Report on the IGF Hyderabad Workshop:
Network Neutrality - Examining the Issues and Implications for Development
(Workshop no. 58, 4 December 2008, 14:30-16:00, Room 5)
Organisers and contacts
DiploFoundation (www.diplomacy.edu) has been actively involved in the Internet Governance process since WSIS 2003 in Geneva. Over 500 professionals from over 70 developing countries were trained online and in-situ in Internet Governance Policy - issues, actors and processes - by DiploFoundation. Members of this worldwide community of professionals, representing global, regional and local stakeholders - governmental institutions as well as civil society, non-government organisations, business sector, media, academy and international organisations - have made remarkable policy and field-work in various IG-related issues, including Network neutrality.
Contact: ig at diplomacy.edu
Technology Policy Institute (www.techpolicyinstitute.org) is a United States-based think tank that focuses on the economics of innovation, technological change, and related regulation in the U. S. and around the world. Its mission is to advance knowledge and inform policymakers by producing independent, rigorous research and by sponsoring educational programs and conferences on major issues affecting information technology and communications policy.
David Gross, U.S. Ambassador
David Gross, U.S. Ambassador
Robert Pepper, Cisco
Thomas Lenard, TPI
Jovan Kurbalija, DiploFoundation
Virginia Paque, ISOC Venezuela
Robert Guerra, Privaterra
Vladimir Radunovic, DiploFoundation
The Internet is a communication platform that allows end-users to access content and content providers to connect with customers. This platform is multi-sided, meaning that incentives to invest and innovate in one side affect the others. Different aspects make network neutrality highly complex and frequently debated issue. While net neutrality has no single definition, in most general terms, net neutrality questions the right of network operators to deliver certain data packets faster than others based on the type of application, source and nature of content, and other criteria.
Network neutrality proponents contend that it is crucial for maintaining content innovation and diversity. Opponents counter such rules are unnecessary, can reduce investment in broadband infrastructure, and paradoxically may even reduce the incentives to develop certain applications in the future. The key point is if any regulations dictating how networks operate are likely to have broad effects beyond those the rules are intended to address, affecting incentives to invest in infrastructure and content.
Network neutrality has been debated in the United States for several years and is emerging as a major issue in Europe. The importance of this issue for the developing world and its possible effect on digital divide is often neglected: the Internet and broadband in particular, are much less widespread in poorer countries than in richer ones.
Maintaining incentives to invest in local Internet infrastructure and content remain crucial in developing countries if the Internet is to fulfil its promise in promoting economic growth and freedom of expression. At the same time, would explicitly allowing packet prioritization and new pricing models convey additional market power to a small number of incumbent companies, further disadvantaging consumers in developing countries?
Goal of the Panel
The panel discussed the economics and engineering aspects of networks and how network neutrality regulations might affect those investments. The workshop also examined implications to the digital divide, by bringing different perspectives of the problem to the audience, and listening to their opinions.
The goal of the session was to discuss the implications of this debate and its outcomes to the developing word. It aimed at raising awareness among the representatives of developing countries and encouraging them to get involved in the global debate in order to bring a strong emphasis on the perspective of the Global South.
Summary of Discussion
In his opening remarks Amb. David Gross questioned the very term ‘network neutrality’ as an artificially constructed term, while the issue is more about the users than about the concept. The term, initially mentioned by Tim Wu who argued that the Internet should be neutral, generated much debate and was seen as an effort to counteract the control of broadband providers on content, platforms, equipment, modes of communication, etc. on the broadband that they provided to end users. Amb. Gross observed the issue in terms of the need for innovation on the edges of the Internet versus the need for increased bandwidth - who makes investments and on what basis.
Dr. Jovan Kurbalija noted the semantics of the discussion and posited that it was a perfect example of the “wrong question to the right answer” - stating that technology is neither bad nor good nor neutral but its impact is determined by the user. In his view, a greater significance than the term itself is the provision of equal access to resources, to promote the interest of those disadvantaged. He emphasised a much broader front of issues commonly involved in the discussion - such as the freedom of expression and choice facilitated by the Internet. He acknowledged that technical designs can solve some social and legal problems in this area.
