Trevor R. Roycroft
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  • Examples of “non-neutral” networks: AOL refused to allow alternative IM users to connect to AOL’s IM service. In 2004, North Carolina LEC Madison River blocked their DSL customers from using any rival Web-based phone service. In 2005, Canada's telephone giant Telus blocked customers from visiting a Web site sympathetic to the Telecommunications Workers Union during a contentious labor dispute. Shaw, a major Canadian cable, internet, and telephone service company, intentionally downgrades the "quality and reliability" of competing Internet-phone services that their customers might choose -- driving customers to their own phone services not through better services, but by making their opponents seem worse than they really are. Separation of telephone company “telecommunications services” and “information services” contributed to the rise of network neutrality.
  • “Negative” consequences of Network Neutrality. Network (and network owner) does little more than provide bandwidth. Limits innovation at the “network core.” As Internet treats all traffic “equally,” network congestion can have a negative impact. Some applications don’t mind (e-mail). Others may degrade (streaming, web browsing, large file transfer).
  • The ability of Cisco Service Control to classify and enforce traffic policies. . ., as well as its ability to manage traffic on an individual user basis , provides a powerful tool for service providers to manage network traffic through “subscriber-friendly” policies. Some of the relevant functions include: Classification and identification of all application traffic, regardless of port number or IP address, including support for port-hopping applications (P2P applications such as BitTorrent, eDonkey, or Gnutella) . . . Prioritizing interactive and delay-sensitive applications (such as gaming, voice, streaming, or even Web browsing) at the expense of noninteractive applications (such as P2P file exchange, file downloads, or news transfers), so that preferential treatment can be given to latency-sensitive applications during periods of increased network congestion. “ Cisco Service Control: A Guide to Sustained Broadband Profitability,” Cisco Systems White Paper, p. 4.
  • “ Better TV”
  • However, it also indicates that AT&T’s plans to sell video are associated with an AT&T commitment to a network architecture that it will use to deliver video services. AT&T indicates that its video services will be delivered through the “client-server” model. While the client-server model grants the content provider a high degree of control over the delivery of content, other technologies, such as the BitTorrent content-delivery architecture, utilize bandwidth more efficiently. Furthermore, service delivery architectures such as BitTorrent are now being commercially adopted by firms that will be competing with AT&T in the delivery of programming. For example, Warner Brothers has recently announced that it will be utilizing the BitTorrent technology to deliver Warner Brothers content to end users, both televison programming and movies. [ii ] The presence of competing content providers and competing delivery architectures raise the real potential for discrimination and exclusion that will be harmful to consumers. Given the traffic identification and prioritization that AT&T is capable of achieving with the network technologies that are provided by vendors such as Alcatel and Cisco Systems, and the loudly declared intention to strike deals with content and applications providers, the competitive threat is real. “ Warner Bros. to sell films via BitTorrent First major studio embraces same peer-to-peer tech used for illegal trading,” MSNBC, May 9, 2006. Edge has demonstrated superior innovation to core. Problems can be solved at edge: Spam Security Application Performance

Trevor R. Roycroft Trevor R. Roycroft Presentation Transcript

  • Network Neutrality or Network Diversity? Presented at the NASUCA 2006 Mid-Year Meeting Memphis, Tennessee June 13 th , 2006 Trevor R. Roycroft, Ph.D. Roycroft Consulting
  • Once upon a time, we had “network diversity.”
    • Pre-Internet privatization (late 1980s, early 1990s).
    • Proprietary, non-interconnected dial-up “online services.”
      • CompuServ, America Online, GEnie, Delphi, Prodigy.
        • Offered proprietary content, e-mail, bulletin boards, etc.
        • But only to limited user community.
    • Enter the Internet
    • Internet encouraged interconnection, expansion of network effects.
    • Competitive ISPs emerged.
    • Consumers “voted” for open-access, non-proprietary, interconnected, and competitively provided Internet services.
  • Network Neutrality and the Internet
    • Network neutrality reflects the end-to-end network principles which have been associated with the operations of the Internet.
      • Network simply moves packets.
      • Open standardization.
      • Interconnection.
      • Deference to the network edge.
    • Encouraged by the pro-competitive policies which have, until recently, been enforced in telecommunications markets in the U.S.
      • Ability of end-users to attach equipment of their choice.
      • Provision of access on nondiscriminatory terms to bottleneck facilities.
