NET NEUTRALITY Work Operator

Database NET NEUTRALITY work operator. In October 2007, Comcast was ac- cused of secretly deploying filtering technologies to manage its network in order to keep some peer-to- Net neutrality denotes the neutral transmission of peer traffic from overloading its network and hence data via the Internet, i.e., every packet of data, affecting the accessing speeds of its other Internet regardless of its content, origin and the application subscribers. The FCC deemed it unreasonable for that created it, is treated the same way and the best Comcast to discriminate against particular Internet effort should always be made to forward it.This con- applications and not to disclose its practice ade- cept is often regarded as a fundamental characteris- quately to its customers and therefore ruled against tic of the Internet. However, the amount of data that Comcast’s practices of throttling Internet traffic and is transported via the Internet is increasing rapidly, delaying peer-to-peer traffic. Comcast appealed to especially because of applications like music and vi- the US Court of Appeals, claiming that no legally deo downloads, Internet TV,and Internet telephony. enforceable standards or rules on the matter existed. All these applications require large capacities. This In April 2010 the federal appeals court ruled that the may lead to a capacity overload and delays of data FCC had limited power over Internet traffic under transmissions.The current technological state allows current law. This decision allows network operators for assigning different priorities to different data to block or slow specific sites and charge sites to packets. Therefore, the discussion has emerged deliver their content faster to users. In the EU in whether network operators should be allowed to contrast, near consensus was reached on the impor- treat different data packets differently, e.g., time tance of preserving the openness of the Internet at sensitive data transmission like Internet telephony the public consultation held on “The Open Internet or video streaming differently than less time sensi- and Net Neutrality in Europe” in 2010. The need for tive data transmission like e-mails. One possible sce- further EU legislation was not seen, but expectations nario would then be that network providers demand were voiced that additional guidance may be needed a higher price for fast data transmission. in the future. Proponents of net neutrality demand net neutrality Instead of imposing net neutrality by regulatory to be legally enforced. They claim that otherwise the interventions, two other means are currently pre- free exchange of information that makes the Inter- ferred to ensure net neutrality: competition and trans- net the most democratic medium is at risk. They fear parency. Competition between network providers and that if net neutrality is not maintained, this may lead free customer choice of ISP (Internet service pro- to a two-class system and even to censorship and vider) are expected to ensure net neutrality. However, blocking of inopportune websites. Further it is ar- to support this process, transparency over the traffic gued that net neutrality ensures the innovativeness management practices of network operators is need- of the Internet sector, by allowing the free transmis- ed. Several countries, e.g., Canada, Japan and the UK, sion of content, products and services, which is of have understood this need and issued rulings that re- special importance for small and new firms. quire network operators to disclose all network management practices. In contrast, opponents of strict net neutrality rules are mainly network operators that make investments N. C. to roll out broadband networks. They argue that net neutrality allows other firms to use their network capacities extensively without compensating adequate- ly for them. Network operators therefore claim that they should be allowed to charge for extensive usage and high speed transmission within their networks. Otherwise further investments in the network infrastructure would not be profitable and further roll out of high speed networks would not be undertaken. In the US there is currently a debate whether net neutrality should be regulated by law, following a lawsuit between the Federal Communications Com- mission (FCC) and Comcast, the second largest net- CESifo DICE Report 1/2011 44 Database Table Net neutrality Country Previous Developments Current Situation/Discussion Australia Volumetric pricing of internet by ISPs: In- The ACCC decided against imposing a net neutrality ternet use is currently capped and usage ruling in 2004, arguing that enforcing certain net neu- above monthly plans is throttled or charged trality rules would negatively affect competition in the at a pre-determined rate. It is argued that market. To address the issue of lack of equal access to this practice reduces incentives for ISPs to infrastructure, the Australian government announced in block or throttle content unaffiliated to the 2009 that it would establish a new, government-con- ISP or generated by users, and encourages trolled entity to build, own and operate a new high speed them to promote extra use of content from national broadband network. any source. Canada The principle of "common carriage" requires Although the common carriage regulation was intended communication networks to provide non-dis- for telephone services, the principle now serves as a ba- criminatory treatment of data and neutral sis for regulation of new technologies and services, in- access to other networks. This principle ori- cluding broadband Internet access. After several viola- ginates from railways and was then also ap- tions of the principle of net neutrality such as traffic plied to telegraph and telephone networks. shaping, bandwidth throttling and blocking of websites, The Telecommunications Act of 1993 stated: the CRTC issued an internet traffic ruling requiring "No Canadian carrier shall, in relation to the ISPs to disclose all network management practices. provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give undue or unreasonable prefer- ence toward any person, including itself, or subject any person to an undue or unreasonable disadvantage." EU As part of the 2009 Telecoms Reform Package, the EU Commission committed itself to scrutinising the open and neutral nature of the Internet and reporting on the current state to the European Parliament and the EU's Council of Ministers. The public consultation on "The Open Internet and Net Neutrality in Europe" ran for 3 months in 2010, as part of the Commission's pre- parations for the report. There was near consensus on the importance of preserving the openness of the internet. The need for further EU legislation was not seen, but it is expected that additional guidance may be needed in the future. France The principle of net neutrality is not codified ARCEP believes that it is in everyone’s interest for the in legislation but the best-effort practices principle of net neutrality to continue to exist, for tech- that have developed over the past several nical, economic and social reasons. In September 2010, years are chiefly the result of unwritten ARCEP published ten proposals on the Internet and rules. The current legal framework requires network neutrality. Network neutrality can only be achieved “neutrality with respect to the content of if Internet access is neutral with regard to the type of transmitted messages”; however, this notion content, service, application, device or the address of pertains primarily to non-discrimination be- the stream's origin or destination. Furthermore, trans- tween users and provides a rather limited ba- parency and the monitoring of traffic management sis for regulatory intervention. techniques are necessary. Germany In 2009, the coalition agreement between The EU Telecoms Reform Package and the draft for the CDU, CSU and FDP stated that com- the new German telecommunication law allow for the petition currently ensures net neutrality. How- national regulators to define a minimum quality. This ever, the continued development will have to addresses the concern that prioritisation of certain ser- be observed closely and, if necessary, coun- vices may significantly slow down other services. The termeasures taken to preserve net neu- German regulator Bundesnetzagentur is considering trality. In March 2010, a committee of en- this option. It further states that discrimination is pre- quiry on the Internet and the digital society sent two service providers offering the same services was set up to investigate, among other are treated differently. This kind of discrimination can things, the current state of net neutrality. already be counteracted by the existing competition or telecommunication law. However, different treatment of different services, e.g., services that require a certain quality, is not considered to be discrimination as long as all providers of that service are treated equally and in a transparent manner. 45 CESifo DICE Report 1/2011 Database (Table continued) Country Previous Developments Current Situation/Discussion Japan Several pre-existing conditions, such as ser- Broadband internet is growing rapidly, especially as a vice- and facilities-based competition, have result of an increase in peer-to-peer file sharing, which created an environment in which net neu- is affecting the speed of the network as a whole. There- trality discordances are less likely to occur. fore, traffic management practices have become an However, after a warning given by the Fair important issue for ISPs, regulatory bodies, and the pub- Trade Commission in 2000 about the treat- lic at large. In 2007, the MIC formulated packet-shap- ment of the incumbent NTT, the MIC forced ing guidelines and ways to prevent discriminatory be- NTT to lease out its unused fibre optic infra- haviour: packet shaping was deemed reasonable under structure (“dark fibre”) at low prices to com- certain circumstances. In 2008, four associations of te- petitors and to grant access to its local "last- lecommunications providers elaborated guidelines such mile" infrastructure.

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