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Zero-Rating vs. The Internet

Reading about the EU Neutrality vote, I’m reminded of the challenge faced by traditional telecommunications regulators in understanding the very concept of the Internet. To put it bluntly zero-rate is a policy framed in terms of Minitel and setting the price based on what phone number is dialed and not at all about the Internet where the value is determined by relationships entirely outside of a network.

In the past I had ignored the term “zero-rating” but recently was asked to join a panel on the topic. It’s a term that harkens back to telephone rates; zero-rating is sort of like an 800 number for data. And it makes perfect sense for traditional telephony. It is similar to the approach for services like Minitel and 900 numbers where the price you pay depends on the phone number you dialed. (Remember when you used phone numbers rather than names?)

But what does it have to do with an Internet where you have packets traveling and totally disconnected from their context? How can you even define something like zero-rates for packets which consist of anonymous bits? The Internet is a very different concept from telecommunications and treats existing facilities as resources rather than depending on them for well-defined services.

We have basically two different realms. One in which a provider derives revenue by managing a path, be it a physical wire, or a virtual path. The provider can charge for services and can determine how much capacity is reserved for each purpose. The other is the Internet with best efforts creating opportunity rather than promising specific results. Inside the network, there is no ability to play favorites, because there is no knowledge about purpose nor context.

In the telco model we have two choices for who pays for the service. The receiver pays or the sender pays or some combination.

The problem with isolated packets is that the sender-or-receiver payment model can work. It may seem to work in that carriers are charging for virtual paths and they keep the wires contained within these paths. More simply put, the carriers are charging at the entry and exit points from the facilities deemed to be the network. This is, in effect, rent-seeking. Because without the ability to add value the carriers are left only with the ability to deny access.

I use the phrase “deemed to be the network” because, if we go back to the initial design point internetworking extended the simplicity of local networks. On such a LAN, any two devices would communicate directly. The genius of the Internet (as Vint Cerf explains) is that two machines would be able to connect in the same way whether they were on the same LAN or on different LANs. Distance didn’t matter. The devices aren’t aware of whether they are crossing the line between the carrier’s network and the local facilities. And the carrier doesn’t know the provenance of the packets.

Historically those interconnecting local networks negotiated for the paths through the telecommunications infrastructure. In that scenario, it made sense for the carriers to charge for such leased lines or other similar services. Local facilities are paid for as part of the common infrastructure. How many companies meter the “usage” for each computer on the corporate network? How many home users worry about streaming a video from their PC to another device?

We have two business models for paying for facilities. The traditional telecommunications model assumes an owner (the telco) making money by controlling the facilities and charging for access (rent-seeking). That charge would be paid for at one end of the pipe or another. And we have another model in which we pay for common facilities. The former involves limiting access and the latter creates a common resource without exclusion.

The confusion lies in thinking of the web as the Internet. That way the telecommunications billable path model works because one might treat accessing a website sort of like a phone call and a provider like Facebook is just a different phone number. But this is not at all the Internet! With the Internet there are raw packets. No Facebook, no web packets. The Internet and the web are not one and the same.

This issue comes to the fore when we try to connect devices and create new services. One of the big changes since early Internet days has been the rise of the “retail Internet” with each device or user directly connected to a carrier’s facilities rather than a LAN. This worked fine for dialing into bulletin board systems and worked as long as there is a user ready to press an “agree screen.” We also face similar hurdles when connecting to WiFi because it represents a boundary crossing.

Boundary crossings are points of failure that exist because of business models that place toll booths in the path. Or if a facilities owner believes it is necessary to only allow approved use. These boundaries violate a basic Internet design point by requiring a direct relationship between the facilities owner and the application or user.

This approach is wholly at odds with the ability innovate without needing to be aware of anything between the two endpoints. With traditional networks if you wanted to add video to telephone calls you had to make sure network supported that new service. With VoIP Video “just works” as long as the capacity is available.

When the service is built into the network the provider sets the rate for that service. That’s if they choose to make it available at all.

The alternative is to honor the big idea that gave us today’s abundance including the web. Extending the reach of a local network is a matter of economics. When building a local network, the facility owner such as a school or apartment owner pays for the wires and gear once and then can use them continuously, paying only for maintenance and upkeep.

If we fund the wires, routers, radios and other gear in the same manner we pay for local networks, then we can benefit from the opportunities. Those benefits can go far beyond what we’ve seen so far. Funding infrastructure as a common facility is actually rather common. Just as we pay for sidewalks, roads and other common infrastructure. I purposely avoid the word “utility” to emphasize that there is no consumable being metered. Packets are ways we share knowledge but we don’t consume them except metaphorically. And we need to be very aware of the limits of such metaphors.

An important lesson from the internetworking experience is that the paid pipes can coexist with the infrastructure model. The infrastructure owners pool their resources to buy capacity from the existing owners. This is a transitional state because of the compelling advantages of owning the shared infrastructure.

This shift represents a disruptive change for the existing telecommunications industry. As a society, we need to work with the process if we are to gain the benefits of connectivity and, now, the benefits of connected things.

During this transition companies that feel they need dedicated facilities should be able to invest in their own facilities. But we need to be very careful to avoid conflicts the of interests that arise in the traditional telecommunications model, such as when fast lanes become preferred revenue sources. But once we have infrastructure available very few companies would want to pay the very high costs of dedicated infrastructure compared with sharing.

We also need to be wary of statements claiming that some applications need special priority. The triumph of voice over IP (including over WiFi and LTE) should put the lie to such claims but they persist. If self-driving cars really need special priority, they should be declared a road hazard because they wouldn’t be resilient in the presence of failure.

Similarly, perimeter security (firewalls and locked down WiFi) are a major source of insecurity as increasingly hijacked devices offer entry into the networks behind such barriers and devices that depend on a physical perimeter become more vulnerable.

Zero rating and fast lanes are legacy telecom constructs that rate a zero when it comes to Internet Awareness.

To reiterate, the Internet is a very different concept from telecommunications and treats existing facilities as resources rather than depending on them for well-defined services. This requires thinking very differently and preferring resilience over assurances.

It may be too much to ask those steeped in the traditions of telecommunications to shift their thinking. But we do need to start by recognizing that concepts like zero rating and fast lanes are incompatible with the key dynamic of the Internet—creating value by using networks rather than by owning them.

For further reading: http://rmf.vc/FurtherReading .

By Bob Frankston, IEEE Fellow

Bob Frankston is best known for writing VisiCalc, the first electronic spreadsheet. While at Microsoft, he was instrumental in enabling home networking. Today, he is addressing the issues associated with coming to terms with a world being transformed by software.

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