Net bias

**Net bias** (or network bias) is the counter-principle to net neutrality, which indicates differentiation or discrimination of price and the quality of content or applications on the Internet by Internet service providers (ISPs). The term was first coined by Rob Frieden, a professor at Penn State University. Similar terms include data discrimination and network management. Net bias occurs when an ISP drops packets or denies access based on artificially induced conditions such as simulating congestion or blocking packets, despite the fact that ample capacity exists to carry traffic. Examples (models) of net bias include tiered service (specialized service), metering, bandwidth throttling, and port blocking. These forms of net bias are achieved by technical advancements of the Internet Protocol. The idea of net bias can arise from political and economic motivations and backgrounds, which create some concerns regarding discrimination issues from political and economic perspectives.

## Models of net bias

### Tiered service (specialized service, bandwidth partitioning)

Tiered service is one of the strategies employed to change Internet pricing and involves an intent to have flexibility in quality of service (QoS) on the Internet. Tiered service allows ISPs to create and manage speed-related subscriber tiers. In other words, this model partitions bandwidth and provides different levels of peering requirements and offers transit clients different amounts of throughput. This model stems from the perception of technical and economic limitations in the broadband industry. As technology develops, the demand for faster and higher performance of communication networks and the customer demand for bandwidth-intensive services, such as streaming videos, have increased. These situations result in network congestion that is mainly driven by a small number of heavy users. Moreover, ISPs argue that existing flat-rate plans do not enable them to cover the additional cost required to manage heavier network traffic. Accordingly, this model may allow ISPs to reach different market segments with different data plans, targeting the different types of needs based on speed tiers, volume data caps, and other customizable conditions.

### Metering

Metered service (also called pay-per-use) is another strategy utilized to change Internet pricing other than tiered service. This model represents a usage-based pricing scheme that charges users based on their packet usages. Metered service contrasts with the model of paying a flat fee on a recurring basis to have unlimited access to a given good or service.[*citation needed*] This metering scheme not only satisfies ISPs in terms of recovering cost, but also enables users to rethink their usage patterns with a price signal. This pricing plan can benefit low-volume users because metered service might create new and possibly lower price points for those users. On the other hand, research shows that price is the most important factor for users, among other factors such as Internet speed, which indicates that broadband users are price-sensitive. Price-sensitivity explains why few consumers like having to think about how much they are using the Internet. In addition, from the users’ perspective, one study suggested that consumers might have far less tolerance for unsolicited advertising, spam emails, banner advertising, and third party users of throughput when they are required to consider the cost for the amount of traffic. However, from the ISPs’ perspective, one study indicates that a usage-based pricing scheme does not cause ISPs’ discrimination incentives against content providers because ISPs are able to gain sufficient profits for the network investment to meet market needs.

### Bandwidth throttling

Bandwidth throttling is a tactic that allows information and telecommunication companies to regulate network traffic and control network congestion. This type of measure is viewed as a limitation on users’ upload and download speeds (rates) of content. Comcast, one of the major ISPs, conducted bandwidth throttling on 49% of its customers who were using bandwidth for P2P file sharing. After Comcast’s actions were exposed, the Federal Communications Commission (FCC) ordered the company to stop throttling on a large scale. In particular, this form of net bias frequently targets heavy mobile users who consume large amounts of content (packets), like unlimited data plans. Mobile companies such as AT&T and Verizon have their own throttling policy because they are sometimes required to limit users’ traffic to maintain the quality of the entire network. Recently, however, throttling has become a controversial issue because some companies infringe upon this policy. For example, AT&T had to pay US$850 to one customer to compensate for slowing down data speeds because they violated the terms of unlimited smartphone data contracts. In response to these complaints from smartphone subscribers, AT&T announced that they would change their policy for unlimited data users.

### Blocking (port blocking)

Port blocking includes the deliberate decision by ISPs to deny onward transmission of traffic, or delivery of traffic, to an intended recipient. ISPs do not have a legitimate reason to deny onward packet transmission to specific customers of other ISPs. The ISPs have contractually committed to carry any and all packets from the former ISP without regard for the identity and marketplace success of that ISP’s customers (on a first-come, first-served basis). However, an ISP is more likely to have higher incentives for port blocking when the ISP is vertically and horizontally integrated because those integrated companies attempt to enhance the marketplace attractiveness of corporate affiliates. For example, AT&T blocked Voice over Internet Protocol (VoIP) because the company was concerned that the VoIP service might threaten its wireless and wired telephony service. Thus, an ISP can engage in port blocking for VoIP traffic when giving preference to an affiliated telephone company.

