1. Network Neutrality
History and Future
Monash University
22 February 2012

2. Prior art....

3. Building on....

4. Author:
• Oxford Bibliography of Internet Law
– Oxford UP, 2012
• Network Neutrality: A Research Guide
– in 'Handbook Of Internet Research' (Elgar, 2012)
• Internet Co-regulation
– Cambridge UP, 2011
• Net Neutrality: Towards a Co-regulatory
Solution
– Bloomsbury, 2010

5. Net Neutrality: European and
Comparative Approaches
• Network neutrality growing policy controversy,
• 2 elements separated:
– present net neutrality 'lite' debate and
– the emerging net neutrality 'heavy'
– concerned with fibre access networks in future.

6. The problem in a graphic

7. Or for rival video providers...

8. As opposed to synchronous surfing

9. In this talk
• I explain its past,
• explore the legislation and regulation of its
present, and explain that
• economics and human rights will both play a
part in its future.

10. Nothing in regulation is new

12. Telcos never liked the Internet
• AT&T’s Jack Osterman reacting to
• Paul Baran’s 1964 concept of the Internet:
• ‘First it can’t possibly work, and if it did,
• damned if we are going to allow the
creation of a competitor to ourselves.’

13. Net neutrality permanent
feature of telecoms law
• It is a debate which
– has existed since 1999
– will grow in importance as
• Internet matures & service quality increases
• demand on the network for
– more attractive fixed and
– mobile/wireless services.

14. Late 1990s debate
• ‘Internet changes everything…’
• But barriers to entry enhanced by tipping effects
– Information Rules, Shapiro/Varian
– The Innovator’s Dilemma, Christensen
– The Sources of Innovation, von Hippel (1988)
• Microsoft trial – bundling Windows with
Explorer/Media Player
• Recognized monopoly problems: Google too?
• Fragile innovation ecosystem with dynamic feed-back
loops

15. Common Carriage not new
• Began with obligations on inns/boats
• Determined by public function of networks
• Continued into modern networks
• E.g. Railways and telegraphs
• 1844 Railway Regulation Act
– Setting both emergency access (‘kill switch’)
– AND Parliamentary trains
• FRAND end-to-end access at set cost

16. The future is not assured

17. Everyone’s doing it

18. Facebook advert for neutrality
• $100billion business built in 6 years
– 845million users
– Not permitted in China/Iran/N.Korea
• Rupert Murdoch bought MySpace 2005
– His revolutionary new idea: paywalls
• So who’s on the right side of history?

19. OPTIMISM

20. NORMS FROM ABOVE

21. 1999
• Network Neutrality debate began in 1999
• Mergers: cable TV and broadband companies
• AT&T/MediaOne and AOL/TimeWarner
• Lessig and Lemley FCC submission:
– ‘The end of End-to-End’
• Before ‘Code and Other Laws…’
• Fear of closed duopoly model

22. 2000s Debate
• 2002-4 US ‘Title II’ telecoms competition
removed by courts, Republican FCC
– Brand X case, Triennial Review
• Lessig and Wu write to Congress 2002:
– fear cable-TV business model
– Wu coins term ‘net neutrality’ 2003
• FCC introduces 4 ‘Net Freedoms’ 2005
– Not including enforcement of same!
– Congress fails to legislate 2005-6
– 2008 – Obama campaigns w.net neutrality

23. Discrimination and Net Neutrality
Non Discriminatory regime
Quality Charging
(QOS discrimination) (price discrimination)
Blocking

24. Telecoms law
• More than just competition law
• Are ISPs all engaged in similar practices?
– All discriminating against innovative users
– Blocking gamers and P2P file sharers
– Are they all doing it for security reasons?
• Vertical integration and discrimination?
– US Comcast (2008) and
– Madison River (2005) cases
– are easy FCC competition cases

25. One- Two- and Many-Sided Markets

26. Supply and Demand Possibilities
1
FTTH
Excess supply
ADSL2 and VDSL
8-50Mb/ s
Peer-to-
Market peer video
capability
Peer-to-peer music
Excess demand
ADSL Content demand
512Kb/ s
Network supply
Inflexion point
0
Time

27. Four types of market failure: legitimacy for
regulators to act
1. Market power
– As in Comcast (2008) and Madison River (2005)
2. Lack of information/asymmetries
– Ofcom work on easier switch between ISPs
3. Quality of service
– Claim of P2P and gamers that they are blocked
4. Provision of public goods
– Welfare loss through lack of innovation
– Much more complex and far-sighted Lessigian view

28. A Different Debate for Europe
Net neutrality must be assessed within the particular
context of European markets and legal regimes:
• Different competitive landscape for networks
– Services competition based on telco infrastructure
– Strong policies favouring wholesale access
• Different legal protections
– Limited regulatory distinctions between communications
networks and services
– Backstop protection for market failures

29. Key Policy Concerns
• Service available to consumers
– What kind of QoS should consumers expect to get when they purchase
‘basic’ broadband Internet access?
– Will consumers be able to access the applications that they want via
the broadband and mobile Internet?
• Discrimination/monopoly rents
– To what extent can network operators treat differently the traffic of
particular content or application providers?
– When can network operators charge for QoS on different terms to
similarly situated providers?

