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Consequences of Opt-in Better Than Best Efforts Internet Routing

While attending the International Telecommunications Society’s 17th bi-annual conference I attended yet another network neutrality session. Economists predominated at this conference and their collective read on network neutrality emphasizes the need for ISPs to “extract value” from content providers primarily by converting zero cost peering with ISPs into specific payments from individual content sources.

I have no problem with offers of non-neutral, “better than best efforts” routing options to content providers who voluntarily opt in, particularly if the offer is made transparently and anyone can opt in. What troubles me is the impact of opt-in on content providers that opt out.

In the satellite industry, an opt-in/opt-out dichotomy exists: content providers seeking better than best efforts can secure what is known as “protected” transponder capacity-a commitment by the satellite operator to prioritize service and to replace transmission capacity should it become defective. Unprotected transponder lessees get no expedited access to replacement capacity, but they suffer no additional punishments for refusing to pay the premium rate.

I am not confident ISPs will follow the satellite capacity model as opposed to applying the Enron model where traders quickly learned that they could make more money creating bottlenecks and spot capacity shortages where no lack of grid distribution, or electricity capacity existed. If the smart folks at Enron could learn how to manipulate the flow of electrons what prevents smart ISP operators from similarly manipulating the flow of packets similarly requiring “urgent” real time delivery?

Put another way will ISPs retaliate against opt-out content providers with the creation of artificial congestion, by dropping packets, inserting traffic resend commands and partitioning bandwidth with an eye toward forcing migration to premium service even as the division guarantees inferior service that breaches contractual QOS commitments?

The opt in/opt out dichotomy does not necessary cleave between deep pocketed content providers who can afford to pay for premium service and providers lacking such financial resources. One paper at the ITS conference suggested that unknown content providers might have the most to gain from premium access. What presents a problem, not addressed by the economists at ITS or elsewhere is the impact of practices that exceed necessary price and QOS discrimination.

The FCC has imposed a number of behavioral regulations on cable television ventures based on their ability and incentive to engage in unreasonable discrimination by favoring corporate affiliates vis a vis competitors. In the cable context discrimination applies to the availability and price of “must have/must see” video content. Arguably ISPs have a similar ability to create a bottleneck or boycott.

By Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law

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Public goods are important too Michael Roberts  –  Jul 9, 2008 10:41 PM

This note reflects standard private sector economic analysis, but the Internet serves many public interests as well.  Ken Arrow and other public good economists have dealt at length with the differences, especially when the good involved has natural monopoly characteristics, such as transportation systems.  The access layer of Internet service is very close to a public good for most of us and needs policies appropriate to that fact.  Vint Cerf’s recent commentary to that end is on point, for which the die hard “market at all costs” folks have given him a hard time.

muddying the infrastructure industry Roger Kim  –  Jul 16, 2008 7:10 AM

As an operator of PAIX Internet Exchange, the notion that that broadband access providers are going to restrict the traffic from content providers who don’t pay them is not operationally possible today, nor are they ready to support a commercial solution today that is viable for content providers to pay access networks. They don’t even have back office infrastructure to support that and would take more resources to manage that to generate revenue at wholesale level.  Most of the access networks (Cable MSO, DSL, Wireless, etc) buy some form of upstream traffic from Tier-1 networks.  Content networks that I know would rather stuff it down the same path of the access network upstream than be be forced to pay, and make them hurt.  Can you imagine source filtering of content network at Gbps level on access network’s upstream transit link?  To manage that at the router level would be an operational nightmare and will yield lots of customer complaints. 

ISPs and their broadband subscribers will be better served to follow the money flow of traditional content distribution model that has worked for nearly hundred years.  Trying to get contents to pay for bandwidth is muddying the water again in an endless spiral of bandwidth price war.  If it’s a video, access networks should get a piece of the advertising revenue for each video served at the retail level.  This should be negotiated at commercial level.  Nickle and diming at bandwidth level by network engineers is not going to yield high margins for access networks, nor should that be a job function for engineers to generate revenue.  This is how it is done today, and it is not good for the Internet infrastructure industry.

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