IBM Systems Magazine, October 2007

Would tiered pricing make a better Web for all, or slow e-commerce to a crawl?

Should phone and cable companies offer priority service to Web content providers who are willing to pay more, and assign lower priority to data from those who aren’t? The net-neutrality debate may seem like an argument between big businesses and scrappy bloggers, but to paint it with such a broad stroke excludes most folks who use the Internet to buy, sell or communicate. What boiled into a Congressional smackdown last year has cooled to a low simmer and may not heat up again until technology catches up with politics. Now’s the time for those with a stake in the Internet to ask themselves: Should I care?

Network neutrality, or net neutrality, is a broad term that describes routers ushering packets of data through wires first-come, first-served—without examining content. For the most part, this status quo remains, if for no other reason than, for now, classifying data into high, medium and low priority would gobble up resources. But investment in the costly deep packet-inspection technology that might make prioritization possible is growing, according to the telecom publication Light Reading, so it seems tiered pricing is on the radar for big telcos.

The debate over whether laws should prevent tiered pricing is contentious. “The future of the Internet is at stake in this debate,” says Craig Aaron, communications director for Savetheinternet.com, a group calling for regulatory enforcement of net neutrality. “Unless your business is that you work for a phone or cable company, you should be very concerned.”

Net-neutrality advocates fear network owners have the power to take away the Internet as we know it: a globally linked system of networks where anyone with a share of bandwidth can see any site, and content providers gain audiences based on merit. Instead, advocates say, we’ll end up with a medium that resembles cable TV, where network owners decide who can access audiences based on deals struck with Web-site owners. Hypothetically, consumers might have to choose between the Yahoo-Disney DSL package and the Google-CNN cable package. In a grim prediction for businesses, Aaron sees a future where, if a network owner has a deal with your competitor, not only does your Web site slow to a crawl, but consumers see your rival’s ads while they wait. “These all become possible when you get rid of net neutrality.”

Critics of net neutrality call this worst-case scenario highly unlikely. They point out that it’s in the best interests of telcos to serve their customers, and say if folks are unhappy with how one network provider directs traffic, they can take their business elsewhere.

“The marketplace is a better guarantor of access and innovation than a new regulatory regime going under the name of net neutrality,” says Lloyd Billingsley, editorial director of the Pacific Research Institute, an anti-regulatory think tank. “The Beatles said it best: Let it be.” The number of markets in which broadband competition goes beyond one phone company and one cable company is tough to pin down—the Federal Communications Commission touts effective competition, while the Government Accountability Office finds it lacking.

One thing is certain: An Arizona business’ content likely travels networks belonging to several telcos on its way to a consumer in Maine. If each one implements a tiered pricing scheme, the information superhighway could sport a tollbooth at every interchange. Yet businesses, most of which have a presence on the Web, have been slow to get involved—perhaps because the issue is often characterized as regulation vs. free market.

Critics of net neutrality promote tiered pricing as a way for network owners to bankroll innovation. Charging content providers for priority service in addition to bandwidth could stimulate investment in greater broadband infrastructure, the Department of Justice’s anti-trust division said in a recent statement discouraging regulation.

The filing compared tiered pricing to the various classes of mail delivery, where consumers pay more to send packages faster. “No one challenges the benefits to society of these differentiated products,” the department stated. “Whether or not the same type of differentiated products and services will develop on the Internet should be determined by market forces, not regulatory intervention.”

Aaron doesn’t buy that analogy: “When you go to the post office, you can personally choose faster delivery. But the post office doesn’t say, ‘Oh, sorry, if you’re mailing to that company, we’re going to hold onto this for a few extra days because they didn’t cut a side deal.’ The postal analogy is more akin to [paying more for greater] bandwidth,” he says.

Among all of the rhetoric and hypotheticals, one business owner is taking action. George Matafonov, owner of a small database-architechting business, believes those who use the Internet should care about net neutrality. So in August, Matafonov gave folks a way to vote with their dollars by helping launch Copowi, the first ISP to guarantee neutral pipes. “One reason we launched Copowi was to say that’s one way to attack the problem,” he says. “To in fact create a market segment and to work within the free-market system.” Though Matafonov is a fan of net neutrality as a concept, he doesn’t trust legislators to preserve the Web. “You’re not going to have lawyers and politicians grappling with this. Even though I see legislation as a potentially short-term solution, as a way to get attention to the issue, long-term I don’t think legislation is a solution because of, one: complexity, and two: the fact that the Internet is now global.”

The name Copowi stands for “community powered Internet,” which Matafonov believes is the ultimate solution in the neutrality issue. He cites municipalities like Lafayette, La., that build their own broadband fibers to give citizens an alternative to phone and cable companies. Now rare, such local ownership of Internet backbone would quell fears of corporate control over content. It could also make ISPs a thing of the past. Matafonov doesn’t mind that—Copowi is a “social enterprise,” not a for-profit business, meant to nurture the neutrality-conscious market segment. “Our goal is to put ourselves out of business,” he says.

But others should keep a mind toward self-preservation in the net-neutrality debate. “A lot of businesses see it as a peripheral issue,” Matafonov says, “But it will have an impact on businesses specifically.”

© 2007 MSP Communications, Inc. All rights reserved