Thursday, 3 April 2008

Some thoughts on "Net Neutrality"

Our Canadian Industry Minister, Jim Prentice has essentially stated that the government will sit back and wait for things to develop between the ISPs and the consumer according to this Globe and Mail Internet article: Prentice mum on ISP throttling debate.

When one moves on into the comments behind that article, there are words like "rights being infringed on by ISPs" and the "right to use their connection as they wish" and others like that.

We run a business. We provide products and services. We, as a business, have a responsibility, within our rights as business owners, to set limits on the how and when for those products and services so our clients receive the best value they can from us.

Our clients understand that they are receiving good value with us. If they do not agree with the way we do business, then they would (as would we in a similar situation) move on to another company that would provide similar products and services.

When we setup a new SBS network, one of the first steps we go through with our client is to talk about and develop an Acceptable Use Policy (AUP). It is standard practice to have an AUP in place for any company to protect the livelihood of both the company and their employees.

When we signed up with our ISPs, we signed an AUP with them.

As a company providing a service, the ISP has the right to tell us what we can and cannot do while we are connected to their network. They even have the right to "Throttle" any data packets travelling between us and the Internet.

It is the ISP's right to do so as it is their assets we are using. Our paid contract with the ISP grants us the privilege to use their assets for our Internet access. A paid contract does not give us rights over the ISP and the use of their equipment.

If we want full rights over what we can and cannot do with an Internet connection, then we need to find ourselves a connection to the Internet backbone and install all of the necessary equipment to give us our Ethernet. We would then be eligible to be an ISP.

Once we have done that, when we have signed up 100 users and we find out that there are 3 or 4 of them who are using 75% of our bandwidth, what would the proper course of action be for us as a business?

Keep in mind the following:
  • The 3-4 customer's bandwidth use directly impacts the other 96-7.
  • The high bandwidth usage limits our ability to sign up new users without further infrastructure.
  • The higher bandwidth usage means higher infrastructure costs for us to provide a "reasonable" amount of service to our customers.
The 3 or 4 high bandwidth users have a direct impact on our ability to do business. This impact reaches into our right as a business to generate income on the products and services we provide as a business.

With that realization, it is not too difficult to see where the situation will lead.

In some cases, ISPs have already began to restructure their service fees to be bandwidth volume based.

To us, this makes sense. If 95% of our customers use relatively small amounts of data volume for the Internet browsing, E-mailing, and the like why should they be penalized with higher service fees for the other 5% of customers who persistently use huge data volumes?

Setting up the above mentioned ISP business is not cheap.

We here in Alberta are fortunate to have had a government that funded a huge infrastructure investment in the form of fibre cabling throughout the Province. The Alberta Supernet was a Three Billion Dollar endeavour.

One of the assumptions was that existing ISP companies or new ISPs would jump onto the Supernet bandwagon and begin providing high speed Internet access to hamlets, small towns and rural areas.

This has not happened. Why? Because of the huge initial investment required to hookup to the fibre backbone and then provide those services to customers in the area.

Given the huge expense of implementing, managing, and maintaining an ISP business, we should not demand the larger ISPs forgo protecting their business and the level of service their customers have come to expect.

Philip Elder
MPECS Inc.
Microsoft Small Business Specialists

*All Mac on SBS posts are posted on our in-house iMac via the Safari Web browser.

4 comments:

Chris Knight said...

Quick comment based on a quick read - I'll probably follow up once I think about it some more.

The big issue here is that the national policy and legislative bodies haven't kept pace with the changes that have rapidly occurred over the last few years. Nor have the major technology players necessarily considered how their innovations impact other infrastructure in the service stack (I'm thinking of HSDPA/HSUPA impact on backhaul circuits primarily).

Internet access has rapidly become an infrastructure. Citizens of developed nations have come to expect that their Internet access is on par with telephony, power and water.

I think this rapid change from being a luxury item to becoming a basic service means that appropriate regulatory frameworks need to be swung in place to help provide guidance to the telco/ISP industry.

A parallel example of where your argument isn't robust is in electricity. When generation capability is starved, rolling blackouts kick in. The people paying premium rates (i.e. homes, SOHO/small businesses) are the ones mostly affected. The people paying discount rates (i.e. the large businesses) are least affected. This highlights that in fact the large businesses aren't really paying what they should be and to a lesser extent neither are the premium rate users. The increase in generation capacity always gets passed on in rate hikes, primarily to the premium rate users as they don't have an ability to lock in long term payment contracts.

I think the Net Neutrality debate is an important one, but I get the sense that the arguments being bandied about are too narrowly focussed.

ZC1 said...

I believe the Net Neutrality arguments are a complex subject with no single accepted answer, just as the principle "Net Neutrality" has no singly accepted definition.

