Net Neutrality

A reader sent me a question about the Net Neutrality stuff that’s been in the news lately:

I keep hearing about net neutrality and the FCC’s new rules. What is net neutrality? Is it a good thing or a bad thing? Should I be worried about it?

I’d actually been meaning to write something about it, but hadn’t gotten around to it, so this seems like a good time!

Before I can really explain net neutrality, we need to go back to some basics, so that we understand how the internet works. A few years back, a not-too-bright congresscritter described the internet as a being like a series of tubes. Lots of people made fun of him for it. But honestly, it’s not a bad description! The network is something like a huge collection of tubes. Each connection has a certain amount of capacity, sort of like the diameter of a tube. What you pay for when you get connected to the internet is a connection with a certain amount of capacity, called bandwidth.

Net neutrality is a property of a particular kind of network. Any network is built out of a massively tangled web of wires and other kinds of connections. In the old days of telephones, telephones worked on something called circuit switching. Simplifying massively, in a circuit switched network, when you called your grandmother on the phone, the telephone network flipped a series of switches creating a circuit between your phone and your grandmother’s phone. The network would find some sequence of wires in the telephone network that ran from your phone to the local service center, from there through a sequence of switches leading to the local service center near your grandmother, and from there to your grandmothers phone. That series of wires was assigned to your connection, and the switches were set to turn that into an electrical circuit connecting your phone to your grandmother’s phone.

att-windowless Circuit switching is remarkably inefficient. The wires carrying your conversation can carry a huge quantity of information, but the voice signal that it actually carried consumed a very small portion of it. It also required massive buildings full of nothing but switches! (For example, there’s this windowless skyscraper in Manhattan that used to be the ATT switching station for NYC. That huge building used to contain nothing but thousands upon thousands of electronic switches!)

The internet takes a different approach, called packet switching. Instead of dedicating wires to corrections, all communication on the internet is broken into little chunks, called packets. Each packet contains routing information that says where it’s coming from, and where it’s going. Your computer is really physically connected to a network called a LAN (local area network) that’s got a small number of computers on it. But one of the computers that’s watching on that wire is a special one called a router. The router is connected to both your LAN, and to some other network(s). It takes any packet that’s put on the network that’s supposed to get delivered to a computer that’s not on the LAN, copies it, and sends it to a network that’s closer to the computer it’s supposed to get sent to. That keeps happening – from network to network to network, until eventually it gets to its destination. The end result is a lot like what used to happen on the telephone network – some sequence of wires gets found which forms a path from your computer to the computer it wants to talk to. But instead of physically reconfiguring the network by flipping mechanical switches, some sequence of routers copies your packets, one at a time, from network to network to network until it gets to where it’s supposed to be going.

The key to the whole shebang is that copying step. When a network router gets a packet, and it’s capable of getting that packet closer to its destination, it’s supposed to copy the packet and send it on its way.

Network neutrality is a very simple idea. It says that your router has to treat all packets equally. It’s not allowed to look at a packet, and say, “Oh, that packet is from Joe, and I don’t like him, so I’m not going to send his packet”, or even “I don’t like Joe, so I’ll send his packet down a slower connection”.

It’s important to understand that in this system, there are no free riders. Joe paid his internet provider for a certain amount of bandwidth. In order to give Joe what he paid for, his internet provider paid their upstream for a certain amount of bandwidth. And so on. The bandwidth is paid for.

Suppose, for example, that I want to watch “Arrested Development” on Netflix (they need some competition so check out: ShowBox App Download). To do that, I pay a monthly fee to my local cable company for a high bandwidth internet connection. I’m paying to be able to send and receive a certain amount of data per month, and I’m choosing to use a part of that bandwidth to watch a stupid comedy show.

So my computer sends a message to netflix, saying “Please send me this TV show.” I’m using the bandwidth that I paid for – both the upward bandwidth to send the request, and the downward bandwidth to receive the packets from the video stream – to send and receive packets from my local cable companies network. As part of my agreement with the cable company, they’re not just supposed to provide me with access to computers on their network – they’re supposed to route my packets out onto the broader internet, and to provide me with a certain amount of bandwidth to do that.

My request goes from my computer to the cable company’s computer. From there, it probably gets sent onto a backbone connection – one of the very high bandwidth connections that, as the name suggests, form the backbone of the internet. My cable company needs to pay for that connection. They pay for a certain amount of bandwidth – both up and down, and the service that I paid for is really a slice of that.

