Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Sunday, April 8, 2012

Net Neutrality in the United States and Europe

Posted by D. Daniel Sokol

Jan Kramer, Lukas Wiewiorra, & Christof Weinhardt (KIT) discuss Net Neutrality in the United States and Europe.

ABSTRACT: The Net Neutrality ("NN") movement essentially believes that the traditions of the internet ecosystem should not be altered. The NN debate originated in the United States, and particularly gained momentum after it became public that large Internet Service Providers ("ISPs") overtly or covertly tried to change some of these traditions. The most prominent acts of alleged NN violations that especially stimulated the debate in the United States were:

The 2005 Madison River Communications case, which accused Madison of blocking voice-over-IP ("VoIP") internet traffic because it was in competition with Madison's regular telephone service; The 2008 Comcast case, which accused Comcast of restricting the flow of peer-to-peer ("P2P") traffic in its networks in order to reduce costs; and The 2005 statement of former ATT CEO Ed Withacre, who announced that, in order to refinance the networks, content and service providers ("CSPs)" should pay an additional fee to the eyeball ISPs where the CSP's traffic terminated.

To understand why these acts are considered a violation of NN, it is important to recapitulate two fundamental traditions of the internet that built the foundation of the NN movement. The first is the best-effort principle, which means that intermediate network nodes (routers) forward internet messages (packages) on a first-come-first-served basis. If routers' queues are full, new incoming packages are deleted and must be resent, again according to first-come-first-served. Therefore, due to the best-effort principle, all packages should be treated equally, independent of their source, destination, or content. Thus, the first and second cases cited above are seen as a violation of the best-effort principle. Second, there is a tradition that CSPs pay only once for being connected to the internet, and not again for being able to deliver their traffic to end customers. The problem is that CSPs usually have a contract with some backbone ISP, who grants them access to the network, but not with the eyeball ISP, who has a terminating monopoly over the end customers. Thus, in the third case, the eyeball ISP wanted to exercise this market power and demanded extra fees from the CSPs.

In this article, we shall look briefly behind the rationale of such violations of NN and discuss whether they are specific to the U.S. internet market, or whether they apply in Europe as well. Finally, we conclude by summarizing the current state of legislation with respect to NN in the United States and Europe.

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