Net Neutrality. Developing Business Model and Evidence Based Net Neutrality Regulation

Scientific Essay, 2014

11 Pages



Developing Business Model and Evidence Based net neutrality Regulation



Over the past ten years, the debate over "network neutrality" has remained one of the central debates in Internet policy. Governments all over the world have been investigating whether legislative or regulatory action is needed to limit the ability of providers of Internet access services to interfere with the applications, content and services on their networks. Net neutrality’ comprises two separate non-discrimination commitments. Backward-looking ‘net neutrality lite’ claims that Internet users should not be disadvantaged due to opaque and invidious practices by their current Internet Service Provider (ISP). Forward-looking ‘positive net neutrality’ is a principle whereby higher Quality of Service (QoS) for higher prices should be offered on fair, reasonable and non-discriminatory (FRAND) terms to all-comers. Neither extreme in the debate is an optimum solution. There is too much at stake to expect government to supplant the market in providing higher-speed connections, or for the market to continue to deliver without basic policy and regulatory backstops to ensure continued openness. Permitting content discrimination on the Internet will permit much more granular knowledge of what an ISP’s customers are doing on the Internet. A co-regulatory regime will ensure oversight and remove the most obvious abuses by fixed and mobile ISPs. Beyond rules that forbid network providers from blocking applications, content and services, non-discrimination rules are a key component of any network neutrality regime.

This analytical study provides background on the debate over network neutrality, including the implications for business models going forward that have been attempted and that are currently in play. This article explains for a global policy audience what the regulatory and governance problems and potential solutions are for the issue referred to as ‘network neutrality’, unpacking its ‘lite’ and ‘heavy’ elements. Eschewing technical, economic or legalistic explanations previously tackled elsewhere, it explains that increasing Internet Service Provider (ISP) control over content risks not just differentiated pricing and speed on the Internet. It explains that a co-regulatory regime may ensure regulatory oversight and remove obvious abuses by fixed and mobile ISPs, without preventing innovation, while guarding against government abuse of the censorship opportunities provided by new technologies.

Keywords: Net Neutrality, Internet Provider, Non-Discrimination, QoS.


What constitutes network neutrality? Several definitions are in current use:

- The ability of all Internet users to access the content or applications of their choice
- Assurance that all traffic on the Internet is treated equally, whatever its source, content or destination
- Absence of unreasonable discrimination on the part of network operators in transmitting Internet traffic[4].

These definitional differences are not a mere matter of semantics. They differ in (1) the degree of focus on access, versus the quality of access, versus the price of access to content and applications; and (2) whether one should be concerned with all forms of differentiation, or only with those that are anticompetitive, discriminatory, or otherwise unreasonable. It is worth noting at this point that the concern here is not only with traditional text and audiovisual content, but also with services such as search engines (such as Yahoo, Google, and Bing) and voice over IP (such as Skype and Viber). The use of various forms of quality differentiation for Internet traffic has been routine for decades. Departures from network neutrality (i.e. unreasonable discrimination) could raise a number of quite distinct potential issues of societal welfare, among them:

Anticompetitive behavior: Is there a risk that a network operator with significant market power (SMP) might project its market power into upstream or downstream market segments that would otherwise be competitive?

Innovation: Might a network operator (especially a vertically integrated network operator that possesses some form of market power) act as a gatekeeper, inhibiting the ability of content providers or application service providers with which it competes from offering new, innovative products or services?

Freedom of expression: Might a network operator interfere with the ability of its customers to express views with which the network operator disagrees?

Consumer awareness: Do consumers understand the service that is being offered to them, and are they receiving the service that has been committed?

Privacy: To the extent that a network operator treats some Internet traffic differently from other traffic, does this necessarily imply that the network operator is delving more deeply than it should into the user’s personal affairs (e.g. by means of Deep Packet Inspection [DPI])?


An Emergence of the two-lane model

Initially, the net neutrality discussions focused on the different treatment of traffic flows in the public Internet. The public Internet is a global system of interconnected networks that use the IP protocol to transport data between the connected end points. The adjective “public” in public internet emphasis that ends users can access all information and applications on the global Internet from their own end point. This information and the applications are offered, either for free or in exchange for payment, by content providers that are connected to an Internet end point themselves as well. The role of the public Internet is essentially that of a transport network that connects users and applications providers across the globe. In principle, the Internet can support all IP-based services and applications by transporting IP traffic between application or content providers and users worldwide. Broadband ISPs play an important role in the public Internet, as they provide the Internet Access Service: the part of the Internet transport chain between the home network or mobile terminal of the user and the larger ISPs that collectively comprise the Internet core. In general, the Internet access service is a best-effort service, e.g., there are no guarantees that IP packets sent over the network reach their destination end point within a certain time. This type of best-effort Internet access services matches the best-effort characteristics of the Internet core. Providers of Internet Access Services increasingly provide other IP-based services in parallel with the Internet access service over same infrastructure. Two well-known examples here are IPTV and IP telephony services provided by a range of European ISPs over their DSL, cable and fiber access networks. Although these services are delivered over the same network infrastructure as the Internet Access Service, they can in a number of respects be distinct from the Internet Access Service. Often, they are offered as “managed services”. Other terms that are used are “managed or specialized services”[3] or “additional, differentiated online services”. The adjective “managed” can be slightly misleading here, as it does not provide a clear demarcation between these newer forms and the traditional public Internet access service. Although the Internet access service and the Internet core are both characterized as best effort, they are both subject to various types of management to ensure their efficient and reliable operation. Apart from this, application and service providers on the Internet actively monitor and manage their web servers, application stores and other resources. Nonetheless, the degree of management and guarantees for managed services is typically higher than that for the best-effort public Internet. The co-existence of (services and applications) over the public Internet and managed services leads to emergence of the so-called two-lane model [1]. In the two-lane model, the broadband access connection of an end user is used to provide him both with the Internet Access Service and a number of managed services.

illustration not visible in this excerpt

Figure 1: Two Lane model over a single broadband access

In the public Internet lane, the ISP provides an Internet Access Service to the end user. Through this access service, the user gains access to the information and applications on the public Internet. Thus, the user has access to a very large variety of information and applications on the Internet, while he only buys the Internet Access Service from his ISP. In a number of cases, the end user is likely to enter into an agreement or contract with a content provider on the public Internet. These agreements do not involve the ISP and also do not require any action from the ISP. In the managed services lane, the ISP has an agreement with the end user to provide him specific services. There can be a single agreement, made directly between the ISP and the end user. There can also be multiple, interrelated agreements, e.g. one agreement between the end user and a content provider, in combination with a second, related agreement between the content provider and the ISP. Each specific service that an end user buys in the managed services lane requires, in principle, an action by the ISP. Typically, part of this action consists of taking measures to guarantee the quality of the service, for example through the reservation of dedicated bandwidth. In the public Internet lane, no measures are taken to guarantee the quality of specific services.


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Net Neutrality. Developing Business Model and Evidence Based Net Neutrality Regulation
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Anurag Rana (Author), 2014, Net Neutrality. Developing Business Model and Evidence Based Net Neutrality Regulation, Munich, GRIN Verlag,


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