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Net Neutrality | Turing100@Persistent Systems


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3rd Session of Turing100@Persistent Systems, Dr Sridhar Varadarajan, Sasken Communication Technologies Ltd presents on Net Neutrality: The supply-demand perspective

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Net Neutrality | Turing100@Persistent Systems

  1. 1. The Net Neutrality Debate: A Supply-Demand Perspective Dr. V. Sridhar Research Fellow Sasken Communication Technologies 8-Sep-2012 http://www.vsridhar.infoSasken Confidential © 2008 Sasken Communication Technologies
  2. 2. Quotes on Net Neutrality Allowing broadband carriers to control what people see and do online would fundamentally undermine the principles that have made the Internet such a success...A number of justifications have been created to support carrier control over consumer choices online; none stand up to scrutiny." - Vinton Cerf Google Chief Internet Evangelist and Co-Developer of the Internet Protocol, Turing 2004 Award Winner “The neutral communications medium is essential to our society. It is the basis of a fair competitive market economy. It is the basis of democracy, by which a community should decide what to do. It is the basis of science, by which humankind should decide what is true. Let us protect the neutrality of the net." - Tim Berners-Lee Inventor of the World Wide Web and MIT Professor © 2008 Sasken Communication Technologies 2
  3. 3. Contents• Demand for multimedia  Mobile data demand  Internet Technology and Characteristics ‐ Stupid Network, Intelligence at the edges• Supply of Network Capacity  Wireline vs. Wireless  Spectrum scarcity for mobile broadband• Problem of the Commons• Net Neutrality Debate  Proponents vs. Opponents  The Indian context• Regulatory and Policy Implications 10 September 2012 3 © 2008 Sasken Communication Technologies 3
  4. 4. The Demand SideSasken Confidential © 2008 Sasken Communication Technologies
  5. 5. Mobile Data Traffic Growth (Cisco, 2011) 1 ExaByte=1018 Byte Or 1 Giga Gigabyte Or 1 Million TeraByte © 2008 Sasken Communication Technologies 5
  6. 6. Device Diversification (Cisco, 2011) © 2008 Sasken Communication Technologies 6
  7. 7. “The mobile-only Internet” population will grow 56-fold from 14 million at the end of 2010 to 788 million by the end of 2015. Sridhar & Hämmäinen, 2011) © 2008 Sasken Communication Technologies 7
  8. 8. What about India (Nokia Siemens, 2012) © 2008 Sasken Communication Technologies 8
  9. 9. Telco’s View: Network is Intelligent Dumb Intelligent Terminals Telco as the bottleneck operator Devices, Better ControlIN Services such s Three way calling; conferencing; voice mail => Ask the telco and they will provision! Basic Fixed Landline services was traditionally considered as a natural monopoly © 2008 Sasken Communication Technologies 9
  10. 10. Internet point of view: Network is “Stupid”• Control back to where it should be => THE USER• Cheap, abundant, interoperable Infrastructure => The Internet• Save me from those specs: Bits-in, Bits-out• Unleash Innovation at the edges => development of compelling apps• Power moves from Infrastructure to Innovation at the edges Stupid + Switched Intelligent Stupid QoS? Network independent TCP/IP Protocol of the Internet © 2008 Sasken Communication Technologies 10
  11. 11. The Supply Side: Capacity of NetworksSasken Confidential © 2008 Sasken Communication Technologies
  12. 12. Growth of Fixed vs. Mobile (Ericsson, 2011) Reached a Billion! 1000 Mobile Subscribers (in Millions) 900 800 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year 50 Fixed Line Subscribers (in 45 40 35 Millions) 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year 12 © 2008 Sasken Communication Technologies 12
  13. 13. 4G Technologies: Network capacities on the increase CDMA CDMA/TDM OFDM/OFDMATD-SCDMA Path TD-SCDMA 2.1 Mbps Adopted by China Mobile TD-LTE The first commercial public LTE-A 1 Gbps network in Stockholm and Oslo in Dec 2009 FD-LTE DL: 326 MbpsWiMax Path UL: 86 Mbps WiMax IEEE 802.16m 40 Mbps 1 Gbps•2004 •2005 •2006 •2007 •2008 •2009 •2010 •2011Telecom Technology - Reliance Executive 13 16 April 2012 Programme @ IIMB © 2008 Sasken Communication Technologies 13
  14. 14. © 2008 Sasken Communication Technologies 14
  15. 15. Progress on LTETelecom Technology - Reliance Executive 15 16 April 2012 Programme @ IIMB © 2008 Sasken Communication Technologies 15
  16. 16. Spectrum of the Commons(Buchi, Sridhar (Sep 2012) Carrier Wi-Fi IEEE Release Frequency Bandwidth Max Data Indoor Outdoor 802.11 (in GHz) (in MHz) Rate (in Range Range Standard Mbps) (in M) (in m) a Sep 1999 5 20 54 35 120 b Sep 1999 2.4 20 11 35 140 g Jun 2003 2.4 20 54 38 140 SIM based n Oct 2009 2.4/5 20/40 72.2/150 70 250 ac (Giga Nov 2011 5 20/40/80/ 87.6/200/4 70 250authentication Wi-Fi) (draft) 160 33.3/866.7 © 2008 Sasken Communication Technologies 16
