Network Neutrality: Who Pays for Bandwidth Management?

Published July 1, 2006

Overnight, it seems, calls for enforced network neutrality reached a fever pitch and are finding their way onto editorial pages and political Web sites everywhere. is convinced that without network neutrality, the end of the Internet is at hand. Popular musicians like Moby and Michael Stipe have lent their voices to the cause, exhorted breathlessly at Now Rep. Edward Markey (D-MA) has introduced legislation that would impose a network neutrality scheme on service providers. Rep. James Sensenbrenner (R-WI), chairman of the House Judiciary Committee, wants to make it an antitrust violation to set preferential rates for Internet services.

A network neutrality policy would prevent the nation’s broadband service providers– telephone and cable companies like AT&T and Comcast, and Internet service providers (ISPs) like EarthLink and AOL–from selectively blocking customer access to Web sites and Web-based applications, such as Voice over Internet Protocol (VoIP). It also would require those companies to treat all digital information the same way as it moves across their networks. So-called Internet “toll lanes” would be prohibited. Service providers would not be allowed to charge an added fee to enhance or guarantee the quality of content or an application a third party wants to provide.

“Broadband network owners should not be able to determine who can and who cannot offer services over broadband networks or over the Internet,” Markey said May 2 upon introducing his Network Neutrality Act of 2006. “In order to prevent the warping of the World Wide Web into a system of ‘tiered service,’ the legislation will prevent broadband providers from charging new bottleneck fees for enhanced quality of service or the prioritization of bits.”

A Terrible Misunderstanding

Unfortunately, Markey, Moby, and other supporters of network neutrality display a terrible misunderstanding of Internet business models and the growing sophistication of integrated applications that use these broadband pipes.

First, none of the large phone companies or cable companies or Internet service providers has ever made it a business policy to block access to Web sites or any Web application. Madison River Communications, a small ISP in North Carolina, tried to block Vonage; it was fined by the FCC and ordered to stop.

The second aspect of net neutrality, which demands phone and cable companies treat all data the same as it crosses their networks, is disingenuous. It sounds fair. But we have reached a point where there are Web applications and content that need to be treated differently in order to work properly for the user. It isn’t so much about slow and fast lanes as it is about who pays the cost of the management and optimization these sophisticated applications will require.

Phone and cable companies have said the costs should be borne by Google, eBay,, and the major studios–the companies that are going to create these management strains to begin with. That rather logical proposition is giving Markey, Moby, and fits.

Instead, they are siding with the big Web content and applications companies who, under a network neutrality regime, would be able to avoid responsibility for the added costs of providing their bandwidth-intensive services–on which they aim to make sizable profits. This is supposed to be fair and egalitarian?

Not a Zero Sum Game

What service providers want to offer third-party applications providers is more like “good, better, and best.” Network neutrality, however, insists on a zero-sum view. Better quality for one means worse quality for another. But that’s silly.

Overnight package delivery recognizes the mission-critical needs of some shipments. Yet overnight delivery does not diminish standard three-day service. The same shipper, in fact, may use both services. If we were to apply the principle of “neutrality” in package delivery, it wouldn’t change three-day service–it would just prohibit anything faster.

When Disney/Pixar wants to use the Internet to deliver Cars in high-definition, six-channel stereo DVD quality, a lot of “care and feeding” is needed as those enormous video, audio, and control codes cross the networks. They require a higher level of real-time, error-free transmission. If service providers can’t recover this cost from content providers, they must spread it among all users. One-hour-a-day Web surfers will pay the cost of servicing 24/7 bandwidth maniacs. In the worst case, service providers will offer little or no quality enhancement to applications at all.

It’s difficult to see how tiered pricing will, in the words of Markey, “imperil economic growth, innovation, job creation, and First Amendment freedom of expression.” Quite the contrary, network neutrality will present those very threats.

Under a network neutrality regime, users will be locked into a mediocre Internet marked by bandwidth congestion and poor performance as ordinary Web sites compete with bandwidth-rich applications for bandwidth capacity. The whole broadband experience will be diminished because there will be no economic means to manage bandwidth use.

Congress needs to grasp the implication of enshrining network neutrality into law. Companies like Google should stop fomenting the hysterical rhetoric about how network neutrality will save the Internet and think about how a law banning “prioritization of bits” will affect its plan to push the envelope on the provision of premium, advertiser-supported Web services.

Network neutrality amounts to significant government interference in the market for management of sophisticated bandwidth services and applications. It’s based on wrong perceptions and wrong assumptions … and, if it goes through, it is going to be bad for everyone.

Steven Titch ([email protected]) is senior fellow IT and telecom policy for the Heartland Institute and managing editor of IT&T News.