The masked debate – net neutrality

The most remarkable aspect of the internet is that it has successfully hidden the fact that, at its core, it is a business (like any other) and run on similar principles. Nevertheless, since the dawn of commercial internet, it has managed to position itself as a democratic forum, champion of transparency, bestowing power on ordinary people and challenging authority per se, any authority. As Kevin Spacey says in ‘The usual suspects’, the greatest accomplishment of the devil is to convince the world that it doesn’t exist. Some of you may recall how the debate over net neutrality became a debate about democracy and fairness, and innovation, when in fact it was (and continues to be) battle between two businesses, one built on the telecom network and the other pivoted on the internet and cable. The idea that net neutrality is vital for innovation has become so entrenched that anyone arguing against net neutrality is seen as anti-innovation!  Since most users in many countries harbor an intense dislike of telecom companies, they received no support or sympathy.

The debate began really in 2008 and hasn’t seen any resolution 14 years later. Writing in the New York Times, Shira Ovide (NYT, February 25, 2021) wryly observed: “People may scream at me for saying this, but net neutrality is one of America’s longest and now most pointless fights over technology”. (https://www.nytimes.com/2021/02/25/technology/net-neutrality-explained.html).

Decoding the issues

For the record, the Federal Communications Commission in the US revoked net neutrality in 2019 under President Trump’s administration – President Obama had put the might of his White House behind neutrality. When this debate acquired mainstream visibility, the tech media observed that “a central tenet of net neutrality is that “best efforts” should be applied equally when transmitting every packet moving through the Internet, regardless of who the sender, recipient, or carriers might be. It does not matter whether the user is downloading a simple text-based article, a video, a spam email, or podcast or whatever; no data packet has priority over any another, and service providers such as ISPs should not get into agreements giving them (and their users) greater speeds or improved access. Telecoms and ISPs challenged this view, arguing that if both video and e-mail traffic were treated equally, users would not have good video-stream reception.

The logic is extended to all kinds of devices, which acquires a special significance in an era of IoT (internet of things), where the number and variety of devices is just increasing. In my view, in India, with 5G and the purchase of spectrum (for Rs 150000 crore) by telecom companies and the Adani group, this issue will acquire an acrimonious tone.

Network management & investment in infrastructure

Tim Wu, one of the most important writers on technology, admits that cable and digital service providers have a legitimate right to manage their networks for maximum efficiency but cautions that they should not be allowed to discriminate against or for certain internet applications as this will benefit those who can afford to pay against those who cannot. The reality though is that every bitstream is different. Nathalia Sautchuk Patricio, Technical Advisor to the Brazilian Internet Steering Committee (CGI.br), writing in DigWatch, a Geneva Internet Platform, says that “Since the early days of dial-up modem connection to the Internet, network traffic management has been used to prioritise certain traffic. For example, Internet traffic carrying Voice over Internet Protocol (VoIP) services (such as Skype) should have priority over traffic carrying a simple e-mail: While we can hear delays in Skype voice chat, we will not notice minor delays in an e-mail exchange” (https://dig.watch/topics/network-neutrality).

The argument from telecom companies and ISPs in favour of a tiered-pricing structure is premised on the fact that the demand for greater bandwidth following the growth of OTT services calls for greater investment in infrastructure. OTT companies benefit the most from such enhanced infrastructure and hence should pay more. Let me note just one fact: Video streaming services were responsible for 57% of the bandwidth used worldwide in 2018. Customers who use less bandwidth may not want to pay for the infrastructure needed to support high-bandwidth activities. (https://nordvpn.com/blog/net-neutrality-pros-and-cons/)

Recently Reliance Jio and Vodafone India supported a proposal to regulate content delivery networks used by big tech companies; these networks were kept out of TRAI’s 2017 recommendations on net neutrality. There is evidence, according to Jio and Vodafone India, that these networks were tying up with some ISPs to offer higher quality services or to certain kinds of customers. These networks are used by the likes of Google, Netflix, Amazon Prime, HotStart among others. NASSCOM has supported these delivery networks arguing that the low entry barriers has driven down prices and should be encouraged. This is clearly a battle between telecom and others, principally Big Tech, with revenues in billions of dollars.

In my view, there has been a confusion over neutrality and anti-competitive practices. For example, if operators tended to prioritise packages by slowing down or banning the flow of data packages from a competing company, while giving priority to data packages of its own in-house service, that would amount to an anti-competitive practice. This will be similar to the argument of Google prioritizing its search engine on mobile phones running on Android or Apple doing the same on iPhones with Safari. Or showing a preference for their own payment systems. This is simply anti-competitive and should not be confused with the issue of neutrality.

Price discrimination pervades life

I have great respect for Tim Wu but must admit to being perplexed about his comments on the exclusion of some people without net neutrality, because every business operates on some principle of exclusion. Charging different prices for the same service (at the same time or different times) is an everyday phenomenon. Quite a few governments charge congestion pricing during peak traffic hours to discourage private over public transport. Radio cabs charge surge pricing depending on demand. In hospitals, every charge is indexed to the room tariff –  whether a routine blood, urine or stool test, radiology examinations, surgery or whatever, you may more or less depending on your room tariff. This price discrimination is vital to the running of (private) hospitals. In an airline, the ticket cost varies according to the class of travel – economy, premium economy, business or first class, with business class and first class passengers getting a priority in seating etc. Some may argue that the service is different domiciled within a common service of air travel. Yes, but the difference in ticket fare is not equal to the difference in the additional cost of additional services in premium, business or first classes. Large retail stores and supermarkets do charge special ‘slotting fees’ if companies want premium positioning giving them greater visibility. If you have been to these stores, you would have seen employees of these product companies, rearranging the display (when disturbed) to ensure visibility. Some will probably pay more to keep products near the cash counter if they are susceptible to impulse buying. These are routine happenings and no one raised any alarm over the unequal treatment or premium pricing. It did not become a matter of democracy.

Look at the 5G figures 

This debate is going to intensify and probably become acrimonious with the advent of 5G with expectations of faster mobile broadband speeds and lower latencies for new applications possible like on-demand video and autonomous vehicles. The Government of India has sold spectrum for a total Rs 1,50, 014 crore, going  by media reports. This is a payment for just spectrum; accompanying investments have been projected to be around Rs 2,50,000 crore.  Precedence Research estimates that the global 5G services market could hit $1.87 trillion by 2030, up from $64.54 billion in 2021, owing to growing demand for internet subscriptions, fast and extensive network coverage and the “internet of things”. Spectrum is available in a range of frequencies – different MHz – each suitable (or not) for offering certain kinds of services. Operators will use a combination of different spectrum bands to deliver 5G services. Media reports show that most telecom companies have opted for 700 MHz, considered 5 times more efficient than the 1800 MHz (for rural areas) and twice as efficient as 900 MHz. Although not explicitly expressed by anyone, companies will strive to recoup such investments sooner than later, because this is a technology-based business, where user demand changes can be quite dramatic.

The only way to recoup any investment is through pricing of products and services. I doubt service providers will pay heed to neutrality while determining prices. Perhaps quietly, bundled services will address these effectively incorporating speed and low latency in different price bands. Given the rising number of instances of fake traffic and misuse of bots not to mention intrusion into privacy, net neutrality might at best receive low decibel level noise. Genuine champions of democracy and freedom should choose better.

Takeaways

The internet is a business like any other
Neutrality is an illusion
Battle between businesses has come across as a battle for democracy and equality
5G and spectrum purchases will create business compulsions
Service bundles may quietly whisk away net neutrality