  17. 17. India’s National Frequency Allocation Plan 2011However, there is a perennial spectrum crunch for commercial mobile services © 2008 Sasken Communication Technologies 17
  18. 18. Supply Side: The Indian context vs. Advanced MarketsSridhar, Casey, and Hämmäinen (2012) Factor In India In Finland Average spectrum 2×7 MHz in 900 and 1800 2×11.3 MHz in 900; allocation per operator for 2G; 2×2.5 MHz in 800 2×24.8 MHz in 1800; per License Service Area for 2G/3G; 2×5 MHz in 2×15 MHz in 2100; 4.8 2100 for 3G; 20 MHz MHz unpaired in 2100; Acute spectrum shortage! unpaired in 2300 for BWA 2×20 MHz in 2600 MHz (Sridhar & Prasad, 2011; Sridhar, 2011) Broadband policy 75 million (30% of 99% households to be households) by 2012; 160 connected with 100 Mbps million (60% of by 2015 (Kim, et al., households) by 2014 at 2010) Minimum download Speed of: 512 Kbps until 31 Dec 2014; 1 Mbps from 1 Jan 2015 (TRAI, 2010) What about the backhaul?? © 2008 Sasken Communication Technologies 18
  19. 19. Problem of the Commons!Sasken Confidential © 2008 Sasken Communication Technologies
  20. 20. Congestion Problems• Problem of Commons  When villagers have shared, unlimited access to a common grazing field, each will graze his cows without recognizing the costs imposed on the others• Without congestion control mechanisms, the Internet will be overgrazed• If the network is congested, packets are dropped and must be resent• Imposes external social costs  A send packet that crowds out B’s packet; B suffers delay; But A does not for the cost (delay) she imposes on B  Creating congestion that results in delays and dropped packets for other users © 2008 Sasken Communication Technologies 20
  21. 21. Congestion Control• Schemes that offer different priorities and QoS, depending on users’ needs  (Without appropriate pricing), what stops an email user from setting the highest priority if it costs nothing?• During periods of congestion, bandwidth is scarce resource and hence should be charged  When the network is not congested, the marginal cost of transporting additional packet is essentially zero ‐ Hence charge very low or no price when network is not congested 10 September 2012 21 © 2008 Sasken Communication Technologies 21
  22. 22. Net Neutrality DebateSasken Confidential © 2008 Sasken Communication Technologies
  23. 23. Network Neutrality• Network neutrality is a principle that says those who operate networks which provide an overall benefit to the public good and rely on public property should not use their ownership to confer discriminatory treatment amongst their customers.• No discrimination  Prevents Internet Service Providers from blocking, slowing down or speeding up content based on its source, ownership, or destination  All bits are equal  No discrimination of data by network• Proponents: Content and Apps providers• Opponents: Telcos, Broadband and Internet Service Providers 10 September 2012 23 © 2008 Sasken Communication Technologies 23
  24. 24. Examples• 2005 Case: Madison River Communications, a Broadband Service Provider in North Carolina in the US blocked Vonage’s Internet Telephony service• 2007: ComCast, the Cable Broadband Access Provider in the US restricted certain peer- peer applications to be used on its network• 2009: AT&T, the US mobile service provider who bundles iPhone 3G handsets along with its access service has decided to put restrictions on the iPhone applications that can run on its 3G network  AT&T allowed SlingPlayer Mobile to stream IP based video broadcast over Wi-Fi networks not on its 3G network  AT&T spokesman as saying about SlingPlayer Mobile, "Its absolutely cool [technology], but if we allowed these kinds of services, the highway would quickly become clogged.“• Skype, another victim, had to restrict its cheap and almost free Internet Telephony application designed for iPhone, to work on the public Wi-Fi network; but not on AT&T’s 3G wireless data connection. © 2008 Sasken Communication Technologies 24
  25. 25. The Case for Net Neutrality • Discrimination restrict access to end-users by blocking or prioritizationInnovation • Discrimination results in network providers capturing value out of innovation at the edge • Enables app/content providers to reach broad audiences • Level playing field for app/providers fosters healthy Consumer competition which eventually benefits consumers • 2-tiered internet where only the rich get the fast lane shall be avoided • Mandating access to content/service providers enablesCompetition competition in content provisioning and hence enhances consumer benefit and innovation © 2008 Sasken Communication Technologies 25
