Net neutrality is the idea that ISPs like Verizon, AT&T, Comcast, and Charter Spectrum must allow customers equal access to content and applications, regardless of the source or nature of the content. ISPs may not discriminate against any content, or types of files, by refusing to transmit these files, charging more for these files and content, or providing special high speed access for some users, like Netflix or Google. It also means that everyone will be charged the same flat fee regardless of how much bandwidth they consume. This means that people who stream or download very large video files pay no more for service than people who just send emails. The Internet currently fits this description, but service providers are increasingly interested in changing this fundamental principle to respond to recent trends in Internet usage. Currently, most Internet traffic is treated equally (or “neutrally”) by ISPs in the sense that someone who streams a Netflix movie each day to their computer pays no more for Internet service than someone who just uses the Internet for email and Web surfing. However, ISPs would like to be able to charge differentiated prices based on the amount of bandwidth consumed by content being delivered over the Internet, much like a utility company charges according to how much electricity consumers use. The carriers claim they need to introduce differential pricing in order to properly manage and finance their networks. Critics worry about ISP conflicts of interest: AT&T may want to prevent Skype traffic on its Internet connections in order to force customers to use the AT&T cell network. There are three basic ways to achieve a rationing of bandwidth using a pricing mechanism: cap plans (also known as “tiered plans”), usage metering, and “highway” or toll pricing. Each of these plans has historical precedents in highway, electrical, and telephone pricing. Cap pricing plans place a cap on usage, say 300 gigabytes a month in a basic plan, with more bandwidth available in 50 gigabyte chunks for, say, an additional $50 a month. The additional increments can also be formalized as tiers where users agree to purchase, say, 400 gigabytes each month as a Tier II plan. A variation on tier pricing is to offer speed tiers, charging more for higher speed Internet service. An alternative to cap plans are metered or usage-based billing charg- ing on the basis of metered units of Internet service. One variation on metering is congestion pricing, charging more for peak hour Internet service congestion pricing, where, as with electric “demand pricing,” the price of bandwidth goes up at peak times, say, Saturday and Sunday evening from 6:00 P.M. to 12 midnight—just when everyone wants to watch a movie! Still a third pricing model is highway (toll) pricing where the firms that use high levels of bandwidth for their business pay a toll based on their usage of the Internet. Highway pricing is a common way for governments to charge trucking companies based on the weight of their vehicles to compensate for the damage that heavy vehicles inflict on roadways. In the case of the Internet, YouTube, Netflix, Hulu, and other heavy bandwidth providers would pay fees to the Internet carriers based on their utilization of the networks in order to compensate the carriers for the additional capacity they are required to users of Internet bandwidth, want no price rationing, caps, metering, or toll pricing in order to maximize their revenues. One price fits all. ISPs and landline carriers of the Internet want to charge heavy bandwidth users more than light users, in order to maximize their revenues. Although currently federal net neutrality regulations have been suspended, the same issues are expected to be debated in future years. What is network neutrality? Why has the Internet operated under net neutrality up to this point in time? Who’s in favor of net neutrality? Who’s opposed? Why? What would be the impacts on individual users, businesses, and government if Internet providers switched to a tiered service model?
Net neutrality is the idea that ISPs like Verizon, AT&T, Comcast, and Charter Spectrum must allow customers equal access to content and applications, regardless of the source or nature of the content. ISPs may not discriminate against any content, or types of files, by refusing to transmit these files, charging more for these files and
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content, or providing special high speed access for some users, like Netflix or Google. It also means that everyone will be charged the same flat fee regardless of how much bandwidth they consume. This means that people who stream or download very large video files pay no more for service than people who just send emails. The Internet currently fits this description, but service providers are increasingly interested in changing this fundamental principle to respond to recent trends in Internet usage. Currently, most Internet traffic is treated equally (or “neutrally”) by ISPs in the sense that someone who streams a Netflix movie each day to their computer pays no more for Internet service than someone who just uses the Internet for email and Web surfing. However, ISPs would like to be able to charge differentiated prices based on the amount of bandwidth consumed by content being delivered over the Internet, much like a utility company charges according to how much electricity consumers use. The carriers There are three basic ways to achieve a rationing of bandwidth using a pricing A variation on tier pricing is to offer speed tiers, charging more for higher speed Internet service. An alternative to cap plans are metered or usage-based billing charg- ing on the basis of metered units of Internet service. One variation on metering is congestion pricing, charging more for peak hour Internet service congestion pricing, where, as with electric “demand pricing,” the price of bandwidth goes up at peak times, say, Saturday and Sunday evening from 6:00 P.M. to 12 midnight—just when everyone wants to watch a movie! Still a third pricing model is highway (toll) pricing where the firms that use high levels
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users of Internet bandwidth, want no price rationing, caps, metering, or toll pricing |
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