30. What ‘good’ looks like
– Continuity in end-to-end architecture (and therefore reach)
• to sustain investment cases and promote innovation
– Effective competition at the ‘right’ level in the value chain
• to allow competing operators to innovate (particularly at the transmission layer)
– Environment in which consumers will prosper:
1. User choice and control
2. Information transparency
3. Ease of switching
– Transparency and non-discrimination from network providers:
• Treatment of content type
• Access pricing
– Existence of effective remedies and processes which enable NRAs to
• act quickly and decisively against unfair discrimination in a fast-moving market

31. market tackle NN concerns?
• Framework relies on healthy competition to police NN:
1. competition (incentives to invest) lacking in some markets
2. not clear flexibility broadband providers have to offer
1. different levels of QoS or to offer a choice of broadband services
3. consumers need accurate information about services received
• information transparency not effective in the past
• consumers (especially vulnerable) not well-informed or motivated
to switch
• Consumers’ flexibility to switch (not 18-month contracts)

32. anti-NN behaviour addressed?
The effectiveness of NRAs in tackling anti-NN behaviour will depend on:
• Ability of NRA or complainant to prove discriminatory behaviour
– poor customer service be distinguished from discrimination?
• How the 2009 Framework is transposed
• Speed and effectiveness of NRA decision-making
• Notifying proposed measures (including non-SMP remedies)
– which Commission may veto
In SMP markets,
• does SMP analysis take place before non-SMP remedies can be applied?

33. 2009 –10
FCC,
CRTC and
European Commission
introduce vague broad principles
of non-discrimination
2011-12 devil lies in the detail…

34. Net neutrality laws
– Netherlands: Law of 6 March 2012
– Chile and Finland: as part of universal service
• Regulation in
– United States – FCC Open Internet Order Sept ‘11
– Canada – CRTC rules 2009, not implemented
• co-regulation in Norway – 2009 agreement
• self-regulation in Japan, United Kingdom
• and many other European countries
– E.g. France 10 Principles

35. US FCC Order 2011, challenge 2012
• FCC Report and Order (2010) Preserving the Open Internet,
– 25 FCC Rcd 17905
• FCC Report and Order, In The Matter Of Preserving The Open
Internet And Broadband Industry Practices,
– GN Docket No. 09-191, WC Docket NO. 07-52, FCC 10-201 § 21-30
– Published 22 Dec 2010, appeared Federal Register 23 Sept 2011
• In Re: FCC, In the Matter of Preserving the Open Internet,
Report and Order, FCC 10-201, 76 Fed. Reg. 59192 (2011),
• Consolidation Order - Judicial Panel on Multidistrict Litigation,
Oct. 6, 2011
– http://commcns.org/sOFyyT

36. • GN Docket No. 09-191 Broadband Industry
Practices WC Docket No. 07-52
• ‘In the Matter of Further Inquiry into #Two
Under-Developed Issues in the Open Internet
Proceeding Preserving the Open Internet’,
• Andersen et al (2010) Comments on
Advancing Open Internet Policy Through
Analysis Distinguishing Open Internet from
Specialized Network Services.

37. DIRECTIVE 2009/136/EC
New Articles 20 and 22, Recital 26:
• Consumer protection/citizen rights NOT SMP
• http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:337:0011:0
036:EN:PDF
• Requirements to notify customers & NRAs
– But will need civil society activists
– To detect discrimination
– To notify higher-end consumers of problems
• Added to interoperability requirements
• Article 5 Interconnection Directive

38. Article 22: Quality of service
1. Member States shall ensure that NRAs are
• able to require networks and/or services to publish
• comparable, adequate and up-to-date QoS information
2. NRAs may specify the QoS parameters to be measured
• content, form and manner of information published,
• including possible quality certification mechanisms,
• end-users...comparable reliable user-friendly information
3. In order to prevent the degradation of service,
• Member States ensure NRAs can set QoS requirements.

