A Spanish version of this post has been published at IESE website
About to start a long holiday weekend, 90% of Spanish air traffic controllers simultaneously called in sick. The airport chaos that was created is well known. To the extent that the Spanish Government stepped in with the firmest possible measures. For the first time ever, the government declared a state of alert in Spain. In other words, air traffic controllers were officially mobilized and under military penal code. This action led to a miraculous healing of the air traffic controllers and a return to business as usual Sunday, December 5. What would happen if something similar occurred with Internet traffic controllers in Spain or somewhere else in the world? Absolutely nothing. Since so far there are not such Internet traffic controllers who regulate and manage the information flows in the network of networks. If Internet has functioned fairly well in the absence of traffic controllers, shall Internet keep operating without them? The answer to that question lies at the heart of the debate on network neutrality. Heated arguments and protests related to network neutrality are analog to the ones expressed by the ten of thousands of irate travelers stranded at airports in Spain last December. However, the term network neutrality encompasses multiple interpretation with political, technological, business and social implications. For this reason, it is necessary to open a thorough debate to incorporate each of these dimensions, avoiding Manichean positions that do not help to find zones of possible agreement.
“the wisdom of crowds” versus “the revolt of the masses”
Governments are torn between preserving network neutrality and at the same time having some control over the Internet. On the one hand, politicians are fascinated by “the wisdom of crowds”, which is behind of phenomenon like Wikipedia. Along those lines, the Spanish Senate has just unanimously approved a motion requesting the Government to guarantee by law the principle of network neutrality. The text approved by the Senate is essentially a statement of universal principles for data packets flowing through networks managed by Spanish telcos. It reads regarding the data packets: “always receive the same treatment regardless of their content, origin, destination or protocol without filtering traffic in any way to prioritize, limit or prevent access to certain pages or services.” A statement of this nature easily generates unanimous support, but hardly has any practical implementation.
On the other hand, the same political class is shocked by “the revolt of the masses” that massively disseminate confidential documents on WikiLeaks. It is well known the pressure that the U.S. government has exerted with Amazon to deny hosting services to WikiLeaks, or with MasterCard and PayPal not to channel WikiLeaks’ donations. As a matter of fact, the actual content of the leaked documents revealed that some political regimes implement a sophisticated filtering of information circulating on the Internet, pointing directly to the Chinese Government, behind the attacks on Google a year ago. WikiLeaks has highlighted the dilemma that the Internet is essentially an area controlled by corporations and governments which tolerates the principle of freedom of speech.
“It’s the network, stupid.”
This freedom we enjoy on the Internet is similar to the one found in the telephone network, where there are no restrictions on who we call to and what we talked about in our telephone calls. However, from a technological standpoint, the telephone network is very different to Internet. In the telephone network, all the intelligence is concentrated in the network itself. For this reason, traditionally handsets were dumb, with limited functionality to make and receive calls, which were connected to an “intelligent” network. The telephone network provisions a dedicated channel that allows the voice to be transmitted with a minimum quality for an interactive communication. The case of the Internet is the opposite, where the intelligence resides in the terminal or “intelligent” computers which are interconnected to a “dumb” network, which only helps to move information between those computers. However, this “dumb” network does not analyze the content of such information. Upon this principle resides the concept of net neutrality. So far, so good. Notwithstanding, Internet was designed to deliver data in an asynchronous way. For this reason, the transmission of files or e-mails are well suited for the Internet. This type of information is quite tolerant to delays and that may arise on the network. However, if we use an application like Skype video call, the call quality will degrade severely if there is heavy congestion on the network. This congestion translates into variable delay preventing an intelligible communication. In these instances, it would be desirable that such information would travel in a segregated channel analog to bus or HVO lanes to avoid traffic jams. Likewise, introducing more “intelligence” on the Internet could filter out most junk mail before it reached our mailbox or could more effectively block the spread of computer viruses.