From the backbone, the request goes to an Amazon datacenter. (I think Netflix uses Amazon’s EC2 servers.) Amazon paid for a connection to the backbone, with a certain amount of bandwidth. Part of that is downward – to receive messages like mine request to watch a TV show, and part is upward, for them to send me the packets in the video stream that make up the show.

Finally, Netflix pays Amazon for a collection of computers in their datacenter, and for the bandwidth that they use. Netflix receieves the request, finds the video in their storage, and starts to send me the packets of the livestream. To do that, they use the upward bandwidth that they paid for from Amazon, which uses the upward bandwidth that they paid for to send it to the backbone. From the backbone, it gets to the connection to my local cable company, where it uses the downward bandwidth that my cable company paid for, and then from there to my computer, using the downward bandwidth that I paid for.

At no step of this chain is anyone free-riding. Every bit of bandwidth is paid for.

Net Neutrality essentially says three things:

  1. Bandwidth gets paid for once. If I pay my cable company for 1 gigabyte of downward bandwidth, then that bandwidth is paid for: they can’t go to netflix and said “MarkCC paid for bandwidth, but if you want him to be able to download your video, you also need to pay us for that bandwidth”;
  2. When I pay for an internet connection, I pay for bandwidth – that is, for total quantity. I don’t pay for the ability to watch just says that when I pay for an internet connection, I pay for bandwidth. I don’t pay separately for bandwidth from netflix and bandwidth from twitter.
  3. Routers need to treat all traffic equally. They don’t get to say “Oh, yeah, MarkCC paid for his bandwidth, but since he’s downloading from netflix, and they didn’t pay us extra to deliver it to him, we’ll slow it down.”.

Should you be worried about it? Hell yes! Neutrality is the entire reason that the internet, as we know it, exists. Take it away, and it becomes close to impossible for new businesses to set up shop and compete with existing ones. Netflix has lots of money; if Comcast decides to demand that they pay extra for their customers to be able to watch movies, they’ll be able to afford it. But a new company that wants to set up shop and start competing with Netflix won’t have the resources to do it.

But ignore all of that. The real thing to understand about the opposition to net neutrality is that it’s all about double billing. Internet service providers are already highly profitable businesses, and they deserve to be. They’re providing a valuable service that requires a substantial amount of expensive infrastructure. They built that infrastructure, and they’re profiting from it. That’s all fine. But what they’re trying to do now is say that when you pay for a service, they’re not obligated to actually give you that service unless someone else also pays for it.

You’re already paying for your network connection and your bandwidth: what the people opposing neutrality are arguing is that that’s not enough. They want to be able to double-charge for traffic. You pay for your download bandwidth. The services that you use, like Netflix, pay (a lot!) for their upload bandwidth. And now, your internet service provider wants to be able to charge the services again for the download bandwidth that you already paid for.

That’s what it’s all about. Net neutrality is really just saying that you buy bandwidth from your ISP, and they have to provide that service. When they try to claim that they should be able to separately bill a company like Netflix for their traffic, what they’re saying is that they want to hold the service that you already paid for hostage until they get paid for it again.

To close, let’s jump back to the old telephone metaphor. In the old days of telephone service, you used to pay a basic fee every month for your connection to the telephone network. That didn’t cover calls outside of your local phone companies exchanges – those were extra. If you wanted to call your grandmother, you had to pay for the use of the switches and wires that would be used to connect you to her. You paid for your connection to the network. Your grandmother paid for her connection to the network. And you paid for the use of the lines to connect your network to her network for the call.

Under the arguments of the anti-net neutrality people, the telephone company should have been allowed to say “Ok, sure, you paid for the network to connect to and talk to your grandma. But we’re not going to let you talk to her unless she also pays for the connection that you already paid for.”

16 thoughts on “Net Neutrality

  1. DKH

    Interesting post because I haven’t seen this angle before, but overall, your argument seems incoherent to me. Of course Grandma (or netflix) also has to pay for a connection to get a phone call from me (or movie to me); my paying for my connection doesn’t get her connected to the network. According to the three-bullet definition of net neutrality above, all bandwidth is paid for twice: once by the sender and once by the receiver. Since I assume netflix doesn’t have a free connection to the greater internet, the definition doesn’t differentiate net neutrality from the current model.