## Technical component for net bias

Technological advancements allowed these types of net bias to function, while the technology was not fully matured enough to apply new pricing or QoS schemes in the past. In other words, as network technologies develop, ISPs implemented technological innovations that can prioritize packets and meter them when faced with increasing bandwidth requirements, using systems to distinguish properties of data packets. Packet analysis enables ISPs to monitor the Internet traffic, and can be performed by a computer program or hardware component that intercepts and logs traffic passing over a digital network. There are many technologies for network management such as SNMP or NETCONF.

## Motivations

The idea of network flexibility in pricing, service provisioning, and QoS tends to be based on economic and political considerations. These considerations show that net bias (network flexibility) makes economic sense and may not violate a reasonable expectation of net neutrality.

### Economic motivations

ISPs have been increasingly investing in the infrastructure necessary to transport the bits and packets that correspond to commercially successful content and services. As the Internet becomes more capable of covering most converged services, and those services require wide bandwidth, high QoS guarantees, and time-sensitivity, ISPs must make substantial investments to the network. Moreover, at the early stage of the Internet’s appearance, ISPs were able to concentrate on “connectivity” over “cost” because the government supported the development of the Internet. However, as this support has been removed and ISPs have sought to recoup their investment, cost recovery has become substantially more important to ISPs. In addition, incumbent carriers like AT&T, whose business involves both the Internet and telephony service, needed the new powerful source of revenue because traditional telephony became less profitable and its market share declined. In this situation, the incumbent carriers recognize that the significant profits accrued by Internet content and application providers such as Google can bring carriers the new revenue streams they are seeking. Accordingly, some of the major ISPs believe that the best way to achieve their goals is through the partitioning of network bandwidth and the prioritizing of bitstreams by offering different QoS. Likewise, some researchers argue that these strategies could work, emphasizing that ISPs should have unregulated pricing freedom, which may lead to promoted innovation, risk tasking, and diverse services and features. In addition, Yoo pointed out that ISPs could offer undropped packets and timely packet delivery even under truly congested conditions when they have the option of offering a premium peak service. Professor Lawrence Lessig also indicates that consumer-tiering, which provides end users with different throughput speeds or permissible volume of traffic, could recoup infrastructure investments and create the necessary incentives for increased investment.

### Political motivations

As the FCC has perceived the need to create more incentives for incumbent carriers to invest in broadband, the commission has taken apart the access requirements and pricing model that force incumbent carriers to offer services at a low rate through the Telecommunications Act of 1996. In addition, the FCC has removed the traditional regulatory burdens for common carriers that provide Internet access and services. These deregulatory initiatives have freed the carriers of having to share and interconnect facilities providing information services. Some proponents of net bias argue that ISPs do not have legal obligation to operate as common carriers and that the network’s interconnection arrangements result from commercial necessity. Moreover, in terms of establishing the network’s interconnection, ISPs argue that they used their resources to maintain and upgrade the network for customers, and so far popular websites have received a “free ride” from these resources. Advocates of net bias also propose lawful pricing. Network flexibility for pricing, interconnection, and QoS characterize the initiatives as lawful price discrimination that can provide consumers with greater flexibility and potentially lower bills for low-volume users. Advocates of net bias also argue that combining simple routing with superior service offers options that are no different from the multiple classes of service provided by most airlines or the qualitative difference between free and toll highways. Consequently, some experts contend that the option of offering network flexibility provides a means for consumers and carriers to utilize premium services.

## Concerns regarding discrimination

The Internet has been historically regarded as an open and “best effort” network. Internet routers must forward packets on a first-come, first-served basis without regard for the analysis of data or content inside the packet. This aspect of the Internet has increased its value, contributing not only to the quality of our lives, but also to economic growth around the globe. Based on these notions, forms of net bias have created some concerns regarding discrimination from economic and political perspectives. In other words, unreasonable net bias occurs when an ISP conducts a discrimination strategy against a specific type of packet without a reasonable and fair financial or operational justification.