39. NRAs shall provide the Commission
• ... with a summary of the grounds for action,
• the envisaged requirements and
• the proposed course of action.
• This information shall be available to BEREC
• The Commission may... make comments or
recommendations...
• NRAs shall take the utmost account of the
Commission’s comments or recommendations when
deciding on the requirements.

40. Declaration: Neutrality 2009/140EC
• The Commission attaches high importance to preserving the
open and neutral character of the Internet,
• taking full account of the will of the co-legislators
• now to enshrine net neutrality as a policy objective and
• regulatory principle to be promoted by NRAs
– Article 8(4)(g) Framework Directive
• strengthening of related transparency requirements
– USD Articles 20(1)(b) and 21(3)(c) and (d)
• safeguard NRA powers to prevent service degradation
• hindering or slowing down of traffic over public networks
– USD Article 22(3)
– http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:337:0037:0069
:EN:PDF

41. Commission will monitor closely
• the implementation of provisions in the Member States,
• introducing a particular focus on how the ‘net freedoms’ of
European citizens are being safeguarded
– in its annual Progress Report to Parliament and Council.
• Commission will monitor the impact of market and
technological developments on ‘net freedoms’
• reporting to Parliament and Council before end-2010
– on whether additional guidance is required, and
• will invoke its existing competition law powers
– to deal with anti-competitive practices that may emerge.

42. Kroes: BEREC given key role by EC
[1] EC is not leading in evidence gathering –for BEREC:
– "At the end of 2011, I will publish the results, including any
instances of blocking or throttling certain types of traffic."
[2] If that produces evidence of widespread
infringement - only Madison River Skype blocking?
– recommend setting EU guidance rules
• "more stringent measures...[in] the form of guidance."
[3] "If this proves to be insufficient, I am ready to
prohibit the blocking of lawful services or
applications.”
• I think that means guidance 2012 - regulatory action
2013, if ever.

43. BEREC response 2010
• EC (2010) consultation on the open Internet
and net neutrality in Europe
• http://ec.europa.eu/information_society/policy/ecom
m/library/public_consult/net_neutrality/index_en.htm
• BoR (10) 42 BEREC Response at
– http://www.erg.eu.int/doc/berec/bor_10_42.pdf
• “blocking of VoIP in mobile networks occurred
– Austria, Croatia, Germany, Italy, the Netherlands,
Portugal, Romania and Switzerland”

44. Incidentally it’s not net neutrality...
• It’s ‘the open Internet’
• In both EC consultation and FCC Order

45. BoR (11) 40 Rev1
• Draft Work Programme for BEREC 2012
• NRAs’ regulatory remedies available
• to address potential discrimination issues,
– link to the quality of service issue
– possible IP interconnection market analysis in
2012

46. BEREC overview situation of European
markets
• BEREC investigation task from Commission
– regarding switching issues and
– traffic management practices
– implemented by operators.
• thorough investigation request
– dedicated task force, together with Commission
• results consolidated and published by Feb
2012?

47. Quality of Service requirements
• Regulatory Framework: competence for NRAs
to set QoS minimum requirements.
• What is meant?
• When should NRAs set minimum
requirements and what should those be?
• Harmonised minimum QoS requirements
– could avoid creating inefficiencies for operators,
– costs ultimately paid by consumers.

48. 2012 further guidelines for NRAs
– Methods available for measuring and assessing
• network and application performance,
• including by the end users themselves.
– E.g. NRAs can promote or provide tools
– end users control or monitor quality achieved
– (including contractually agreed parameters).

49. Discrimination:
• Prioritisation implicitly is discrimination,
• number of aspects should be taken into
account
• to evaluate negative consequences for
– level of competition, innovation and end users’
interests.
• 2011, economic analysis of potential and
theoretical effects of discriminatory behaviour.

50. IP interconnection
• current IP interconnection agreements
– peering/transit,
– which may affect net neutrality issues.
• analysis competition/technological
developments
• in particular contribute to economic analysis.

51. BEREC NN Deliverables:
1. Detailed guidelines on Transparency;
1. (depending on outcome of the public consultation):
2. Guidelines on Quality of Service Requirements;
3. Completion of BEREC Reports on discriminatory
issues;
4. Report on IP interconnection;
5. Inquiry results on traffic management practices.

52. Deadlines for BEREC 2012
• Results of inquiry on traffic management
Q1/2012
• Discrimination report – public consultation
Q2/2012, adoption Q3/2012;
• Transparency – Q3/2012;
• QoS guidelines – Q3/ 2012;
• IP interconnection – final report Q3/2012;

53. December 2011 documents
• BEREC Christmas present!
• Dense information documents:
• BoR 53(11) Quality of Service
• BoR 67(11) Transparency, at
– erg.eu.int/documents/berec_docs/index_en.htm

54. Three wise monkeys
‘We have received no complaints’ is NOT
‘I have not listened to any complaints’.
• Some regulators are:
– Seeing no evil
– Hearing no evil
– Speaking no evil.
• BEREC analyzing the
problem sensibly!