    Aside from that, do you have a citation for the following contention: “what the people opposing neutrality are arguing is that that’s [i.e. your payment for connection and bandwidth] not enough?” You haven’t shown that the opposition to net neutrality is making this argument, and I have never seen this argument before.

    1. Brian Utterback

      It doesn’t differentiate from the current model because mostly it *is* the current model. The difference is that Net Neutrality seeks to codify that model and disallow charging extra for not slowing down packets from those content providers who do not pay. The ISPs have been trying to institute the pay to play fast model and up until now the FCC has been trying to block them.

      The argument the ISPs are making is that yes, you paid for a certain bandwidth, but we didn’t expect you to actually use it all of the time. The high amount of packets from a small number of content providers (e.g. Netflix) is too much for our internal networks to handle at speed. We can either charge everyone more money so we can get enough money to upgrade our infrastructure (which would make us lose customers, boo hiss) or we can charge those content providers that are forcing us to upgrade to the capacity we already promised you and charged you for. What incentive will we give those content providers to pay more for the same capacity that everyone else gets for less? No problem, we will just slow everyone else’s connection down that isn’t paying more.

      As far as I know, this is the only argument being made, that in addition to the speed costs and the total bytes cost, the ISPs need to also charge for what might be called byte density, or perhaps “percentage of bytes in flight”.

    2. markcc Post author

      In the old-style telephone example, I thought I was pretty clear.

      In that old-school network, there are three things that get paid for:
      (1) Your connection into your local phone network.
      (2) Your grandmothers connection into her local phone network.
      (3) The transient connection from your local network to her local network to make the call.

      (1) and (2) are what we used to call “local phone service”, and (3) is what we called “long distance”.

      Everyone paid for local phone service to be connected to the network. If you chose to make a long distance call,
      you paid for that transient connection. The person you were calling didn’t: the call would only show up on
      your long distance bill.

  2. Toby Cathcart Burn

    If net neutrality were to be abandoned, stuff wouldn’t get paid for twice. It may not even benefit the ISPs as they would be dealing with larger corporations who might be able to get better deals than individual customers.

    Instead, who pays for what would change, so that you would pay an ISP for the right to a slightly slower than current standard connection speed to most of the Internet, while corporations such as Netflix would pay for a much faster connection between you and them. What exactly you’re paying for is complicated anyway, given the degree with which time is involved.

    Net neutrality says that ISPs aren’t allowed to sell it in that way. Selling something a different way is not inherently evil.

    In general, this would seem a good thing, services which benefit most from extra speed would be sped up; however, there are a number of other points to consider, including some very strong reasons against it.

    Also there are problems other than lack of net neutrality involved with setting up any large operation such as a competitor to Netflix. A large capital investment is required anyway in order to get servers and a large database of movies. Lack of net neutrality would add to the difficulties, but not prevent it completely. It is likely that ISPs would charge by bandwidth used, so huge costs would not be incurred at start-up.

    Internet connections would become significantly cheaper for end users, approximately offset by increased cost of, say, a subscription to Netflix. This would increase the availability of Internet access, which is a good thing, although the connection they provide you may correlate to wealth (advertisers can get more money off richer people, so they’ll pay more to ISPs with richer customers) leading to a potential ironic situation where the more you’re willing to pay for Internet, the less you need to pay for a good connection. This could be implemented by bundling connections with an expensive TV subscription.


    Wikipedia – Wikipedia would not be able to pay for special treatment, along with countless similar sites that do not generate profit in proportion to their value.

    P2P – This would probably take the worst hit, as there is no way that that traffic will get sped up and a good deal of it depends on good internet connections. Some organisations would no doubt rejoice to see harm come to bittorrent, but things like multiplayer games hosted by individuals would suffer significantly if they can’t share data very quickly. The fact that anyone can talk to anyone is a powerful and important feature of the Internet.
    Skype is also partly peer to peer, and would benefit significantly from faster connections so I don’t know how ISPs would try and sell that.

    Increased ownership of media by large corporations – This could be debated further, and dystopian scenarios won’t occur because of a slight change in the speed of some connections, but I’d rather not have everything I read controlled by a corporate Big Brother. Youtube is an example where individuals might still be fine, but it’s still owned by Google and extra costs would be passed on to the end user somehow (more ads).

    Very distributed audiences – If my website only has 2 regular customers in Middle Earth, it may not be worth paying an ISP to speed up the connection to there. Even if the amount paid is proportional to bandwidth it might not be worth the time taken to set up an agreement.