      • Requirement that network providers interconnect.
  • Outcomes of network neutrality approach.
    • Competition for provision of Internet services, content, applications.
    • Rapid innovation at the network edge.
    • Positive contribution to economic growth.
  • Policy shift—Network Neutrality Challenged.
    • Broadband last-mile facilities (Cable/Telco) classified by FCC as “information services.”
      • Lifted common carrier obligations.
      • No obligation to provide multiple ISP access.
    • RBOC/Cable Arguments:
      • Network neutrality prevents innovation in the “network core.”
      • We won’t invest unless we can control.
      • “ 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?”
        • at&t CEO Edward Whitacre
    AT&T Broadband Facilities Google YouTube Etc., etc. Internet
    • Network Control.
      • Cisco, maker of network control equipment, says:
    • “ One of the most significant risks that broadband service providers face is the threat from ‘nonfacility’ service offerings for music or video downloads, VoIP, or interactive gaming. With the increased bandwidth for high-speed Internet services, operators risk having their service regarded as a baseline commodity as their users subscribe to third-party services from off-net destinations. . .”
          • “ Cisco Service Control: A Guide to Sustained Broadband Profitability,” Cisco Systems White Paper, pp. 7-8. Available at:
  • “ Innovation” at the network core.
    • Identify customer choices.
      • Determine which ones harm revenues.
        • Crimp their bandwidth.
        • Implement “Pay-as-you-go” schemes “streaming, gaming, voice (Skype, SIP)” targeted for higher prices. (Cisco White Paper.)
    • Create “fast lanes” to provide preferential treatment for some content.
    • Impose Usage Restrictions:
      • Unlimited NationalAccess/BroadbandAccess services cannot be used (1) for uploading, downloading or streaming of movies, music or games, (2) with server devices or with host computer applications, including, but not limited to, Web camera posts or broadcasts, automatic data feeds, Voice over IP (VoIP), automated machine-to-machine connections, or peer-to-peer (P2P) file sharing, or (3) as a substitute or backup for private lines or dedicated data connections. (Verizon 3G Terms of Service.)
  • Network Control and Innovation—Core v. Edge
    • Core—“AT&T’s IPTV service will entail a switched, two-way, client server architecture designed to send each subscriber only the programming the subscriber chooses to view at a particular time. . . . AT&T’s IPTV service will utilize an architecture designed to give customers additional choices in video programming that are not available today.” (AT&T/BellSouth Merger Public Interest Showing.)
      • “ Fast Lane” for AT&T video delivery.
    • Edge—BitTorrent delivers with existing bandwidth and architecture.
        • News Item: “Warner Bros. will become the first major studio to distribute its films and TV shows over the Internet using peer-to-peer technology developed by BitTorrent Inc.” MSNBC, May 9, 2006.
  • Threat to Competition and Innovation
    • Thus, if an AT&T broadband customer prefers to purchase video programming from Warner Bros., and use the BitTorrent technology to receive this content, AT&T can easily
      • (1) identify the customer which has made this choice,
      • (2) assign lower priority to the delivery of this content, thus degrading the alternative (and more efficient BitTorrent) technology,
      • (3) designate the consumers who purchase their content from non-AT&T sources as “heavy users” who “take excessive bandwidth,” and
      • (4) charge these end users (whose only offence is to make a competitive choice) more than those customers who purchase AT&T-sourced content.
  • If not neutrality, then “network diversity.”
    • Argument:
      • Multiple, differentiated, last-mile broadband networks can do it better.
      • Superior network security, spam control, application performance, can be guaranteed.
      • Losses in scale economies will be offset by higher value/higher priced services.
  • Network Diversity—Reality Check
    • 95% of broadband is currently delivered over Telco DSL and Cable Modem.
      • Duopoly market.
      • Competition not present today.
    • Track record of last-mile competition weak.
    • Telcos and Cable operators are pushing fiber closer to users.
      • Will capital markets support multiple last-mile overbuilds?
      • Substantial sunk costs discourage entry.
    • WiMax, Broadband over Powerline, Broadband in Gas have deployment/operational limitations.
  • Conclusion
    • Network neutrality has demonstrated economic benefits.
    • Network diversity has already been rejected by consumers.
    • Last-mile broadband competition has limited potential.
    • Economic criticism of network neutrality rests on shaky foundation.