### Concerns about economic discrimination

Users enjoy the high level of value when they are able to access the Internet on an unmetered and flat-rate basis. Users can also obtain attractive content subsidized by advertisers who employ the flat-rate subscription option by adding to the downloaded packet payload. This value proposition provides users with the benefits of the Internet, emphasizing connectivity with less regard for cost-related concerns. Likewise, the positive network effect — which refers to the process whereby more and more people adopt a service or buy a good, and as a result users receive enjoyable benefits and additional users are attracted to the Internet — created by the spread of the Internet is substantially beneficial. In the Internet, interlinking hundreds and thousands of networks reduces transaction costs and brings a flood of free information to subscribers. However, if major ISPs can freely block and degrade specific traffic streams, there would be societal losses as the Internet becomes more expensive and less productive. Proponents of net bias contend that market-based Internet access achieves efficient outcomes, such as creating innovation incentives for ISPs to invest in building and expanding networks. Nevertheless, opponents of net bias claim that allowing price and service discrimination may ruin the value of the Internet and enable ISPs to shut out competitors or other stakeholders who are unwilling or unable to pay surcharges. In other words, when large or powerful ISPs place a disproportionate financial burden on small and less financially sound ISPs and their subscribers by using forms of net bias like port blocking or tiered services, they may exacerbate the digital divide that separates people with easy and robust Internet service access opportunities from those without. One consumer group, Free Press, calls attention to a number of disadvantages that specialized services (tiered services) may produce. This organization argues that any form of prioritization on the open Internet would bring enormous disadvantages in terms of innovation, competition, investment, consumer choice, and free speech because this permission may enable ISPs to choose specific content/applications with respect to their own interests and thereby destroy the nature and value of the today’s open Internet. Free Press cautions that specialized services will result in unbalanced and unparalleled economic growth, which is utterly against the public interest.

### Concerns about political discrimination

In 2005, the FCC issued a Broadband Policy Statement (also known as the Internet Policy Statement) that offered guidance and insight into its approach to the Internet and broadband consistent with Congress’ direction. (FCC) The four principles of this statement are as follows:

* To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to access the lawful Internet content of their choice.

* To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement.

* To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to connect their choice of legal devices that do not harm the network.

* To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to competition among network providers, application and service providers, and content providers.

At first glance, these principles appear noncontroversial in terms of standards regarding the freedom of the network. However, these principles do not address regulations with respect to the issues of differentiations in pricing, interconnection, and QoS. Further, the unregulated forms of net bias have the potential to create false congestion by the ISPs. More specifically, advanced Internet protocol technology can allow ISPs to fabricate congestion and drop packets when no real congestion takes place. In addition, existing peering and transit agreements between stakeholders such as small and large ISPs may lack a specific prohibition of deliberate packet loss.

Many ISPs contend that major content providers such as Google or Yahoo! enjoy a free ride. AT&T, one of the major ISPs, stated that the current standard procedure for Internet pricing and interconnection has left the company burdened with having to create, maintain, and frequently upgrade an expensive bit transport infrastructure whereas content providers do not have to do the same. However, Rob Frieden points out that the ISPs’ practices of net bias, as they are based on a “free rider” consideration, may violate the principles of network freedom or even the peering and transit agreement between ISPs. Based on existing peering and transit agreements made by AT&T, Google is allowed to have its traffic delivered to AT&T subscribers free of charge, and AT&T is compensated for the traffic from other ISPs by the agreements. Moreover, if AT&T penalizes Google’s traffic from the various forms of net bias, it would jeopardize the principles of network freedom as well as violate its contractual commitment to its peers and transit customers who have paid for best efforts access to AT&T’s networks.

Technical and market convergence as well as deregulation by the Telecommunications Act of 1996 provided incentives for companies to integrate vertically and horizontally. As a result, those integrated companies have discrimination incentives such that they may try port blocking or unfair throttling to enhance the marketplace attractiveness of corporate affiliates. From this perspective, Free Press emphasized through its comments to the FCC Notice of Inquiry that specialized services should be provided with fairness, particularly in the vertically integrated environments of the information and telecommunication industry (e.g., Comcast, which has both content and broadband services). Consequently, concerns regarding discrimination raised the need of network neutrality regulations to preserve the open Internet and public interest and enable the Internet industry to survive and succeed.

## References

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