Network neutrality

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Tuesday, I read on ArsTechnica about SBC's CEO Edward Withacre interview on BusinessWeek, where he declares, and I quote:

How concerned are you about Internet upstarts like Google (GOOG ), MSN, Vonage, and others?

How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?

The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! (YHOO ) or Vonage or anybody to expect to use these pipes [for] free is nuts!

This is happening because ISP made huge investments in developing broadband networks, betting in the access business, and now are realizing that the real money is some layers above: companies like Google and Yahoo, are making huge profits, in advertising; Skype has a huge hype value, 'selling' free voice instant messaging, disguissed; and World of Warcraft(?), with millions of players, each paying an average of 10 euros a month, must be a case study. So, ISPs want a piece of the cake.

And the thing is, in some places, ISPs have monopolies, so they can, for instance, block all your VoIP traffic, and make you use their own product. You, as a customer, having no other broadband operator in your area, have no choice. And companies like Narus, are already making money with this: Narus product, not only allows ISPs to block almost any kind of traffic, as ISPs can decide to jitter the traffic, in order to avoid any legal constraints. From another article from ArsTechnica, the words of Jay Thomas, Nerus marketing president:

"But there's nothing that keeps a carrier in the United States from introducing jitter, so the quality of the conversation isn't good," Thomas says. "So the user will either pay for the carrier's voice-over-Internet application, which brings revenue to the carrier, or pay the carrier for a premium service that allows Skype use to continue. You can deteriorate the service, introduce latency [audible delays in hearing the other end of the line], and also offer a premium to improve it."

Can ISPs do this? Or should they be network neutral? This issue is being debated in several places, like ArsTechnica and LessigBlog, and there is a very interesting paper by Barbara van Schewick, which gives us an excellent economic framework for discussing the need for regulation on this matter.

It is an important matter for managers, regulators, and people concerned with the right to free information. In my humble opinion, this issue must be regulated: the temptation to do this kind of blocking and filtering, either in a monopoly, either in a cartel, is too strong. And with no regulation, we can be going to an ISP dictatorship.

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