Monday, December 10, 2007

What to Do With Heavy Internet Users?

Comcast’s heavy handed treatment of its peer-to-peer networking customers made me wonder if these customers deserve to expulsion or a fruit basket. In other words do heavy users present an opportunity or a threat to network managers?

ISPs, like airlines, only make money when customers use their services. Airlines and many other businesses typically reward heavy users with rewards. Other ventures can use data mining to determine the profitability of any particular heavy user. So I readily agree that that not all heavy users are desirable.

The problem with Comcast’s approach appears to be that the company assumed any peer-to-peer user is a problem customer deserving degraded service, rather than a candidate for upselling. Comcast should offer more expensive service to the power user who needs better than best efforts traffic routing. I do not consider this a violation of network neutrality. My beef with Comcast or any ISP lies in instances where the carrier without disclosure or reasonable explanation drops packets and otherwise degrades service, or vice versa.

For me network neutrality is primarily about transparency in a transaction that increasingly presents opportunities for mischief. At the WIK conference I recently attended on the European approach to Network Neutrality, there was much discussion on how parties frame the issue. The most common U.S. frame involves a referendum on the virtues of marketplace competition, assumed to exist, versus marketplace failure assumed to exist.

Other alternative frame considers technical standardization of the Internet and whether TCP/IP promotes or retards innovation, i.e., a variation on the dumb versus smart pipe argument. Others in Europe involve consumer protection, contract law and ex ante versus ex post facto regulation.

European Assessment of Network Neutrality

I had the good fortune to participate in a conference on Network Neutrality from a European perspective organized by WIK-Consult GmbH in Bonn Germany; see I got the distinct impression that European stakeholders and regulators take the matter quite seriously and refrain from what one participant deemed “policy entrepreneurship,” i.e., the bombast, hyperbole, partisanship and mean spiritedness that permeates the policy making process. I also sensed that for better or worse the European approach creates both the ability and incentive for regulators to act in ways the FCC would never consider, e.g., determining that wireless call terminations are too expensive and setting lower rates. On the other hand carriers would never consider engaging in the kind of stealth traffic “management” and “shaping” designed to discipline heavy users.

The thoughtfulness of European viewpoints juxtaposes with what has become a food fight in the U.S. Advocates all too readily assume that it would be “curtains for the free world” should their policy prescriptions get ignored.

Consider Verizon Wireless’s 180 degree turnabout. While one can applaud a now sensible pronouncement, how can one ignore the most vituperative and down right arrogant positions taken by Verizon’s sponsored advocates and the slightly more civilized statements made by Verizon executives? Verizon Wireless gets great public relations dividends for its enlightened new stance, but it suffered no disgrace for supporting “curtains for the free world” advocacy if any wireless Carterfone initiative took root.

Are we to conclude that the marketplace, or the court of public opinion has persuaded Verizon Wireless to rethink its policies? Or is there less than meets the eye here?