Georg Merdian, director of the company’s infrastructure regulation.

But he said that the number of its broadband customers was doubling each year. “We anticipate we will soon have to use some kind of management techniques,” Mr. Merdian said.

For most mobile operators, traffic management is a fact of life.

Vodafone, one of the largest mobile operators in Europe and a part owner of Verizon Wireless, the No.1 wireless operator in America, routinely alerts its customers when they exceed the download limits of their service packages.Like all other operators, Vodafone uses sophisticated software that can pluck users or applications from the digital clamor.

“We use a form of network management to say, ‘I’m sorry, you are not going to be able to get the same level of service unless you decide to top up,”’ said Richard Feasey, Vodafone’s public policy director in London.

As data traffic levels rise, some executives, like César Alierta, the chairman and chief executive of the Spanish operator Telefónica, and Vittorio Colao, the Vodafone chief executive, have floated the idea of charging not only customers but also Web sites that generate lots of data traffic, like Google, Amazon and Facebook, for faster, guaranteed service.

Web businesses, which depend on fast Internet paid for by individual customers, oppose the idea and have been pushing lawmakers in Brussels and Washington to adopt restrictions preventing operators from making deals with content providers.

Prohibitions like that would make an operator’s business untenable, eventually reducing cable and phone networks to unprofitable, crowded data freeways, said Robert Mourik, the director of Telefónica’s regulatory policy in Europe.

“We have an explosion of traffic, but our revenues have not been growing at the same pace or staying flat,” Mr. Mourik said. “We are not looking at content on the Internet. We are not trying to police the network. What we are looking to do are commercial deals.”

Whether operators can successfully sell preferred Internet access to big Web businesses remains to be seen. Such a move would drastically alter the economics of the Internet, forcing content providers, in effect, to pay a toll, and perhaps a heavy toll, for access.

Naturally, none of the big Web sites are interested in doing that.

In February at an industry convention in Barcelona, Eric Schmidt, the chief executive of Google, was asked to comment on statements made by Mr. Colao of Vodafone, who had called for the right to clinch commercial deals with big Web businesses like Google.

Mr. Schmidt, who during a speech that day had stressed Google’s role in helping network operators build their wireless broadband businesses by attracting consumers to the mobile Web, declined to comment, adding that Mr. Colao was a friend.

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FCC Endorses Network Neutrality - washingtonpost.com

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By Cecilia Kang
Washington Post Staff Writer
Tuesday, September 22, 2009

The government would play a far more aggressive role in policing the public's unfettered access to Internet services and content under a proposal offered Monday by Federal Communications Commission Chairman Julius Genachowski.

The agency would be the "smart cop on the beat," Genachowski said in a speech, outlining a plan to prohibit Internet service providers from blocking or slowing certain technologies and content on their networks. The chairman proposed that firms be required to make public the steps they are taking to control Web traffic.

The proposal raised concerns among several providers, which said the regulation could hurt their business by limiting their ability to manage their networks.

Some of the loudest protests came from wireless service providers, including telecommunications giant AT&T. They argued that "net neutrality" rules should exclude the booming cellphone industry, where competition among carriers is healthy and resources are limited.

U.S. wireless networks are "facing incredible bandwidth strains . . . which require continued private investment at very high levels and pro-active network management to ensure service quality for 270 million customers," Jim Cicconi, AT&T's senior vice president of external and legislative affairs, said in a statement.

Others worried how the government would decide what offerings are acceptable.

"Should all product and service offerings be the same?" asked Chris Guttman-McCabe, vice president of regulatory affairs for the wireless association CTIA.

Genachowski said the FCC would weigh such concerns as the agency goes about drawing up its regulatory principles.

"This is the announcement of the beginning of a process," said Colin Crowell, a senior adviser to Genachowski. "The chairman said two things with respect to mobile; first, that the principles ought to apply to all platforms, in order to be technologically neutral. The principals ideally apply in a technologically neutral way so that your expectations as a consumer and entrepreneur don't change as you choose different ways of reaching the Internet. Second, he indicated that how, to what extent, and when the principles will apply to different platforms is what the process will determine."

Genachowski said he suggested that the FCC should evaluate alleged net neutrality violations on a case-by-case basis.

"This approach, within the framework I am proposing today, will allow the commission to make reasoned, fact-based determinations based on the Internet before it -- not based on the Internet of years past or guesses about how the Internet will evolve," Genachowski said in his speech, delivered at the Brookings Institution.

He said the proposed principles won't prevent broadband providers from "reasonably managing their networks." But defining what is reasonable management is where debate by carriers of all sizes and regulators will go forward, telecommunications specialists said.

David Young, vice president of regulatory affairs for Verizon Communications, questioned the need for new regulations because he said there hasn't been much proof that consumers or business have not been able to get the Web content and services they want.

"I'm pleased to hear that the chairman intends to do only as much as needed and no more . . . We need to see what are the problems that need to be fixed and what are the examples that require a dramatic change," Young said.

Genachowski said examples of discriminatory behavior -- such as Comcast's move to allegedly block peer-to-peer service BitTorrent on its network -- show that rules need to be in place to stop such practices and that there needs to be greater transparency by network operators for entrepreneurs and consumers of the Web to ensure that they are able to build Internet businesses and get the services they expect from their providers.

"This is not about protecting the Internet against imaginary dangers. We're seeing the breaks and cracks emerge, and they threaten to change the Internet's fundamental architecture of openness," Genachowski said.

