Net Neutrality | Turing100@Persistent Systems

Sasken Confidential © 2008 Sasken Communication Technologies
The Net Neutrality Debate:
A Supply-Demand Perspective
Dr. V. Sridhar
Research Fellow
Sasken Communication Technologies
8-Sep-2012
Sridhar.varadharajan@sasken.com
http://www.vsridhar.info

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© 2008 Sasken Communication Technologies
Quotes on Net Neutrality
Allowing broadband carriers to control what people see and do
online would fundamentally undermine the principles that have
made the Internet such a success...A number of justifications
have been created to support carrier control over consumer
choices online; none stand up to scrutiny."
- Vinton Cerf
Google Chief Internet Evangelist and Co-Developer of the
Internet Protocol, Turing 2004 Award Winner
“The neutral communications medium is essential to our society.
It is the basis of a fair competitive market economy. It is the
basis of democracy, by which a community should decide what
to do. It is the basis of science, by which humankind should
decide what is true. Let us protect the neutrality of the net."
- Tim Berners-Lee
Inventor of the World Wide Web and MIT Professor

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18 March 2022 3
Contents
• Demand for multimedia
 Mobile data demand
 Internet Technology and Characteristics
‐ Stupid Network, Intelligence at the edges
• Supply of Network Capacity
 Wireline vs. Wireless
 Spectrum scarcity for mobile broadband
• Problem of the Commons
• Net Neutrality Debate
 Proponents vs. Opponents
 The Indian context
• Regulatory and Policy Implications

The Demand Side

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Mobile Data Traffic Growth (Cisco, 2011)
1 ExaByte=1018 Byte
Or 1 Giga Gigabyte
Or 1 Million TeraByte

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Device Diversification (Cisco, 2011)

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“The mobile-only Internet” population will grow 56-fold from 14 million at the end of
2010 to 788 million by the end of 2015. Sridhar & Hämmäinen, 2011)

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What about India (Nokia Siemens, 2012)

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Telco’s View: Network is Intelligent
Intelligent
Devices,
Better Control
Dumb
Terminals
IN Services such s Three way calling; conferencing; voice mail => Ask the telco and they will provision!
Telco as the bottleneck operator
Basic Fixed Landline services was traditionally considered as a natural monopoly

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Internet point of view: Network is “Stupid”
• Control back to where it should be => THE USER
• Cheap, abundant, interoperable Infrastructure => The Internet
• Save me from those specs: Bits-in, Bits-out
• Unleash Innovation at the edges => development of compelling apps
• Power moves from Infrastructure to Innovation at the edges
Switched Intelligent Stupid
Stupid +
QoS?
Network independent TCP/IP Protocol of the Internet

The Supply Side: Capacity of Networks

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Growth of Fixed vs. Mobile (Ericsson, 2011)
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0
100
200
300
400
500
600
700
800
900
1000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Mobile
Subscribers
(in
Millions)
Year
0
5
10
15
20
25
30
35
40
45
50
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Fixed
Line
Subscribers
(in
Millions)
Year
Reached a Billion!

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4G Technologies: Network capacities on the increase
2.1 Mbps
TD-SCDMA Path
•2009
•2008
•2007
•2006
•2005
•2004 •2010 •2011
TD-SCDMA
WiMax Path
OFDM/OFDMA
CDMA/TDM
CDMA
DL: 326 Mbps
UL: 86 Mbps
FD-LTE
LTE-A
1 Gbps
TD-LTE
WiMax
40 Mbps
IEEE 802.16m
1 Gbps
The first commercial public
network in Stockholm and Oslo in
Dec 2009
Adopted by China Mobile
16 April 2012
Telecom Technology - Reliance Executive
Programme @ IIMB
13

14

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Progress on LTE
16 April 2012
Telecom Technology - Reliance Executive
Programme @ IIMB
15

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Spectrum of the Commons
(Buchi, Sridhar (Sep 2012)
SIM based
authentication
IEEE
802.11
Standard
Release Frequency
(in GHz)
Bandwidth
(in MHz)
Max Data
Rate (in
Mbps)
Indoor
Range
(in M)
Outdoor
Range
(in m)
a Sep 1999 5 20 54 35 120
b Sep 1999 2.4 20 11 35 140
g Jun 2003 2.4 20 54 38 140
n Oct 2009 2.4/5 20/40 72.2/150 70 250
ac (Giga
Wi-Fi)
Nov 2011
(draft)
5 20/40/80/
160
87.6/200/4
33.3/866.7
70 250
Carrier Wi-Fi