  26. 26. The Three Pillars of Net Neutrality: TheProponents’ View Content Prohibition Access Tiering Vertical Integration • Prohibition against • Prohibition against • Line of business blocking of certain speedier delivery of restriction for contents certain content network operators – • Consumer’s (may be own vertical integration “internet content) with content freedom” • Is it a zero-sum providers to be • Curbs Innovation game? carefully looked at at the Edge! • What about economies of scope effects? © 2008 Sasken Communication Technologies 26
  27. 27. An Example of Prioritization and Pricing All others are Blocked! © 2008 Sasken Communication Technologies 27
  28. 28. How can I prioritize: DPI to the rescue! Telcos can filter the traffic, or accelerate/ decelerate at the core or access network Telco: Using a walled garden approach © 2008 Sasken Communication Technologies 28
  29. 29. Charging Models CONTENT PROVIDER END USER BANDWIDTH ALLOW ALLOW PRIORITY BAN ALLOW Network Neutrality Proponents want 10 September 2012 29 © 2008 Sasken Communication Technologies 29
  30. 30. What do Opponents Want?• Arguments By Opponents of Net Neutrality  Capacity is finite!  Prioritisation of bandwidth is necessary for future innovation on the Internet ‐ The added revenue could be used to pay for building increased broadband access to more consumers.  No incentive for innovation and investment for Internet Service providers and network operators to develop advanced fibre-optic networks to enhance capacity A very small number of customers use an excessive amount of the network bandwidth, to the extent that it can impair the experience of others. The intent of <operator> Fair Usage Policy is to provide the optimum internet experience to all customers. 30 © 2008 Sasken Communication Technologies 30
  31. 31. Effect of Prioritization• If there is capacity constraint, then prioritized packets are more valuable to users. But if there isn’t any constraint, then every packet is the same to user.  The seller is more interested to sell his/her product to the buyer than the buyer himself.• If there is capacity constraint and if we prohibit prioritization, then it de-motivates suppliers from differentiating contents and applications © 2008 Sasken Communication Technologies 31
  32. 32. Broadband as a Two-Sided Market (Sridhar & Venkatesh, 2012;Subhash & Sridhar, 2011)• Cross-side network effect in a two-sided market• Demand for network access = f (bandwidth, application/ content)  Without bandwidth => cannot consume application/ content  Without application/ content => bandwidth is of little value ‐ There is cross-elasticity of demand between bandwidth and content• Who should be charged and why?• In general, one side is subsidized and the other is priced  Which side to subsidize and by how much? The two-sides and the platform in betweenContent/ Consumers ISP/ Mobile Broadband Operator AppProvider © 2008 Sasken Communication Technologies 32
  33. 33. What are the content providers doing?• Google fibre project at Kansas City, U.S.  started on July 26th  Kansas City beat out more than 1,100 other cities to win the Google project.  $70 a month for the one gigabit per second connection ‐ Alternatively pay $300 to connect home to the network and then have free access to the Web at the current US average speeds for seven years  Deadline to sign up: Sunday, the 9th Sep!• Comments from Telcos: Too small a network to test and validate• 2008: Google announced joining five other telecom companies — Bharti Airtel, Global Transit, KDDI, Pacnet and SingTel — to jointly finance a new trans-Pacific "Unity" cable linking the U.S. to Japan  March 2010: Unity completed: direct connectivity between Chikura, located on the coast near Tokyo, and West Coast network Points-of-Presence in Los Angeles, Palo Alto and San Jose.  Through the deployment of state-of-the-art submarine cable technology, the five fiber pair Unity cable system is designed to deliver up to 4.8 Terabits per second (Tbps) of bandwidth across the Pacific, with each fiber pair having a capacity of up to 960 Gigabits per second (Gbps). © 2008 Sasken Communication Technologies 33
  34. 34. Regulatory and Policy ImplicationsSasken Confidential © 2008 Sasken Communication Technologies
  35. 35. Implications on Regulation • Categorical restrictions • Pre-emptive regulation Ex- Ante • Prevents realization of potential benefits • Case-by-case • Imposes liability only when proven to be anti- Ex-post competitive • Does not prevent realization of potential benefits• Ex-Ante  Suits take time and damage can be done before they are solved ‐ The legal system is slow and law suits are not solved in “Internet Time”  Internet is key to economic growth; allow it to flourish and not bar it!• Ex-Poste  Difficult to visualize whether an outright ban of prioritization leads to social surplus © 2008 Sasken Communication Technologies 35