Mr. Robert Pepper stressed that we should try to accomplish to build on the success of the Internet making it faster and more robust, as this would lead to greater innovation, consumer benefits and an open and safe infrastructure. He discussed the impact of video on Internet traffic and drew reference to traffic statistics from Japan, where the top 10% of the Internet users were using 90 % of network resources. He underlined that the applications which were time sensitive required a different approach.
Dr. Thomas Lenard discussed the issue in the context of the current financial crisis, noting that tight credit markets and the high cost of capital mean that investors will require a higher rate expected rate of return than in the recent past. He noted that broadband is a distribution business and that broadband platforms are intermediaries in multi-sided markets, and that these characteristics have implications for analyzing pricing and other business practices. He also pointed to empirical evidence by TPI senior fellow Scott Wallsten indicating that if net neutrality means mandatory unbundling, it has an adverse effect on investment in next-generation infrastructure. The best answer is more platform competition, which has a positive effect on investment.
Referring to the Global Internet Freedom Programme which was helping companies evaluate benefits and risks associated with network neutrality, Mr. Robert Guerra observed the convergence of different media such as newspapers, radio and TV with ISP. The activism campaigns to promote a better understanding of issues as to whether open or neutral networks help have been primarily expressed in Canada and the US, he said. He drew reference to the Caribbean where major telecommunication incumbents, acting as ISPs, have an interest in slowing VOIP traffic which may cut into their telecom business. Noting that slowing down the Internet has consequences for freedom of expression, he drew reference to Iran where he said slow connections were used as a form of censorship.
Presenting the issue from a consumer viewpoint, Mrs. Virginia Paque framed the discussion in terms of choice or control of what the consumer can do. While nothing is free or unlimited, choices and control about pages and applications should be in the hands of consumers rather than ISP, and any shaping should be transparent. As an example if Walmart limits choices one can switch to Target but it is more difficult to change ISP. She noted that the IGF was a great place to discuss these complex issues.
Taking the floor from the audience, Mr. Bob Kahn discussed the technical aspects of the “end to end” configuration of the Internet and the integration of applications at the core for more and more efficient operation. He felt that the future should be in the applications at the core with open interfaces so there is no fragmentation of the Net.
In the discussion that followed Mr. Pepper noted that the old model analogies don’t always make the point and sometimes conflate the issues. He noted that there should be a clear distinction between State and ISP action which seeks to impact on the neutrality of the Internet. Mr. Guerra reiterated that the Net should be the same whoever by and wherever it is accessed as this ensures that developing countries are not disadvantaged. Dr. Lenard also pointed out that ISP usually need to do what customers want in order to make profit.
Some questions were raised from the floor relative to the level of competition among ISP in developing countries as it relates to their responsiveness to consumer demands. The issue of ISP capacity to provide adequate broadband without traffic shaping was also raised. Mr. Sivasubramanian Muthusamy from India challenged the panel to develop a business model that ensures network neutral ISP make money suggesting that this would solve the problem. He argued that a person using the net for example to download music and movies should be differentiated from a person who uses it for business purposes with priority being given to the latter. At the very least a pricing structure that reflected different usage patterns should be put in place so that ISPs remained profitable, he debated.
A general opinion was that it was a stimulating workshop. The workshop made it clear that network neutrality is a complex issue and can be looked at from different viewpoints - bringing socio-political issues to the fore with respect to freedom of expression and consumer choice, versus framing the issue in technical terms.
The point was also raised that, considering the digital divide, access to the Internet was a more pressing issue for developing countries than the issue of network neutrality. In other words the debate about the neutrality of the Internet is pointless in the absence of the Internet. Nevertheless, for those emerging economies where the Internet is spreading rapidly network neutrality can have an impact on the type of business models that they can develop and this will ultimately impact on their overall economic prospects.
While there was no compelling information presented that carved out a position that was in the interest of developing countries to take - whether ‘neutral networks’ would hurt or help the prospects of developing countries and in what ways, the workshop succeeded to dissect the issue and somewhat delineate technical, economical and socio-cultural aspects, leaving space for a follow-up work in the coming months.