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India’s National Frequency Allocation Plan 2011
However, there is a perennial spectrum crunch for commercial mobile services

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Supply Side: The Indian context vs. Advanced Markets
Sridhar, Casey, and Hämmäinen (2012)
Factor In India In Finland
Average spectrum
allocation per operator
per License Service Area
2×7 MHz in 900 and 1800
for 2G; 2×2.5 MHz in 800
for 2G/3G; 2×5 MHz in
2100 for 3G; 20 MHz
unpaired in 2300 for BWA
(Sridhar & Prasad, 2011;
Sridhar, 2011)
2×11.3 MHz in 900;
2×24.8 MHz in 1800;
2×15 MHz in 2100; 4.8
MHz unpaired in 2100;
2×20 MHz in 2600 MHz
Broadband policy 75 million (30% of
households) by 2012; 160
million (60% of
households) by 2014 at
Minimum download Speed
of: 512 Kbps until 31 Dec
2014; 1 Mbps from 1 Jan
2015 (TRAI, 2010)
99% households to be
connected with 100 Mbps
by 2015 (Kim, et al.,
2010)
What about the backhaul??
Acute spectrum shortage!

Problem of the Commons!

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Congestion Problems
• Problem of Commons
 When villagers have shared, unlimited access to a common grazing field,
each will graze his cows without recognizing the costs imposed on the others
• Without congestion control mechanisms, the Internet will be overgrazed
• If the network is congested, packets are dropped and must be resent
• Imposes external social costs
 A send packet that crowds out B’s packet; B suffers delay; But A does not for
the cost (delay) she imposes on B
 Creating congestion that results in delays and dropped packets for other
users

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18 March 2022 21
Congestion Control
• Schemes that offer different priorities and QoS, depending
on users’ needs
 (Without appropriate pricing), what stops an email user from
setting the highest priority if it costs nothing?
• During periods of congestion, bandwidth is scarce resource
and hence should be charged
 When the network is not congested, the marginal cost of
transporting additional packet is essentially zero
‐ Hence charge very low or no price when network is not
congested

Net Neutrality Debate

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18 March 2022 23
Network Neutrality
• Network neutrality is a principle that says those who operate networks
which provide an overall benefit to the public good and rely on public
property should not use their ownership to confer discriminatory
treatment amongst their customers.
• No discrimination
 Prevents Internet Service Providers from blocking, slowing down or speeding
up content based on its source, ownership, or destination
 All bits are equal
 No discrimination of data by network
• Proponents: Content and Apps providers
• Opponents: Telcos, Broadband and Internet Service Providers

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Examples
• 2005 Case: Madison River Communications, a Broadband Service Provider in North
Carolina in the US blocked Vonage’s Internet Telephony service
• 2007: ComCast, the Cable Broadband Access Provider in the US restricted certain peer-
peer applications to be used on its network
• 2009: AT&T, the US mobile service provider who bundles iPhone 3G handsets along with
its access service has decided to put restrictions on the iPhone applications that can
run on its 3G network
 AT&T allowed SlingPlayer Mobile to stream IP based video broadcast over Wi-Fi
networks not on its 3G network
 AT&T spokesman as saying about SlingPlayer Mobile, "It's absolutely cool
[technology], but if we allowed these kinds of services, the highway would quickly
become clogged.“
• Skype, another victim, had to restrict its cheap and almost free Internet Telephony
application designed for iPhone, to work on the public Wi-Fi network; but not on
AT&T’s 3G wireless data connection.