55. Neutrality ‘Lite’
• Common carriage
• Quality of service guarantee
• Lowest through-put guarantee
– Not maximum speed
– 2Mbps is universal service broadband definition
– Should be feasible with LTE
• No blocking of rival applications/P2P
• FRAND for premium content
– FRAND can mean exclusivity in narrowband networks
– Al Franken’s fears: everything goes premium
– And video’s future is on CDNs – is this network?

56. Framework for Solving Problem
• Consumer and competition harm
– Misleading advertising
– Deceptive trade practices
– Stymying competition in downstream market
– Vertical integration
• Freedom of speech and innovation
– Blogs and YouTube videos – allow consumers their
content
– P2P – future of distribution
– PSBs – distribution of publicly funded content

57. NN Regulation light as possible, but effective:
1. Information regulation
– to require service providers to inform consumers
2. Continual monitoring and surveillance
3. Timely evidence-based intervention
– to correct harmful and unjustified discrimination
where necessary

58. NN enforced via reporting requirements:
1.incentive for market players, and
2.co-regulation or formal regulation
– if insufficiently unanimous cooperation.
• Market actors & self-regulatory bodies in
– dialogue with regulators and consumers.
This is preferable and lighter-touch:
• NOT government regulation
• OR non-regulation.

59. Managed services FRAND
Fair
Reasonable and
Non-discriminatory
Access
• means Murdoch, Berlusconi and Disney
– can’t cut exclusive deals to freeze out
competitors
• Universal service must also be considered
• As well as Public Service must-carry

60. Broadband Internet a mess

61. Road to nowhere –break the circle of
disinvestment and disincentive

62. Private Internet Censorship
• This is shorthand for what ISPs have to do
• ISPs are not evil – they’re capitalists
• Regulators are meant to regulate capitalism
• Innovation does not take place at ISP layer
• Do they innovate more than Skype/Google/
Facebook?
• If so, why do voice phone calls still exist?

63. ISP as secret policemen?

64. PHORM secret trials 2006/7
• Press Release IP/09/570
– Article 5(1) of Directive 2002/58/EC
– Article 2(h) of Directive 95/46/EC
• Press Release IP/10/1215
• No court case before CJEU against UK
• UK Regulation Of Investigatory Powers Act 2000
– Section 1a And Schedule A1
• Regulation of Investigatory Powers (Monetary Penalty Notices and
Consents for Interceptions) Regs (SI 2011 No.1340)
• Investigation of Unintentional Electronic Interception:
Monetary Penalty Notice, Exercise Of Powers Under
• http://www.intelligencecommissioners.com/docs/Interception_Co
mmissioner_Guidance_RIPA.pdf

65. European Data Protection Supervisor
(2011)
• Concerned that traffic management would
result in exposure of users’ personal data
– Including IP addresses
• ‘Opinion on net neutrality, traffic management
and protection of privacy and personal data’
– http://www.edps.europa.eu/EDPSWEB/webdav/si
te/mySite/shared/Documents/Consultation/Opini
ons/2011/11-10-07_Net_neutrality_EN.pdf

66. Deep Packet Inspection Policy
• US Congress hearings 2008:
• http://energycommerce.house.gov/cmte_mtg
s/110-ti-hrg.071708.DeepPacket.shtml

67. Govt control replaced by private censors?

68. Questions?
cmars@essex.ac.uk
WWW.ESSEX.AC.UK/EXCCEL
@EXCCELESSEX

69. We need rules of the road?

70. Losing liberty?
• ISPs important intermediary limited liability
• Based on their wise monkeys role
• Behavioural advertising – PHORM
• Blocking and filtering
• Throttling on non-transparent basis
• Removes 2000/31/EC Art.12-14 exemption
• Freedom of expression vital to democracy

71. Book launched
Feb-March 2010
100,000
downloads
first 2 months
Canada (McGill)
UK (Oxford)
Brussels
Author@Google
71 Check against delivery participants only

72. 2011 articles
• ‘Three Wise Monkeys’
–www.globalpolicyjournal.com/
• ‘Mobile Net Neutrality’
–ejlt.org//article/view/32
• More ssrn.com/author=220925
• www.essex.ac.uk/law/staff/profil
e.aspx?ID=832