INTRODUCTION

The United States Congress is currently exploring revisions to the nation’s communications laws, namely the 1996 Telecommunications Act.[1] One of the most important, and contested, issues under consideration is Internet Neutrality (Net Neutrality). The concept of Net Neutrality is straightforward.

In a neutral network, all network traffic is treated neutrally (not discriminated against) regardless of origin or destination. In a neutral network, all endpoints (content, applications, equipment) are treated neutrally (not discriminated against), regardless of function, ownership, or implementation. Since the Internet’s inception, the network has been neutral.

From the consumer’s point of view, a neutral network allows for unfettered access to any (legal) content and applications, using the equipment of their choice.

From the application and content provider’s point of view, a neutral network supports the offering of any (legal) content and application, using the platforms of their choice.

From the network operator’s point of view, a neutral network dictates the implementation and management of a standards-based network, to transmit information from origin to destination, without consideration for the usage patterns, payload, and volume generated by the endpoints.

In essence, a neutral network is a dumb pipe. The intelligence resides at the endpoints. And there lies the conflict.

In a neutral model, the network operators claim the application and content providers get a free ride on the network, with great financial returns, on the network operator’s investment, while the network operators themselves are prohibited from offering new services (access tiers, prioritized traffic) to realize a return on their investment. Without a return on investment, network operators claim no incentive to continue their investment, specifically in broadband deployment.

In response, the application and content providers claim a discriminatory model would limit consumers’ choice on the Internet, and create high barriers to entry for new, innovative, application, and content providers. Without accessible and compelling content and applications, broadband adoption and usage will decline. Not to mention, the network operators do collect fees from the endpoints (consumers and providers).

As you can see, the Net Neutrality issue is circular. The network needs compelling applications and content. The applications and content need a viable network.

However, the good news is both sides, and the government, are in agreement that further broadband deployment and adoption are critical for innovation, social causes, economic growth, and global competitiveness.

The challenge, then, is setting forth policies that encourage both network and endpoint investment and innovation today, without placing unforeseen restrictions on future innovation.

Given this, the Senate Commerce Committee held a Net Neutrality hearing on February 7, 2006, inviting experts from both sides of the debate to share their perspectives.[2] The hearing was important not only for the information shared, but also because it stimulated a much-needed national conversation on the topic.

In the spirit of participating in, and encouraging, that conversation, we have compiled this Net Neutrality perspective. The perspective presents the Net Neutrality issues, provides important context, and shares each side’s position, along with the intersections and divergences. In an attempt for neutrality, we limit our own views to the closing.

This is an issue best understood in historical context, so we begin with background information on policy and the marketplace.

BACKGROUND--TELECOMMUNICATIONS POLICY AND MARKETPLACE

In this section, we take a look at significant policy and related marketplace developments that led up to today’s Net Neutrality conversation. Keep in mind, the U.S. government has taken the stance that a limited regulatory atmosphere is best for Internet innovation and growth. A vibrant, competitive, free marketplace should in most instances be self policing and self correcting.

Since the 1996 Telecommunications Act evolved from the Communications Act of 1934, we start there.

First, There Were Telephones

The 1934 Act--through a series of revisions--split carrier services into two types, basic and enhanced. Basic services included transmission services over any medium (copper, microwave, fiber optic cable, wireless), and voice phone calls. Enhanced services are value-added information services, such as caller ID, call blocking, and call forwarding.

Basic services were regulated. Enhanced services were not. Basic service regulation requires all common carriers to be non-discriminatory in: providing service upon reasonable request, allowing the attachment of devices to the network, and connecting their networks to other operators. Basic services are regulated under Title II.

Then, There Was Dial-Up Internet

Back in the days of dial-up Internet access, the Internet fell under common carrier policy. The basic and enhanced service definitions migrated into the Telecommunications Act of 1996 as telecommunications services and information services. Therefore, telecommunications services were regulated, and information services were not.

Telephone carriers providing telecommunications services were required to be non-discriminatory. This led to an explosion of ISPs and spurred the creation of the Internet we enjoy today.

Next, There Was Broadband Internet

Over time, applications and content became richer, directed at a wide range of audiences--consumers, students, educators, business professionals, scientists, technologists, social groups, sports enthusiasts, gamers, you name it. This expansion required bandwidth: broadband networks over cable lines and digital subscriber lines (DSL).

Information Service Classification. To encourage investment and deployment in broadband cable networks, in 2002, the FCC classified cable modem service as an information service, rather than a telecommunications service. This removed the non-discriminatory carrier code policy from cable network providers. As a result, the FCC only has ancillary authority (Title 1) over the cable network providers. The lack of definition of this ancillary authority is a topic of discussion for Net Neutrality supporters.[3]

The “information service” classification was overturned by the Ninth Circuit Court of Appeals, but was then affirmed by the Supreme Court in 2005.

Internet Freedoms--February 2004. In the interim period, while the information service classification was overturned, then FCC Chairman Michael K. Powell delivered his consumer-oriented Internet Freedoms in a speech at the Silicon Flatirons Symposium on Feb 8, 2004.[4] Powell challenged the broadband network industry to preserve the following Internet freedoms...