  36. 36. What are regulators doing?• Preserving the Open Internet; Final Rule Federal Register / Vol. 76 , No. 185 / Friday, September 23, 2011 / Rules and Regulations( Transparency: Fixed and mobile broadband providers must disclose the network management practices, performance characteristics, and terms and conditions of their broadband services;ii) No blocking: Fixed broadband providers may not block lawful content, applications, services, or non-harmful devices; mobile broadband providers may not block lawful Web sites, or block applications that compete with their voice or video telephony services;iii) No unreasonable discrimination: Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic. © 2008 Sasken Communication Technologies 36
  37. 37. FCC Open Internet Rules (contd.)• Mobile broadband is at an earlier stage in its development than fixed broadband and is evolving rapidly. For that and other reasons discussed below, we conclude that it is appropriate at this time to take measured steps in this area.• Accordingly, we require mobile broadband providers to comply with the transparency rule, which includes enforceable disclosure obligations regarding device and application certification and approval processes;• we prohibit providers from blocking lawful Web sites; and we prohibit providers from blocking applications that compete with providers voice and video telephony services.• We will closely monitor the development of the mobile broadband market and will adjust the framework we adopt in this Order as appropriate. © 2008 Sasken Communication Technologies 37
  38. 38. Elsewhere..• Netherlands: May 2012: First country in Europe to pass Net Neutrality regulation  Mobile operators will not be able to do discriminatory pricing for services such as Skype; neither can they throttle some services  Some exceptional reasons, such as network congestion and security, are allowed for slowing down users connections;  but the general thrust of the law is that operators ought to be blind to the traffic they carry and treat all of it equally• Rest of Europe: Public consultation going on .. Ending in Oct 2012.. Likely rules only in 2013 © 2008 Sasken Communication Technologies 38
  39. 39. What about India?• No mention about Net Neutrality in the National Telecom Policy 2012 (NTP 2012)• What happens in Fair Usage Policy being enforced by the mobile operators?  Under the policy there is a set fair usage levels for unlimited data transfer plans ‐ On reaching the fair usage level, the plan speed would be rationalized by up to 50% for the rest of the monthly billing cycle. You would also be redirected to a page which will inform you that the speeds for the rest of the billing cycle month would be as per the operator’s Fair Usage Policy.• Is it discrimination? Discrimination against the user who uses large bandwidth application or discrimination against that application itself?  Will not the user cease to use the application after some time ‐ The innovative app loses and goes out of the market! © 2008 Sasken Communication Technologies 39
  40. 40. The battle between the operators and content providers continue…..Sasken Confidential © 2008 Sasken Communication Technologies
  41. 41. References• Sridhar, V. (2012). The Telecom Revolution in India: Technology, Regulation and Policy, Oxford University Press India.• Sridhar, V., Casey, T., and Hämmäinen , H. Flexible Spectrum Management for Mobile Broadband Services: How does it vary across Advanced and Emerging Markets? Accepted in Telecommunications Policy Special Issue on Cognitive Radio.• Sridhar, V., Casey, T., and Hämmäinen , H. (2012). Systems Dynamics Approach to Analyzing Spectrum Management Policies for Mobile Broadband Services in India. International Journal of Business Data Communications and Networking, 8(1), 37-55.• Sridhar, V., & Prasad, R. (2011). Towards a New Policy Framework for Spectrum Management in India, Telecommunications Policy (Elsevier), 35, 172-184, DOI: 10.1016/j.telpol.2010.12.004.• Sridhar, V,, and Venkatesh, G. (30 Apr 2012). The Mobile Platform Wars: A 2-Sided Market View, DataQuest, 58-60.• Mobile Internet: Indian Telecom Leading the Way, DataQuest, July 15, 2011 (with Heikki Hämmäinen)• Threat to Walled Garden, Business Line, April 4, 2011 (with Subhash P)• What’s in store for Mobile Telecom? Business Line, June 28, 2010 (with G. Venkatesh)• Gravy train stops at app platform, Economic Times. Mar 1, 2010 (with G. Venkatesh)• Let the traffic flow. Business Line, Sep 14, 2009 (with G. Venkatesh).• Reliance Communications MDP @ IIMB 41 18 April 2012 © 2008 Sasken Communication Technologies 41
  42. 42. Thank You and Questions? Queries: sridhar.varadharajan@sasken.comSasken Confidential © 2008 Sasken Communication Technologies