Flush With Cash and Fearing Tighter Rules, Major Carriers Shun Broadband Stimulus

By Cecilia Kang
Washington Post Staff Writer
Friday, August 14, 2009

The Obama administration made a national priority of spreading high-speed Internet access to every American home and offered stimulus money to help companies pay for it, but the biggest network operators are staying away from the program.

As the Aug. 20 deadline nears to apply for $4.7 billion in broadband grants, AT&T, Verizon and Comcast are unlikely to go for the stimulus money, sources close to the companies said.

Their reasons are varied. All three say they are flush with cash, enough to upgrade and expand their broadband networks on their own. Some say taking money could draw unwanted scrutiny of business practices and compensation, as seen with automakers and banks that have taken government bailouts. And privately, some companies are griping about conditions attached to the money, including a net-neutrality rule that they say would prevent them from managing traffic on their networks in the way they want.

"We are concerned that some new mandates seem to go well beyond current laws and [Federal Communications Commission] rules, and may lead to the kind of continuing uncertainty and delay that is antithetical to the president's primary goals of economic stimulus and job creation," said Walter B. McCormick Jr., president of USTelecom, a trade group that represents telecoms including AT&T and Verizon.

Yet those firms might be the best positioned to achieve the goal of spreading Internet access to underserved areas, some experts say.

"If you want to get broadband out, you have to do it with [those] who brought you to the dance in the first place, and in this case it is the incumbent cable and telephone carriers who have 85 percent of lines in the country," said Robert Atkinson, president of the Information Technology and Innovation Foundation, a Washington tech policy think tank. "This is not basket weaving. This is really complex and intensive technical stuff that takes a fair amount of sophistication and scale to be able to do right and to continue to upgrade."

Obama has pushed for universal access to broadband since his presidential campaign, saying it would underpin the country's economic future. The stimulus funds target homes and businesses in the hinterlands that have largely been overlooked by broadband providers because of the hefty costs to lay down fiber-optic and other broadband pipes to small communities.

At the same time, the government has promised more scrutiny of industry practices that seem to limit consumer access to services, such as Comcast blocking the peer-to-peer file sharing service BitTorrent in 2007 and Apple's recent decision to block Google's voice service and the free Internet calling service Skype on the iPhone.

Those efforts have alarmed the major carriers. Specifically, some of the biggest firms fear that a clause in the stimulus plan that says recipients of the grants cannot "favor any lawful Internet applications and content over others" -- the concept known as net neutrality -- could lead to more rules down the road.

This condition goes beyond guidelines at the FCC that have been criticized by consumer advocacy groups as too vague. Carriers have pushed to keep current rules in place and see the condition on the stimulus grants as a potential precursor for additional rules at the FCC on how carriers can manage content over the Web.

The companies paint dire scenarios where new rules would lead to networks getting clogged with spam and too much video content, slowing down service for all users.

"It's not cost-effective for the big network operators to play in rural [markets] in the first place, and if they take federal money that comes with all these strings attached to it, they are opening themselves up to being regulated even further," said Roger Entner, head of communications research for Nielsen IAG.

McCormick said net-neutrality conditions on the grants are fuzzy and may give network operators pause before investing in long and expensive projects that could end up in a tangle of technical and legal hang-ups over how the firms oversee their networks.

"Clearly, it's causing potential applicants to reflect upon the uncertainties," McCormick said.

Verizon said it decided not to apply before conditions were announced. Comcast, which mainly serves urban and suburban areas, said it would also abstain. AT&T said that it likely would not apply but that it is open to partnership with state and local governments who win the grants.

Corporate officials have also said it would look bad for a company like AT&T or Comcast to come to the government with hat in hand when they are among the few companies in the economy flush with billions of dollars in cash reserves.

One official at a large network operator said on the condition of anonymity that once taken, government funds incite a "mob mentality" that could preclude sponsoring golf tournaments or giving executives bonuses, for fear of political backlash.

Some public advocates and analysts say the carriers never had a compelling reason to seek the grants.

"They weren't going to apply," said Ben Scott, head of policy at public advocacy group Free Press. "They are using this as an opportunity to grandstand against net neutrality."

Rebecca Arbogast, head of tech-policy research at Stifel Nicolaus, notes that the biggest carriers would be less inclined to deploy networks in rural areas because there is not enough demand to justify the ongoing financial investments. She said the companies should have expected stronger net-neutrality conditions because it was mandated by Congress in the stimulus act.

"With a few exceptions, the net-neutrality provisions were not a great departure from what I think was already out there and is consistent with the path that most recognize we were already headed down," Arbogast said.

The Commerce and Agriculture departments, which are handing out a total of $7.2 billion in broadband stimulus grants through 2011, say the plan to bring high-speed Internet to the hinterlands and urban poor can be accomplished without the big carriers. Companies like wireless broadband provider Clearwire and small cable and telecom operators may introduce more competition into the industry by using the funds to build networks that could compete with AT&T, Verizon and Comcast, analysts and government officials say.

"I think if the big carriers want to participate and play by the rules, great. If not, I'm not that concerned," said Mark Seifert, a senior adviser for the National Telecommunications and Information Administration, which is overseeing grants for the Commerce Department.

Seifert said the rules for broadband grants were not written to favor any size or kind of network operator. Further, the $7.2 billion is not intended to complete Obama's goal of spreading broadband to every home; rather, it is a "down payment" on a larger plan being crafted by the FCC, he said.