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The Net Neutrality Debate – A Supply/Demand Perspective – V. Sridhar, Sasken

(This is a liveblog of a lecture on Network Neutrality by V. Sridhar, a Fellow at Sasken. This talk was delivered as a part of the Turing100@Persistent Lecture Series in Pune. Since it is being typed as the event is happening, it is not really well structured, but should rather be viewed as a collection of bullet points of interesting things said during the talk. For more information about Dr. Sridhar, see his website)

The Problem of Net Neutrality

The principle of “Net Neutrality” states that all traffic on the internet should be treated equally. Thus, the principle states that network service providers (i.e. the telecom companies) should not be allowed to discriminate (i.e. limit or disallow) on network connections and speeds based on the type of traffic. Thus, for example, under net neutrality, a telecom should not be allowed to disallow BitTorrent Downloads, or limit bandwidth for Skype or Video streaming, or provide higher speeds and better quality of service guarantees for just traffic generated by iPhones or US-based companies.

Telecom companies are trying to introduce systems by which different levels of service are provided for different types of traffic, because, they argue that network neutrality is not economically viable.

The Demand for Network Services

  • Mobile broadband and 3G traffic is increasing exponentially
    • Even in India! In the last 7 months there has been 78% growth in 3G traffic, and 47% growth in 2G. India loves mobile broadband
    • Users are getting hooked to 3G. An average 3G user consumes 4 times more data than a 2G user. 3G is an acceptable alternative to wired broadband
    • Mobile data is growing fastest in smaller towns and villages (category B & C circles)
  • Video, voice, and streaming data are taking up huge chunks of bandwidth

NetHeads vs BellHeads

There are two major approaches to the network: the traditional telephone providers who come from a circuit switched Telephone background (the BellHeads), and the people who come from the packet-switched internet protocol background (the NetHeads). The BellHeads believe that the network is smart, endpoints are dumb; they believe in closed, proprietary networks; they expect payment for each service; often with per-minute charges; they want to control the evolution of the network and to control everything about the network. They want strong regulations. The NetHeads philosophy is that network is dumb, and endpoints are smart. So users should take all the decisions; they believe in an open community; and they expect cheap or free services, with no per-minute charges; they want the network to evolve organically without regulations.

To a large extent, the NetHeads are for net neutrality and the BellHeads are in favor of abolishing net neutrality in favor of carefully controlled tiered traffic.

The Supply Side

Land-line penetration is decreasing. On the other hand, mobile penetration continues to increase and is showing no signs of saturation. Fixed-line is losing its relevance, especially in case of emerging countries in India. Which means that increasing chunk of the internet bandwidth is going to be consumed by mobile devices.

LTE (the Long Term Evolution) mobile network is the fastest growing network ever. 300+ different operators all over the world are investing in LTE. This will come to India soon.

Mobile technologies are improving, and individual devices will soon be capable of handling 1Gbps data connections. This means that the capacity of the core network will have to go up to provide the speeds that the device is capable of consuming. And the NetHeads are making good progress and being able to provide high capacities for the core networks.

The problem is that the mobile spectrum is a scarce resource, and will soon become the bottleneck. The other problem is that chunks of the spectrum have to be exclusively allocated to individual operators. And then that operator has to operate just within that chunk.

The Problem of the Commons

When people have shared, unlimited access to a common resource, then each will consume the resource without recognizing that this results in costs for everyone else. When the total amount that everybody would like to consume goes above what is totally available, everybody suffers. This is a problem which will affect the mobile spectrum. The spectrum gets congested, and bandwidth suffers.

How to solve the congestion problem?

  • Congestion pricing. For example, cheaper access after 9pm is an instance of congestion pricing – an attempt to convince some of the users to consume resources when they’re less congested.
  • During periods of congestion, bandwidth is scarce and hence should have high prices. On the other hand, when the network is not congested, then the additional cost of supporting an additional user’s downloads is minimal, hence the user should be given free or very cheap access.

The Net Neutrality Debate

Net neutrality believes that the maximum good of maximum people will happen if networks service providers do not discriminate amongst their customers.

No discrimination means:

  • No blocking of content based on its source, ownership or destination
  • No slowing down or speeding up of content based on source, ownership or destination

Examples of discrimination:

  • In 2005, Madison River Communications (an ISP) blocked all Vonage VoIP phone traffic
  • In 2007, Comcast in the US, restricted some P2P applications (like BitTorrent)
  • In 2009, AT&T put restrictions on what iPhone apps can run on its network
    • Disallowed SlingPlayer (IP based video broadcast) over it’s 3G network
    • Skype was not allowed to run over AT&T’s 3G network

The case for net neutrality:

  • Innovation: Operators/ISPs can kill innovative and disruptive apps if they’re allowed to discriminate
  • Competition: Operators/ISPs can kill competition by selectively disallowing certain applications. For example, if AT&T slows down Google Search, but speeds up Bing Search, this can cause Google Search to die.
  • Consumers: Operators/ISPs will have a strong grip on the consumers and other players will not get easy access to them. This will hurt the consumers in the long run.

The case against net neutrality:

  • Capacity is finite. Especially in the case of mobile broadband (because the spectrum is limited)
  • If there is no prioritization, a few apps will consume too much bandwidth and hurt everybody; and also it reduces the service provider’s motivation to increase bandwidth
  • Prioritization, and higher pricing for specific apps can be used to pay for new innovations in future network capacity increases

Broadband is a two-sided market:

  • Apps and Broadband is a two-sided market.
    • Both, applications and bandwidth are needed by consumers
    • Without applications, users will not consume the bandwidth, because they have nothing interesting to do
    • Without bandwidth, users will not use applications, because they’ll be too slow
    • Hence both have to be promoted simultaneously
  • How should a two-sided market be handled?
    • Usually, one side should to be subsidized so it can grow and help the other grow
    • e.g. Somebody needs to break this cycle and grow one side of this market, so that the other can then grow
    • For example, Google (an app/content provider) is buying fiber and providing 1Gbps connection in Kansas for $70 per month. Thus Google is subsidizing the bandwidth increase, and hopes that the users and apps will increase in proportion.
  • Regulatory and Policy implications
    • Two ways to handle this:
      • Ex Ante: come up with regulations and policies before problems occur
        • Because lawsuits are expensive
        • US is trying to do this – they have exempted mobile providers from net neutrality principles
        • Netherlands has passed net neutrality regulations – first country in the world. Mobile operators are not allowed to disallow or discriminate against services like Skype
        • Rest of Europe: public consultations going on
      • Ex Post: Let the problems occur and then figure out how to deal with them
  • Net Neutrality and India
    • No mention of net neutrality in the NTP (National Telecom Policy 2012)
    • Fair Usage Policy (FUP)
      • Is against net neutrality (maybe)
      • It discriminates against users, but does not discriminate against applications
      • But it is indirect discrimination against applications – because users who use BitTorrent and other bandwidth heavy applications will be more affected by FUP
      • Affects innovation – because users are discouraged from using innovative, bandwidth heavy applications

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2 responses to The Net Neutrality Debate – A Supply/Demand Perspective – V. Sridhar, Sasken

  1. sameer says:

    Awsm live blog and some good pin pointed issues.

  2. Tahseen says:

    The videos and slides of session by V. Sridhar regarding “The Net Neutrality Debate – A Supply/Demand Perspective can be found here-

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