    Slows down packet processing – I don’t know how long it would take to check a packet is sent by a paying service and deal with it accordingly; probably not too long, but it would have a negative overall effect.

    If ISPs are making most of their money from the high speed connections, their revenue depends on some connections being slower than others. They have little incentive (except to get more customers) to improve the ordinary connections, leading to significant problems for the future of the Internet. This is a very bad thing, as while the speed of ordinary connections would probably not drop by very much, it would not increase by nearly as much as it would otherwise. Thank goodness it didn’t happen 10 years ago, and I hope people in 10 years time will say the same about now. Loss of net neutrality could lead to increased investment in network infrastructure and technologies(although this is debatable), potentially causing even standard connections to be faster than they would otherwise(even less likely), but an increased gap in traffic speeds would exacerbate the other problems.

    I’m sure that there are a number of other points I haven’t mentioned here.

    1. markcc Post author

      You’re right that without net neutrality, who pays for what changes.

      But the ISPs that are pushing for this change are trying to pretend that that’s *not* true. On my current cable bill, what’s specified is high speed internet service up to a certain maximum bandwidth. It’s not “high speed internet service for connections to internet services that also pay us”.

      The internet, as it exists, has been built on a certain basic concept of how things work. And we’re all paying for services based on that understanding of how things work. What a lot of unscrupulous ISPs want to do is to continue to say that I’m just buying bandwidth from them – but then to charge someone else for the bandwidth that I already paid for.

      IF they want to change the system, then they’ve got to actually be willing to accept what that change means. If I can’t get netflix at high speed without netflix paying the cable company for my high speed connection, then they shouldn’t be able to charge me that surcharge for high-speed internet access. But they want both – that’s double charging.

  3. Wyrd Smythe

    Personally, I’d actually be fine with charging double (or triple (or more!)) to people who waste interweb bandwidth watching stupid videos. 😀

    Hopefully this will all shake out as it always has: the infrastructure will improve and become a very cheap commodity (as did phone service). We’ve welded our future to the interweb in so many ways that it can’t afford not to. I remember when URLs first started appearing on ads. Now many companies assume you have an interweb connection (and a Facebore account and a TWITter account).

    If the interweb becomes just another money-making tool of massive corporations, well, that’ll be pretty much like just about everything else in this money-lusting society, won’t it. This is, indeed, a vital issue people need to pay attention to if they don’t want to surrender the interweb to Big Money interests!

  4. Simon Farnsworth

    There’s a free market/competition argument that I note is absent from the Net Neutrality debate.

    Network Neutrality means that each company involved in getting (say) Netflix videos from Netflix to me pays their choice of company for a service. If I don’t like the service I’m paying for, I’m free to choose a competitor at the competitor’s pricing. Similarly, if Netflix is paying Level 3 to carry their traffic, but Cogent offer them a better deal, Netflix is free to switch.

    In a non-neutral world, Netflix’s choice of people to pay is constrained by my choice of provider; if I choose Comcast because they’re the cheapest option, Netflix has no choice but pay Comcast for access to me if they want to sell their services.

    This, in turn, means that in market terms, Comcast has no incentive to reduce the fees it charges Netflix. In the neutral world, if Comcast’s costs for domestic broadband drop by $1/user, Comcast either profits by an extra $1/user, spends an extra $1/user on improving the service, or drops its prices by $1/user in order to beat out competition. It only has one source of income for domestic broadband, so it has no other choices.

    In the non-neutral world, Comcast has two sources of income; the fees paid by its customers, and the fees paid by content providers. It thus gets four choices if its costs fall by $1/user:

    1. Take an extra $1/user profit.
    2. Reduce end user fees by $1/user.
    3. Spend $1/user on improving service
    4. Reduce content provider fees by $1/user.

    Of those three options, (1) and (2) still make sense; (3) sometimes makes sense, depending on the improvement, but only where the improvement doesn’t stop content providers from paying Comcast for access.

    (4) does not make sense; that cost is hidden from the consumer, and can be played with (made complex to describe) as needed to make explaining it sound like Netflix trying to pull the wool over the user’s eyes. There are circumstances in which Comcast can’t get away with increasing the fees it charges Netflix for access, but there are no circumstances in which Comcast benefits from charging Netflix less.