Obviously, having a “smarter” network requires an investment by telcos. They argue that network neutrality in the strict sense stifle the innovation needed to build a faster and smarter Internet to cope with the exponential growth of traffic. In fact, it is estimated that Internet traffic will fivefold increase in the 2008-2013 period, reaching a staggering 55,000 Petabytes per month with one petabyte equals to one trillion of bytes. Most of this traffic, 91% according to a study of Telefónica, corresponds to information related to video content. With this situation, telcos must wield heavy investments both in the fixed and mobile networks. They claim that such investments will be affordable if only if their income is coupled to the increase of traffic. Today, this is not the case since the majority of users enjoy flat-fee or all-you-can-eat broadband. However, such a tariff models have provided significant profits to telcos during the last decade. Flat-fee broadband is behind the rapid growth of broadband penetration and the derived recurrent revenues from their DSL customers. The increase of Internet traffic is already a serious problem in the mobile network. Here, the success of the iPhone has dramatically boost the use of Internet in smartphones. As a matter of fact, telcos have not dimensioned their mobile networks to support such heavy traffic. Therefore, they play with the principle of scarcity of resources to differentiate services and rates based on the contents of the data. Thus, Internet users would pay more or less subject to the service they use, similar to the rates of courier companies depending on the urgency of delivery and weight of the package. Unsurprisingly two weeks ago, the Federal Communications Commission (FCC) announced to pass a controversial set of rules that broadly create two classes of Internet access, one for fixed-line providers and the other for the wireless net. Likewise, carriers do not look kindly on the substantial profits obtained by companies like Google. This revenue is manly captured through advertising based on traffic generated by their Web services. Such traffic, mostly from YouTube, constitutes 6.4% of all global Internet traffic. Telcos argue that such businesses are only possible if they invest in infrastructure to interconnect Google services with their audience. For this reason, telcos demand what is known as “Google tax”, as Cesar Alierta, President of Telefónica, said last February. In other words, companies like Google should share a part of their profits with telcos. In this way, service companies would pay telcos an easement over their networks.
“All about Apps”
However, the concept of “Google tax” is inherited from a unidirectional vision of the information flows. Namely, a few large companies generate most of the content to be distributed to users who consume this content in a similar fashion to the TV and radio broadcasting. Nevertheless, it is precisely the bidirectional nature of Internet that has allowed each of its users to become not only consumers but also content providers. This democratic component of the Internet, every user is equal in the network, is what has encouraged and fostered innovation on the Internet. This is how many Internet startups have succeeded, like Google and Facebook. Moreover, it also allows any user to compete with the incumbent Media moguls by writing on her/his own. For this reason, Internet users are fighting for the Internet to remain a public resource, in terms of its governance. Without that network neutrality, the Internet is in danger to become an environment where access to content and distribution are tightly regulated, as is the case of cable TV.
A few months ago, Wired magazine proclaimed that the Web was dead, and increasingly access to Internet will not happen through the web but through applications (Apps) in three screen sizes: small screen on the mobile, medium screen on the computer and big screen on the TV. Therefore, if we really want to address the issue of network neutrality on a global basis, we will have to enter in the debate of who and how these screens control the access to the Internet. For instance, this control can be exercised by Apple, in its refusal to approve a video calling application for the iPhone which can compete with Apple or a partner. Furthermore, the results of a Google search, which uses a proprietary algorithm, could be biased to favor a Google client versus another who is not. In fact, the European Commission has recently warned both Apple and Google to take action to prevent collusive behavior.
Undoubtedly, addressing network neutrality will require certain compromises from each of the involved agents. On the one hand, a clear regulation for telcos to maintain their neutrality in the interconnection with other networks, similar to what happens with the interconnection of calls between an AT&T customer and a Verizon one. Moreover, the Regulator should allow telcos to make tariff differentiation by type of service, such as a high-definition video, which consumes more resources than to send an email. This differentiation should be allowed telcos to undertake the necessary investment on the Internet to provide the required intelligence and capacity. In such cases, differentiation of services should be based on the principle that similar situations should be treated in the same way, but not all situations must be treated in the same way. That is to say, telcos cannot discriminate on the basis of the content provider but only on the type of content (video, e-mail, etc.). The debate is served. If we need Internet traffic controllers, we would better know which privileges we will grant them. Otherwise, one day we can find the information withheld as the 600,000 passengers in Spanish airports last December.
