Is Internet traffic neutral, or is it manipulated by network providers for pecuniary and anti-competitive purposes? If so, to what degree? Are application providers getting a free ride by using the network at no cost?

These issues have been propelled to the forefront as a result of recent policy statements on network neutrality made by the U.S. Federal Communications Commission (FCC). “Network Neutrality” is the concept that network providers should treat all traffic indifferently (i.e. providers should be neutral). This article examines the debate between network providers (e.g. AT&T, Verizon, Comcast) and application providers (e.g. Google, Microsoft, YouTube) with regards to network neutrality.

Think about how the Internet works. Computers communicate with one another by exchanging packets of information. Packets are relayed from one router to another until reaching their destination. However, the way in which routers treat packets determines the extent of compliance with the neutral neutrality principle.

For example, should routers process packets in the order of arrival (first-in, first-out), or should routers process packets based on some other priority? In a congested network, should routers with full buffers discard new packets, or should routers discard old packets waiting in buffers in order to accommodate new packets?

All packets are created equal, but perhaps some packets are more equal than others. That is, some may be worth more to the network provider. Generally, network providers want to prioritize traffic and create an intelligent network, while the application providers want to have a simpler network with intelligent applications at the edges of the network.

The danger of allowing network providers to prioritize traffic liberally is that prioritization can turn into discrimination. The packet with the highest dollar figure flies first class. This position is illustrated by a statement made by then AT&T CEO, Ed Whitacre in a 2005 interview with Business Week: “Why should Google use my pipes for free?”

Network neutrality provides a level playing field where only the “fittest” applications succeed, a Darwinian theory of access of sorts. In other words, when all packets get similar treatment, the applications that users use the most succeed, rather than the applications that have better network access.

In September 2005, the FCC put forth a policy statement that network operators could not prevent users from accessing lawful content, applications and services of their choice, nor could operators prohibit users from attaching non-harmful devices to the network. This policy statement was put to the test in November 2007, when a complaint was filed against Comcast for intentionally slowing down traffic from the BitTorrent Web site. BitTorrent is a peer-to-peer application used for downloading content from other computers. Eventually, the FCC enforced its network neutrality policy against Comcast.

In September, the FCC announced plans to issue a Notice of Proposed Rulemaking to establish rules for the 2005 network neutrality policy. Further, the FCC set forth two additional principles as part of the policy: namely, that (1) broadband providers cannot discriminate against Internet content or applications, and that (2) broadband providers must be transparent in their network management policies.

We all agree that reasonable traffic prioritization, for the purposes of network management, is reasonable. After all, the network should be protected from harmful traffic such as viruses. However, the real issue rests on how large this exception to the network neutrality rule should be. In other words, besides protection from harmful traffic, should network providers also be allowed to filter spam, reroute telemarketing or even block content? This last point may lead to a network provider prioritizing their own applications over competing applications. For example, a cable company’s own video-on-demand application taking precedence over other applications like YouTube or BitTorrent.

In sum, the Internet is an unprecedented platform for such fundamental matters as commerce, free speech, education and culture. Decisions made by the FCC today will shape the next era of the Internet and the applications that will define it. As the FCC comes out with its Notice of Proposed Rulemaking on network neutrality, it is imperative that every affected party participates.

Raul Magallanes runs a Houston-based law firm focusing on telecommunications law. He may be reached at +1 (281) 317-1397 or by email at raul@ rmtelecomlaw.com.