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The Case for Net Neutrality
• Discrimination restrict access to end-users by blocking or
prioritization
• Discrimination results in network providers capturing value
out of innovation at the edge
• Enables app/content providers to reach broad audiences
Innovation
• Level playing field for app/providers fosters healthy
competition which eventually benefits consumers
• 2-tiered internet where only the rich get the fast lane shall
be avoided
Consumer
• Mandating access to content/service providers enables
competition in content provisioning and hence enhances
consumer benefit and innovation
Competition

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Content Prohibition
• Prohibition against
blocking of certain
contents
• Consumer’s
“internet
freedom”
• Curbs Innovation
at the Edge!
Access Tiering
• Prohibition against
speedier delivery of
certain content
(may be own
content)
• Is it a zero-sum
game?
Vertical Integration
• Line of business
restriction for
network operators –
vertical integration
with content
providers to be
carefully looked at
• What about
economies of
scope effects?
The Three Pillars of Net Neutrality: The
Proponents’ View

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An Example of Prioritization and Pricing
All others are Blocked!

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How can I prioritize: DPI to the rescue!
Telcos can filter the traffic, or accelerate/ decelerate at the core or access network
Telco: Using a walled garden approach

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18 March 2022 29
Charging Models
CONTENT PROVIDER END USER
BANDWIDTH ALLOW ALLOW
PRIORITY BAN ALLOW
Network Neutrality
Proponents want

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What do Opponents Want?
• Arguments By Opponents of Net Neutrality
 Capacity is finite!
 Prioritisation of bandwidth is necessary for future innovation on the
Internet
‐ The added revenue could be used to pay for building increased broadband
access to more consumers.
 No incentive for innovation and investment for Internet Service
providers and network operators to develop advanced fibre-optic
networks to enhance capacity
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A very small number of customers use an excessive amount of the
network bandwidth, to the extent that it can impair the experience of
others. The intent of <operator> Fair Usage Policy is to provide the
optimum internet experience to all customers.

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Effect of Prioritization
• If there is capacity constraint, then prioritized packets are more
valuable to users. But if there isn’t any constraint, then every packet
is the same to user.
 The seller is more interested to sell his/her product to the buyer than the buyer
himself.
• If there is capacity constraint and if we prohibit prioritization, then it
de-motivates suppliers from differentiating contents and applications

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Broadband as a Two-Sided Market (Sridhar & Venkatesh, 2012;
Subhash & Sridhar, 2011)
• Cross-side network effect in a two-sided market
• Demand for network access = f (bandwidth, application/ content)
 Without bandwidth => cannot consume application/ content
 Without application/ content => bandwidth is of little value
‐ There is cross-elasticity of demand between bandwidth and content
• Who should be charged and why?
• In general, one side is subsidized and the other is priced
 Which side to subsidize and by how much?
ISP/ Mobile Broadband Operator
Content/
App
Provider
Consumers
The two-sides and the platform in between

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What are the content providers doing?
• Google fibre project at Kansas City, U.S.
 started on July 26th
 Kansas City beat out more than 1,100 other cities to win the Google project.
 $70 a month for the one gigabit per second connection
‐ Alternatively pay $300 to connect home to the network and then have free access to the Web at
the current US average speeds for seven years
 Deadline to sign up: Sunday, the 9th Sep!
• Comments from Telcos: Too small a network to test and validate
• 2008: Google announced joining five other telecom companies — Bharti Airtel, Global Transit, KDDI,
Pacnet and SingTel — to jointly finance a new trans-Pacific "Unity" cable linking the U.S. to Japan
 March 2010: Unity completed: direct connectivity between Chikura, located on the coast near Tokyo, and West
Coast network Points-of-Presence in Los Angeles, Palo Alto and San Jose.
 Through the deployment of state-of-the-art submarine cable technology, the five fiber pair Unity cable system is
designed to deliver up to 4.8 Terabits per second (Tbps) of bandwidth across the Pacific, with each fiber pair
having a capacity of up to 960 Gigabits per second (Gbps).

Regulatory and Policy Implications

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•Categorical restrictions
•Pre-emptive regulation
•Prevents realization of potential benefits
Ex- Ante
•Case-by-case
•Imposes liability only when proven to be anti-
competitive
•Does not prevent realization of potential benefits
Ex-post
Implications on Regulation
• Ex-Ante
 Suits take time and damage can be done before they are solved
‐ The legal system is slow and law suits are not solved in “Internet Time”
 Internet is key to economic growth; allow it to flourish and not bar it!
• Ex-Poste
 Difficult to visualize whether an outright ban of prioritization leads to social
surplus

