Communications - February 2009

in which it does have an incentive to do so—to increase its own profit, to manage bandwidth on its network, or to exclude unwanted content. Consistent with these theoretical predictions— and in spite of heightened public attention from the ongoing controversy about the need for network neutrality regulation, examples of discriminatory conduct have started to appear in practice. As Lawrence Lessig has put it, “if ‘network neutrality’ was ‘a solution in search of a problem’ in 2002, and 2006, the network owners have been very kind to network neutrality advocates by now providing plenty of examples of the problem to which network neutrality rules would be a solution.” ²

For example, network providers

Does a network
provider really
have an incentive
to discriminate
against applications?

may want to exclude applications that threaten their traditional sources of income. In 2005, Madison River, a rural phone company in North Carolina, blocked the Internet telephony application Vonage, which threatened its revenue from traditional phone services. In 2007, Comcast, the second-largest provider of Internet services in the U.S., shut down peer-to-peer file sharing connections, degrading the performance of applications such as Vuze that legally deliver television content to end users based on a peer-to-peer protocol and threaten Comcast’s traditional cable-based content delivery services. ISPs such as AT&T or Verizon, which offer co-branded services with Yahoo may have an incentive to increase their joint advertising revenue with Yahoo by slowing down Web sites or portals that compete with Yahoo. Network providers need not necessarily be able to monopolize the market for a specific application to make discrimination profitable; the increased revenue from

selling more copies at the market price may be incentive enough.

Network providers may also be motivated to interfere with applications to manage bandwidth on their network. Because of the prevailing flat-rate pricing structure, network providers have an incentive to block or degrade applications that consume more bandwidth or consume it in unexpected ways. After all, if the use of the network increases, the network provider’s costs increase as well, but due to flat-rate pricing, its revenue stays the same. For the network provider, blocking or degrading selected applications is a quick fix that requires less investment than upgrading the network or devising a nondiscriminatory solution. Comcast’s blocking of Bit Torrent and other peer-to-peer file-sharing applications is an example of this type of behavior.

Finally, network providers may have an incentive to block unwanted content that threatens the company’s interests or does not comply with the network provider’s chosen content policy. In 2005, Telus, Canada’s second largest ISP, blocked access to a Web site that was run by a member of the Telecommunications Workers Union. At the time, Telus and the union were engaged in a contentious labor dispute, and the Web site allowed union members to discuss strategies during the strike. In 2007, Verizon Wireless rejected a request by NARAL Pro-Choice America, an abortion rights group, to let them send text messages over Verizon Wireless’ network using a five-digit short code. In the same year, AT&T deleted words from a Webcast of a Pearl Jam concert in which the singer criticized George W. Bush. Both providers argued that the rejected or deleted

content violated their content policies.

d

While the latter two examples are not direct examples of ISPs restricting content on their networks (Verizon Wireless restricted a service on its wireless mobile network, not the wireless Internet, while AT&T acted in its role as a content provider, not as ISP), it is easy to imagine virtually identical incidents in which an ISP enacts a content policy and restricts content on its network accordingly.

If ISPs have an incentive to block selected applications or content or discriminate against them, why should we care? Preventing discrimination is necessary if the Internet is to realize its full economic, social, and political potential. Discrimination restricts users’ ability to choose the application and content they want to use. This ability to choose is fundamental if the Internet is to create maximum value, for us as individuals and for society. The Internet is a general-purpose technology. It does not create value through its existence