NET NEUTRALITY Presentation to Women in Telecommunications

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NET NEUTRALITYPresentation to Women in
Telecommunications
Bill Nusbaum TURN May 3, 2006
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Recent quotes

• Ed Whitacre, ATT CEO started the current battles
  over net neutrality in a November 7, 2005
  Business Week interview. In responding to the
  interviewers question about how concerned
  Whitacre was with internet companies like Google,
  MSN and Vonage, Whitacre said
• How do you think they're going to get to
  customers? Through a broadband pipe. Cable
  companies have them. We have them. Now what they
  would like to do is use my pipes free, but I
  ain't going to let them do that because we have
  spent this capital and we have to have a return
  on it. So there's going to have to be some
  mechanism for these people who use these pipes to
  pay for the portion they're using. Why should
  they be allowed to use my pipes? The Internet
  can't be free in that sense, because we and the
  cable companies have made an investment and for a
  Google or Yahoo! or Vonage or anybody to expect
  to use these pipes for free is nuts!

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Recent quotes

• A few weeks later, BellSouth Chief Technology
  Officer William Smith said the Internet should
  become a pay-for-performance marketplace.
• Verizon CEO Ivan Seidenberg says that Web
  applications need to share the cost of the
  broadband services already paid for by consumers.
  We need to pay for the pipe.
• Verizons SVP and Deputy General Counsel, John
  Thorne has stated that
• "The network builders are spending a fortune
  constructing and maintaining the networks that
  Google intends to ride on with nothing but cheap
  servers. It is enjoying a free lunch that should,
  by any rational account, be the lunch of the
  facilities providers."
• "The only way we are going to attract the truly
  huge amounts of capital needed to build out these
  networks is to strike down governmental entry
  barriers and allow providers to realize profits.

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So, whats all the fuss?

• Whether the owners of the pipes be it telco or
  cable get to effect what content is available to
  consumers and at what speeds
• Is anyone really getting a free ride?
• Those who favor net neutrality have been labeled
  as extremists. For example, the Chairman of the
  House Energy and Commerce Committee, Rep. Joe
  Barton, the promoter of the ironically named
  Communications Opportunity, Promotion and
  Enhancement Act of 2006 argues that
• Net neutrality is "still not clearly defined."
  It's kind of like pornography You know it when
  you see it."
• He has also stated that Net neutrality
  proponents were overstating their case and
  exaggerating the dangers of a more laissez-faire
  approach. "I don't think all the Draconian things
  they (predict) will happen if we don't adopt net
  neutrality requirements.

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An historical perspective

• Reminiscent of the battles over
• The MFJ information services restriction and
• UNEs
• The 1984 consent decree on the divestiture of
  ATT banned the newly formed RBOCs from providing
  information services major reason concern
  that the owner of the bottleneck pipe could
  discriminate against the providers of the content
  (lifted in 1991 by Court of Appeals)
• Open networks and the ultimate demise of UNEs

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More recent developments

• Massive telco industry consolidation
• SBC purchase of ATT
• Verizon merger with MCI
• ATTs proposed acquisition of Bell South
• National video franchising

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Competition?

• The result a duopoly of telco and cable
• Even Ed Whitacre appears to agree
• It's still about scale and scope. It's about
  owning the assets that connect customers. The
  assets that probably can't be duplicated except
  maybe by the cable companies. We have that,
  Verizon has that, BellSouth has some of that.
  The cable companies have it. It's the numbers of
  customers you can get to. So it's scale and
  scope.
• Perhaps if consumers had a real choice among
  competing internet providers net neutrality would
  be less of an issue

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What is believable?

• So, the question is which statements of the
  telco executives do you believe?
• ILECs track record
• Monopoly DNA
• Broken promises
• Investment blackmail
• What is the rationale reaction when an 800 pound
  gorilla says he will sit on you?

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Responding to the uproar

• In March 2006, Whitacre said
• "Companies are trying to scare people into
  thinking the Internet is at risk or that the
  Internet as we know it will disappear," he said.
  "It's like Mark Twain said, a lie can travel
  halfway around the world before the truth has its
  shoes on.
• Any provider that blocks access to content is
  inviting customers to find another providerand
  thats just bad business.
• "ATT is not going to block anyone's access to
  the Internet and we are not going to degrade
  anyone's quality of service." And we wont
  change (our position) no matter what
  sky-is-falling rhetoric you hear. Markets work
  best when consumers have choices.
• In April, United States Telephone Association CEO
  Walter McCormick, testifying before the House
  Judiciary Committee hearing on Internet
  neutrality stated that telephone companies will
  not block or degrade or impair content.

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Why should consumers care?

• Internet is pervasive
• Pew Internet American Life Project internet
  penetration is now 73 of American adults
• Google estimates that it has over 8 billion
  indexed web pages
• There are over 27.2 million web blogs tracked by
  Technorati the blogosphere is doubling in size
  every 5 and a half months
• A change from an all you can eat to
  capacity-based pricing would have significant
  repercussions
• Threat to one of the internets most important
  contributions the democratization of
  information

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The ILEC (and cable) arguments

• Someone has to pay for network enhancements
• The internet is not currently treated as a free
  good
• ILECs want a guarantee that network investment
  will pay off
• Access charges redux?
• What is the lesser evil?
• What about bandwidth hogs?
• Mandating network neutrality is too regulatory

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Closing thoughts

• Net neutrality is just the latest battle in the
  telecom policy wars on getting real, effective
  competition into the market
• Monopolists and duopolists will always do what
  they have always done optimize their market
  power and position (this is every companys goal,
  but when a market is truly competitive there is
  at least some checks on efforts to achieve that
  goal
• Captive policymakers

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Closing thoughts

• "If anything is going to halt necessary
  investments in next-generation networks it will
  be Congress dictating business models to
  companies," said ATT spokeswoman Claudia Jones.
  "The finance community should be wary of wolves
  in sheep's clothing who are attempting to codify
  the status quo to their own benefit and to the
  detriment of consumers everywhere."
• "Net neutrality is not about being neutral, it is
  about companies that benefit from selling video
  on the internet and their potential advertisers
  looking to have the cost of the bandwidth they
  use paid by the consumer," said Bill McCloskey,
  BellSouth spokesman.

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Network Neutrality and Independent ISPs

• Women in Telecommunications
• May 3, 2006
• Andreas Glocker

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What does an ISP do?

• We buy Internet Transit for 8 of budget
• Autonomous System AS6994
• Mange BGP session
• Defend against DDOS attacks
• Last mile access management
• Installation and maintenance of router
• Coordination with ILEC
• Monitoring of link uptime, dispatch of repair

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What does an ISP do?

• We add Application support
• Hosted VoIP PBX Solutions
• Email hosting MetricMail
• Spam and Virus filtering MetricScrub
• Cisco VPN maintenance installation
• User management

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What does an ISP do?

• Last mile access are delivered via contracted
  Layer 2 networks
• ATM with ATT for ADSL last mile
• ATM with Covad for DSL provisioning
• DS1, DS3 with ATT
• We interconnect via multiple DS3s using Cisco
  7206 VXR access routers

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Network Neutrality

• Definition is evolving
• ISPs provide value by managing QoS
• We prioritize VoIP traffic to our Switch
• We drop packets which are DDOS attacks
• We support multiple building clients off a DS3 by
  managing bandwidth by subscription rate.

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Bell / Cable / Power Control

• ILEC will discontinue Layer 2 relationship with
  Wholesaler
• ILEC will not allow access to wires
• Cable has proprietary access (does not share)
• Power company, who will control access?
• Wireless, who owns the license