    Note that this wouldn’t apply to a weakly non-neutral net; if the end customer (the one paying Comcast for “Internet”) then had to pay Comcast a fee for access to Netflix, Comcast has an incentive to try and reduce that fee, in order to be more attractive than competitors (“Use Comcast, and you can get your interwubs with Netflix for $99.99/month – with CompetitorNet, you pay $109.99/month for the same service”, where Comcast is $98.99/month for base service, and $1/month for Netflix, while CompetitorNet is $89.99/month for base service, but $20/month for Netflix).

    Ideally, though, you’d want to tie Comcast’s fees not to the traffic endpoints, but to something about how the traffic behaves – so there’s a fee for being able to stream at 10 Mbit/s or slower, suitable for online video, and a different one for low latency and jitter under 1 ms suitable for VoIP and gaming; that ties Comcast’s income to improving its service from the customer perspective.

    1. John Armstrong

      Well, the whole free-market aspect is hamstrung the moment you realize that ISPs operate in anything but a free market from the end-user’s point of view.

      I’ve got FiOS; I love FiOS; FiOS eats Comcast’s lunch every damn day of the week from what I can tell. But my friends living in an older building in downtown DC? Comcast’s their only real choice for broadband. There is no free market when there is an effective monopoly for a given buyer.

      1. Simon Farnsworth

        That just means that there’s no directly comparable competition to Comcast; you still get mobile data services as options. These aren’t nearly as good, but they provide some connectivity, and put pressure on Comcast to not be worse than mobile data for the money they charge.

        Right now, Comcast can only charge people who choose to pay them for service; if Comcast raises their prices for a usable service beyond the price of a mobile data service that’s good enough for your needs, you can switch. In a non-neutral world, your friend’s decision to use Comcast instead of Sprint can be used against Netflix to get money into Comcast, making it less likely that your friend would switch to mobile data.

        Plus, Comcast has to provide a good enough service that there’s no room for a competitor; if Comcast is charging $500/month for a Netflix-friendly service, and Verizon reckon they can offer FiOS service for $100/month, that’s an incentive for Verizon to build out and steal customers. In a non-neutral world, Comcast would charge the customer less than Verizon, and make up that money by billing Netflix.

        1. John Armstrong

          Yes, because broadband service is totally just like buying something at a store, and doesn’t require millions of dollars of infrastructure investments on the part of a new competitor…

          1. Simon Farnsworth

            I didn’t say it was cheap for Verizon to move in on an area; I said that if Comcast was charging $400/month more for service than Verizon would charge for the same service, that acted as a reason for Verizon to consider moving into the area – it could (for example) charge $450/month instead of Comcast’s $500 for a usable service, and make an extra $350/month for a while.

            And you’re not addressing the wider point – just because high speed internet is a monopoly in your area doesn’t mean we should grant the monopoly more powers to extract rent from more parties. If you do that, you make it even harder to break the monopoly – imagine Verizon’s planning for moving in on your friend’s building if one of the risk items is “Comcast will offer this region free service for the next 10 years, funded entirely by charging content providers for access to the customer base”.

          2. John Armstrong

            I think you’re misunderstanding my point entirely. I’m not saying we should grand them more powers at all. I’m actually saying that the market is structurally un-free by its very nature. You can wave your hands all you want, but it’s just not the same as choosing between widget brands A and B.

            No, internet service is more like a utility, and should be treated and regulated as such. And that includes net neutrality.

        2. John Armstrong

          Not to mention permission of the building’s owners — who are often getting kickbacks from the existing monopoly-holder — to perform the invasive construction in the first place.

          1. Simon Farnsworth

            And I’m saying that in other countries (the UK, for example), regulation makes the structurally unfree bit behave separately from the bit that could be a free market.

            Discussing why the US has a centrally planned internet access market (instead of a free market with antitrust regulation used to prevent monopolies as exists in other countries, and in other industries within the USA) is a follow-on from net neutrality as a market issue – it’s thus not in Comcast et al’s interests to have you consider net neutrality as yet another manifestation of their control of the internet access market.

            After all, the USA likes to think of itself as the “land of the free”; if it’s clear that net neutrality is only an issue because some companies are trying to take control, you play into that mentality and have people think about why Comcast et al are permitted such a level of power anyway.

  5. Cite needed

    “They’re [ISPs] providing a valuable service that requires a substantial amount of expensive infrastructure. They built that infrastructure, and they’re profiting from it.”

    Probably the biggest part of the problem r.e. free market justification 🙂


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