Network neutrality — what?

You’re on the highway approaching the toll booth, on a tight deadline for an important meeting. To your dismay, you’re shepherded into a long, slow-moving lane.

“This is the new differentiated service system,” your companion explains. “Some car manufacturers and some big businesses have struck a lucrative deal with the toll-road company, giving their vehicles platinum-class service in the fast lanes! We’ll just have to sit it out in the slow best-effort lane.”

“Well, why don’t they just open more toll booths for the slow customers?”

“Don’t be silly — that would completely undermine their business case for getting the platinum customers to pay more in the first place.”

The so-called network neutrality debate is alive and well. It is time we started taking note of some of the issues in South Africa. Network neutrality is the notion that all packets on a data network should get fair treatment.

Historically, the builders of the information highways have also been the providers of voice, fax, mobile and SMS services. Internet services that compete with their own revenue streams are regarded as hostile.

Worldwide we’ve seen telcos blocking voice-over IP packets, or the packets of competitors like Skype and MXit. BitTorrent, a popular peer-to-peer file-sharing application, is a frequent target, and the network operators implement “traffic shaping”: slowing down or rate-limiting some types of services that don’t fit their notion of what the network ought to be used for.

Fortunately, the “substitute-email-for-fax” avalanche took off before the telcos had time to react, and it is unlikely that they will claw that one back now.

In a related challenge, Skype currently has the Carterphone Petition before the US regulator.

If you drill down to the legal submission, it turns out to be quite interesting. Skype is claiming that network operators are (mis-)using their influence with handset manufacturers to block certain features on handsets — specifically those that could offer the consumer a better deal, at the ultimate expense of the operator’s own services.

Skype is asking for the regulator to allow us to connect any third-party equipment (provided, of course, that it doesn’t damage the network). If this is approved, watch for a Skype mobile handset that creates MXit-like economies on mobile handsets! Consumer watchdog groups wait with baited breath.

When BellSouth, the biggest provider of ADSL services to homes in the US, tried to secure payment from iTunes and Google to ensure that their customers’ downloads were “speedily delivered”, Google refused to pay, and made a public commitment to network neutrality.

Larry Lessig, the well-known lawyer who founded the Creative Commons movement, wryly observed that Google’s announcement could well be self-serving. With server farms in almost every major region of the world, Google already has a huge advantage over its competitors — and network neutrality regulations would create significant barriers to entry for new competitors.

It is a tough call for the regulator to make. If a provider cannot protect its premium revenue-generating services against cheap internet substitutes, there is reduced incentive to invest heavily in the network.

On the other side, the largely unregulated internet has led to an explosion of useful and innovative services, to the benefit of the customer — who of us would want to give up or restrict our online shopping, our favourite search engine, our email, our online banking, online poker, our iTunes downloads and airline bookings, just because they happen to compete with some future or current business plans of the network operators?