Therefore in light of all given definitions:

I do feel that regulation (whether self-regulated or governmental) is needed to abate the extremes present at either end of the Net Neutrality spectrum,

(Extremes represented as "providers can do ANYTHING they want", and "customers can demand ANYTHING they want at any price they want"

Although:

I do feel that the remaining largest non-extreme spectrum should be left up to market forces to work out.

(I'm not sure this explanation is sufficient to clearly reveal the colorful picture in my head).

So who is going to define and regulate the non-extreme spectrum?

Nobody and Everybody.

I feel a combination of free market forces, provider requirements and consumer actions should combine to make up the substantial portion of Net Neutrality.

I think the market can manage itself as long as there is a place for grievances and the muscle to act on those grievances.

I would alter the statement "Internet access has rapidly become an infrastructure", to ...its become a commodity. There has always been some type of infrastructure that sustains Internet access.

I think the government (at least U.S.) has experience with regulatory telecommunication frameworks re: telephone monopoly, (the comparison may not be exact), although the government is reactive, not proactive.

As a whole, I'm not sure how the collective wisdom of the government could ever be proactive, their track record is not good.

I'm not at all sure the "electricity" argument is accurate. At least in Michigan, when the rolling blackout kicked in a couple years ago, everyone was affected. There were no large businesses getting a secret supply of electricity and of large businesses normally underpaying for it. Simply EVERYONE's electricity shutdown, regardless what they paid for it.
The people WITH electricity were provided by generators or in my case, a few UPS's.

I'd like to hear more from Chris on this.

ZC1
Beta tester of "0"s and "1"s

Chris Knight said...

@ ZC1 - I'm based in Australia and specifically from a state where the majority of power supply is hydro-electricity (Tasmania), so I haven't experienced the rolling blackout problem. A neighbouring state has been through rolling blackouts.

My observations have been that the rolling blackout has affected everyone's power supply equally (except where large enterprise has equal bargaining power with the supplier and availability is in the contract). However, large and medium enterprise as a whole were reasonably well covered by gensets for critical systems. Small businesses were invariably stuck and had to re-organise their workloads to cater with the outages. So yes, everyone equally lost power, but everyone was affected at differing levels.

With electricity, I think we're going to see further problems once carbon trading schemes fully kick in. But this is digressing from the Net Neutrality issue.

I'm not opposed to the stratification of services and access to premium content. I think that's a given. I am however concerned that some of the proponents of this approach want to make the current Internet less useful that it already is. Compuserve and AOL had their day and lost. We don't really need virtual ones pop up, although I guess we're seeing this with data lock-in with FaceBook and protocol lock-in with Skype to name just two.

The success of the Internet has been about an egalitarian and open approach to data communication. Any change to this is potentially going to make it less useful.

Philip E. said...

Chris,

I agree, Internet access has become an infrastructure.

And to some extent, it has become a commodity that people expect to have access to on an ongoing basis.

But, the big difference between POTS and Power is time+$$$. POTS and Power have been around a long time and their initial costs have long been paid for. We are now paying for ongoing maintenance and upgrades.

The same cannot be said for the Internet.

The initial infrastructure core costs lie here with you and me. Especially now, with the huge increased demand on bandwidth due to video and sound streaming, and P2P. Those investments are being made for now.

Maybe in 25-50 years one can look at the Internet and its access as a commodity that everyone would have the right to expect stability, bandwidth, and never being out (like POTS). By then the inital costs will have been absorbed.

As far as focus, there are many facets to the discussion. Content and the right to publish content, the right of the user to not be censored, the right of users to access information other users may deem unfit for public consumption, the developing right of access to the Internet, and more.

ZC1,

The market will determine. Providers are going to walk away. And believe me, they will, if we come to expect them to provide access to the Internet at a loss to their owners and shareholders.

High bandwidth users are going to have to get used to the fact that they are going to pay by volume.

I choose to drive a high performance V8 Taurus, and the way I drive it has an effect on the consumption of gas. The bandwidth issue should be seen in the same light: Burn 50 liters in a day ... pay for 50 liters. Burn 50 liters in a week, then pay for those 50 liters across the week.

It makes total sense to me.

In my mind, Government should be in the business of weeding out business that fails to follow the rule of law.

Government has no place in telling a company what they can and cannot do with their products and services as long as they are lawful. Yeah, I know, that is a rat's nest in and of itself. ;)

Chris,

Besides Facebook and Skype ... look to Google and others like them.

Business is becoming, and to some extent already has, the biggest driving force behind the data passing across the Internet. From advertising to commodities, market forces have been quietly realigning the way the Internet is used.

That alignment is not unlike things are now for us in the physical world. The ISPs provide the pathways like roads for us to head out on the Internet to the movies, grocery store, book store, and night on the town, or whatever. The ISPs may not see it that way as they want a slice of the online business’ pie, but the market will speak … and to some extent it already has.

I think it would be a real eye opener to have a site like Internet Traffic Report that gives us a global picture of what protocols and site types are in the top 100 for the world and by continent. Alexa is a good start in that direction.
Thanks for the comments!

Philip