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What are regulators doing?
• Preserving the Open Internet; Final Rule Federal Register / Vol. 76 ,
No. 185 / Friday, September 23, 2011 / Rules and Regulations
(http://www.gpo.gov/fdsys/pkg/FR-2011-09-23/html/2011-24259.htm)
i) Transparency: Fixed and mobile broadband providers must disclose
the network management practices, performance characteristics,
and terms and conditions of their broadband services;
ii) No blocking: Fixed broadband providers may not block lawful
content, applications, services, or non-harmful devices; mobile
broadband providers may not block lawful Web sites, or block
applications that compete with their voice or video telephony
services;
iii) No unreasonable discrimination: Fixed broadband providers may not
unreasonably discriminate in transmitting lawful network traffic.

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FCC Open Internet Rules (contd.)
• Mobile broadband is at an earlier stage in its development than fixed
broadband and is evolving rapidly. For that and other reasons discussed
below, we conclude that it is appropriate at this time to take
measured steps in this area.
• Accordingly, we require mobile broadband providers to comply with
the transparency rule, which includes enforceable disclosure
obligations regarding device and application certification and approval
processes;
• we prohibit providers from blocking lawful Web sites; and we prohibit
providers from blocking applications that compete with providers' voice
and video telephony services.
• We will closely monitor the development of the mobile broadband
market and will adjust the framework we adopt in this Order as
appropriate.

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Elsewhere..
• Netherlands: May 2012: First country in Europe to pass Net
Neutrality regulation
 Mobile operators will not be able to do discriminatory pricing for services
such as Skype; neither can they throttle some services
 Some exceptional reasons, such as network congestion and security, are
allowed for slowing down users' connections;
 but the general thrust of the law is that operators ought to be blind to the
traffic they carry and treat all of it equally
• Rest of Europe: Public consultation going on .. Ending in Oct 2012..
Likely rules only in 2013

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What about India?
• No mention about Net Neutrality in the National Telecom Policy 2012
(NTP 2012)
• What happens in Fair Usage Policy being enforced by the mobile
operators?
 Under the policy there is a set fair usage levels for unlimited data transfer
plans
‐ On reaching the fair usage level, the plan speed would be rationalized by up to
50% for the rest of the monthly billing cycle. You would also be redirected to a
page which will inform you that the speeds for the rest of the billing cycle month
would be as per the operator’s Fair Usage Policy.
• Is it discrimination? Discrimination against the user who uses large
bandwidth application or discrimination against that application itself?
 Will not the user cease to use the application after some time
‐ The innovative app loses and goes out of the market!

The battle between the
operators and content providers
continue…..

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• Sridhar, V. (2012). The Telecom Revolution in India: Technology, Regulation and Policy, Oxford
University Press India.
• Sridhar, V., Casey, T., and Hämmäinen , H. Flexible Spectrum Management for Mobile Broadband
Services: How does it vary across Advanced and Emerging Markets? Accepted in
Telecommunications Policy Special Issue on Cognitive Radio.
• Sridhar, V., Casey, T., and Hämmäinen , H. (2012). Systems Dynamics Approach to Analyzing
Spectrum Management Policies for Mobile Broadband Services in India. International Journal of
Business Data Communications and Networking, 8(1), 37-55.
• Sridhar, V., & Prasad, R. (2011). Towards a New Policy Framework for Spectrum Management in
India, Telecommunications Policy (Elsevier), 35, 172-184, DOI: 10.1016/j.telpol.2010.12.004.
• Sridhar, V,, and Venkatesh, G. (30 Apr 2012). The Mobile Platform Wars: A 2-Sided Market View,
DataQuest, 58-60.
• Mobile Internet: Indian Telecom Leading the Way, DataQuest, July 15, 2011 (with Heikki
Hämmäinen)
• Threat to Walled Garden, Business Line, April 4, 2011 (with Subhash P)
• What’s in store for Mobile Telecom? Business Line, June 28, 2010 (with G. Venkatesh)
• Gravy train stops at app platform, Economic Times. Mar 1, 2010 (with G. Venkatesh)
• Let the traffic flow. Business Line, Sep 14, 2009 (with G. Venkatesh).
•
References
18 April 2012
Reliance Communications MDP @ IIMB 41

Thank You and Questions?
Queries: sridhar.varadharajan@sasken.com

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