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Overview of Network Neutrality Kyle D. Dixon Senior Fellow & Director, Federal Institute for Regulatory Law & Economics The Progress & Freedom Foundation Presented to the California Foundation on the Environment and the Economy Roundtable Conference on Telecommunications and Advanced Technologies May 4-5, 2006 Overview of Network Neutrality What is network neutrality? Increasing complexity of the concept Public policies and proposals 2 What is Network Neutrality? – Out with the Old Telephone Cable Video Broadcast Traditional Communications Networks 3 What is Network Neutrality? – In with the New Applications, Content and Devices Internet Protocol Network Infrastructure Broadband IP (“Edge”) Networks 4 What is Network Neutrality? – The Opportunity Traditional Networks Broadband IP Networks Intramodal Competition E.g., telecom resale, UNE-p, leased access E.g., voice, video or data content, applications, etc. Intermodal Competition Minimal Existing and potential 5 What is Network Neutrality? – Early Conception Origins in “open access” debate (i.e., choice of ISPs on cable modem service) Consumer perspective: freedom to use broadband to access content, applications and devices of their choice Company perspective: broadband networks may not “discriminate” in favor of their own or affiliated content, applications or devices 6 Increasing complexity – Blocking/Degradation Blocking – not allowing certain data traffic to reach end user (e.g., blocking voice packets or ports) Denying interconnection – refusing to link networks physically Re-routing – manipulating routes taken by certain data traffic 7 Increasing complexity – Network Management Quality of service – adjusting network performance for specific applications Security – preventing viruses, spam, etc. Spectrum reservation – on broadband connection for affiliated content, applications Traffic shaping – limiting bandwidth available for specific applications or end users “Acceptable use” policies “Caching” – storing content nearby 8 Increasing complexity – Premium Service Fees Prioritization – speeding delivery of data for extra fee to consumer or service provider Tariffed tiering – offering content/applications providers fee schedule for improved delivery “Access charges” – charging content/applications providers to deliver traffic to end users over “last mile” 9 Increasing complexity – Limits on Networks Technical feasibility Commercially sustainable (e.g., avoiding “bypass” on other networks or dodging intended constraints) Acceptance by government 10 Increasing complexity – Limits on Networks Likely to Prohibit: • Blocking • Denial of interconnection • Re-routing traffic • Access charges Case By Case: • Virus, other security • Spectrum reservation • Traffic shaping • “Acceptable” uses • Caching Probably Allow: • Quality of service • Prioritization of traffic • Tariffed tiering 11 Public Policies and Proposals – The FCC Net Neutrality Policy Statement Codifies commitment to openness and competition among broadband networks Limited where harm to network, law enforcement needs Rejects industry-wide rules at this time Bell Merger Conditions Temporary, limited to merging companies 12 Public Policies and Proposals – The FCC Intramodal Competition Intermodal Competition Traditional Networks Broadband IP Networks E.g., telecom resale, UNE-p, leased access Voluntary access to content; agency can intervene if necessary Minimal Regulation could thwart investment, consumer choice 13 Public Policies and Proposals – Congress Congress Several bills address net neutrality Approaches vary: monitoring/enforcement of Policy Statement abuse of “market power” test specific prohibitions with exceptions reflecting evolving concept of “neutrality” his time Division on this issue may complicate statutory reform generally 14 Stay tuned . . . Kyle D. Dixon, Senior Fellow The Progress & Freedom Foundation Phone: 202-289-8928 [email protected] 15