Reconciling Political and Economic Goals in the Net Neutrality Debate

Abstract

The net neutrality debate is one of several sites of struggles to adapt and redefine rights and obligations of stakeholders in the Internet-centric communications system. Its outcomes will shape the future of the Internet and influence the level and distribution of its benefits. We identify key values that drive the net neutrality discussion and examine the governance mechanisms proposed to achieve these objectives. We find that there is no single policy instrument that allows realization of the range of valued political and economic objectives simultaneously. Contrary to some of the claims advanced in the current debate, safeguarding multiple goals requires a combination of instruments that will likely involve government and nongovernment measures. Furthermore, promoting goals such as the freedom of speech, political participation, investment, and innovation calls for complementary policies.

Keywords:

• free speech
• innovation
• Internet
• investment
• neutrality
• openness

ACKNOWLEDGEMENTS

This is a significantly revised and expanded version of Bauer, Obar, and Koh (2011). The final article benefited from comments and feedback by three anonymous reviewers. Johannes M. Bauer acknowledges the generous hospitality of the Institute of Media and Communications Research (IPMZ) at the University of Zurich, which provided an ideal environment to work on the article.

Notes

Even though a precise definition is elusive, the term “open” typically refers to several aspects of the Internet's architecture and operation. It includes (1) publicly available standards, (2) the treatment of information flows in roughly the same way, and (3) the ability of entrepreneurs to design new devices and services without having to seek permission from other stakeholders in the ICT ecosystem. See, for instance, Faulhaber and Farber (2010), Shah, Sicker, and Hatfield (2003), Clark (2007), Claffy and Clark (2013), and Van Schewick (2010). The terms “open” and “neutral” are often used interchangeably, but we interpret “neutral” as a subset of attributes relating predominantly to how traffic flows related to different users and uses are handled.

This is a more pressing issue in countries and regions that have imposed stringent obligations on network operators. For example, private firms and policymakers in the European Union (EU) are concerned about low levels of investment in advanced networks and reassessing the prevailing regulatory framework (Cave and Martin 2010). For a view from the European Commission, see “Enhancing the Broadband Investment Environment—Policy Statement by Vice President Kroes,” July 12, 2012, available at http://europa.eu/rapid/press-release_MEMO-12-554_en.htm

For a recent thought-provoking expression of these apprehensions see Crawford (2013).

The term “governance” is used very heterogeneously by scholars in different disciplines and even geographic regions. A fair number of researchers, including many in the Internet governance field, use the term to refer to nongovernment forms of coordination. Such a narrow use is neither logically compelling nor reflecting the etymological roots of the word.

The United Nations Working Group on Internet Governance (WGIG) circumscribed Internet governance as “the development and application by governments, the private sector, and civil society, in their respective roles, of shared principles, norms, rules, decision-making procedures, and programs that shape the evolution and use of the Internet” (WGIG 2005).

See also the special section on net neutrality in the International Journal of Communication (IJoC 2007).

See http://www.savetheinternet.com/net-neutrality (accessed August 4, 2012).

Again, see http://www.savetheinternet.com/net-neutrality (accessed August 4, 2012).

Strict neutrality could also be enforced with detailed regulation, although few, if any, stakeholders endorse this option. The specter of detailed regulation is regularly invoked by stakeholders opposed to any form of government involvement as an inevitable consequence of even more modest forms of safeguards (Bauer 2007). The U.S. Open Internet Order (FCC 2010) does not require strict neutrality but allows differentiation. However, the order's managed services exemption is subject to considerable concern and criticism (e.g., Claffy and Clark 2013).

The order has been challenged in court by Verizon, one of the largest broadband Internet service providers (ISPs) in fixed and wireless markets, with a decision expected in 2013. In 2010, Comcast had won an appeal against a 2008 FCC order, adopted in response to Comcast's selective throttling of Bit Torrent traffic that imposed nondiscrimination obligations on the company. The D.C. Circuit Court of Appeals argued that the FCC did not have the authority to impose such rules limiting traffic management practices (U.S. Court of Appeals 2010).

See “Netherlands joins Chile in Net Neutrality Victory,” International Business Times (tech), accessed September 6, 2012, from http://www.ibtimes.com/articles/169065/20110624/netherlands-joins-chile-in-net-neutrality-victory.htm; and Canadian Radio-Television and Telecommunications Commission, “Telecom Regulatory Policy CRTC 2009–657,” http://www.crtc.gc.ca/eng/archive/2009/2009–657.htm (accessed September 15, 2013).

The European Commission encouraged national regulatory agencies in the member states to safeguard net neutrality (Marsden 2010; 2011). In May 2012, the Body of European Regulators for Electronic Communications (BEREC) released several reports addressing net neutrality; see http://berec.europa.eu/eng/document_register/subjectmatter/berec/download/0/24-berec-publishes-net-neutrality-findings-_0.pdf

See ETNO paper “Contribution to WCIT: ITRs Proposal to Address New Internet Ecosystem,” available at http://www.etno.eu/news/etno/2012/51.

Verizon and Metro PCS filed an appeal against the FCC Open Internet Order of December 2010, in which, among other problems identified by the complainants, violations of the First and Fifth Amendments are asserted. See Verizon, Appellant v. Federal Communications Commission, Appellee, filed in the U.S. Court of Appeals for the District of Columbia, July 2, 2012.

Recent panels and workshop at the Internet Governance Forum addresses topics such as “Internet and Human Rights: Shared Values for Sound Policies” (organized by the Internet Society and the Association for Progressive Communications; see Liddicoat and Doria [2012]) and “A Plan for Rights-Respecting Telecoms.”

See Somini Sengupta, “U.N. Affirms Internet Freedom as a Basic Right,” http://bits.blogs.nytimes.com/2012/07/06/so-the-united-nations-affirms-internet-freedom-as-a-basic-right-now-what

For example, the ACLU (2010, 5) notes that the First Amendment requires “that the government create strong policies against incursion by companies that are, at root, profit-seeking rather than civic-minded.” Similarly, Cooper (2004, 96) argued that “allowing network owners to discriminate against communications, content, equipment or applications represents a dramatic change that would render the information environment much less conducive to innovation. The mere threat of discrimination dramatically affects incentives and imposes a burden on innovation today.”

For example, the test developed in the Turner I and Turner II cases, which upheld must-carry rules for cable systems (e.g., Nuechterlein and Weiser 2007).

Furthermore, the E-Commerce Directive, part of the European telecommunications regulatory framework, establishes exemptions from liability for mere conduit, caching, and hosting operations, which are seen as additional safeguards for the equal treatment of data traffic. But see also the critique of Horten (2011) on recent amendments.

The argument here is largely economic. There are a few examples where network operators discriminated against content on political and strategic grounds, although all these cases were resolved relatively quickly after they became publicized (see Nunziato 2009).

In a best effort Internet, blocking is the only credible threat that ISPs have to extract payment from a content provider. However, if quality of service tiers exist, it will be possible to charge a positive price for access to higher tiers without blocking access to the Internet per se.

In the United States, large companies such as Verizon and AT&T have invested in such incubators.