Net Neutrality Book 2.indb i Book 2.indb i 12/18/2009 7:37:35 PM 12/18/2009 7:37:35 PM

Book 2.indb ii Book 2.indb ii 12/18/2009 7:37:35 PM 12/18/2009 7:37:35 PM

Net Neutrality Towards a Co-regulatory Solution CHRISTOPHER T. MARSDEN B L O O M S B U R Y A C A D E M I C Book 2.indb iii Book 2.indb iii 12/18/2009 7:37:35 PM 12/18/2009 7:37:35 PM

First published in 2010 by: Bloomsbury Academic An imprint of Bloomsbury Publishing Plc 36 Soho Square, London W1D 3QY, UK and 175 Fifth Avenue, New York, NY 10010, USA Copyright �� Christopher T. Marsden 2010 CC 2010 Christopher T. Marsden This work is available under the Creative Commons Attribution Non-Commercial Licence CIP records for this book are available from the British Library and the Library of Congress ISBN 978-1-84966-006-8 e-ISBN 978-1-84966-037-2 This book is produced using paper that is made from wood grown in managed, sustainable forests. It is natural, renewable and recyclable. The logging and manufacturing processes conform to the environmental regulations of the country of origin. Printed and bound in Great Britain by the MPG Books Group, Bodmin, Cornwall www.bloomsburyacademic.com Book 2.indb iv Book 2.indb iv 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

V Contents List of Abbreviations vii Preface xiii Introduction Net Neutrality as a Debate about More than Economics 1 1 Net Neutrality: Content Discrimination 29 2 Quality of Service: A Policy Primer 57 3 Positive Discrimination and the ZettaFlood 83 4 User Rights and ISP Filtering: Notice and Take Down and Liability Exceptions 105 5 European Law and User Rights 133 6 Institutional Innovation: Co-regulatory Solutions 159 7 The Mobile Internet and Net Neutrality 181 8 Conclusion: Towards a Co-regulatory Solution? 211 Notes 237 Bibliography 265 Index 295 Book 2.indb v Book 2.indb v 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

Book 2.indb vi Book 2.indb vi 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

VII List of Abbreviations 3G Third-generation mobile networks, providing voice and data capacity at midband speed above 128 kilobits per second 3G LTE Third-generation mobile networks Long-Term Evolution 3GPP 3rd Generation Partnership Project, a collaboration between telecommunications associations to make a globally applicable 3G mobile phone system specification within the scope of the International Telecommunication Union (ITU) ADSL Asymmetric Digital Subscriber Line, technology for sending data over copper telephone wires, using asymmetrical speeds: higher download and slow uploading speed ADSL2+ Asymmetric Digital Subscriber Line 2+, a later higher speed variant of ADSL AT&T American Telephone and Telegraph, formerly a US monopoly telephone company subject to universal service, broken up into Regional Bell Operating Companies in 1982���4, leaving AT&T as long distance provider, since absorbed into an agglomerated regional incumbent provider. In this book, AT&T generally refers to its monopolistic pre-1982 existence AVMS Audio Visual Media Services, New Directive passed in 2007 to regulate audio visual media in Europe (see below TVWF) AWTs Alternative wireless technologies to mobile GSM and UMTS: these include WiFi, wireless local area network (WLAN), RFID and Bluetooth, with longer range WIMAX IEEE 802.16x and other proprietary technologies BBC British Broadcasting Corporation, a publicly owned and publicly fi nanced broadcaster, see PSB BEREC Body of European Regulators of Electronic Communications, see BERT BERT Body of European Regulators in Telecom, proposed regulatory body to help implement 2009 European telecoms laws. Other proposals for a similar body include BEREC, EECMA, and GERT BPON Broadband Passive Optical Network, networks utilizing a lower bandwidth Time Division Multiple Access than Ethernet fi bre, and also splitting a single optical fi bre between many (typically 32) households BT British Telecom, UK incumbent with competitive international operations separately managed under BT Global Services, and former owner of O2 mobile networks internationally (now owned by Spanish incumbent Telefonica) CDMA Code Division Multiple Access CoE Council of Europe, socio-cultural organization established in 1948, which in part seeks to uphold human rights in the ���wider Europe��� of both EU Member States and non-members to the east and north, Book 2.indb vii Book 2.indb vii 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

VIII LIST OF ABBREVIATIONS with currently 47 members. See also ECHR. It is also responsible for the Cybercrime Convention of 2001, ETS No.185 CRTC Canadian Radio-Television and Telecommunications Commission, the converged federal regulator of broadcasting and telecoms for federal Canada DivX MPEG-4 based digital video compression format DMCA Digital Millennium Copyright Act 1998 in the United States, a statute which obliges ISPs to take down material whenever they are notified of copyright infringement, under the Notice and Take Down (NTD) procedure DNS Domain Name System, global address system for Internet hosts DPI Deep Packet Inspection, means by which ISPs can read into the packets of data they carry to analyse the contents as well as the header, in order to prioritize, deprioritize or even block the packets DRM Digital Rights Management, method of embedding content standards and policy into computer-readable form, used to enforce copyright conditions DSL Digital Subscriber Line DSLAM Digital Subscriber Line Access Multiplier, the box typically located in the local exchange which provides for typically about 32 households��� Internet access from the backbone network DSM Dynamic Spectrum Management, technology that can effectively replace DSL to provide faster data transfer using the same copper wiring DT Deutsche Telekom, German incumbent operator, also owner of T-Mobile networks internationally DWDM Dense Wavelength Division Multiplexing, an ultra-high-speed broadband technology E2E ���End-to-end��� policy choice, based on an engineering principle that the early Internet worked best when all packets were routed with the same priority EC European Commission, executive body of the European Union responsible for developing and implementing the acquis communitaire, the body of EU law ECD E-Commerce Directive, 2000/31/EC, which limits ISP liability for packets it hosts or carries over its networks without knowledge of the content ECHR European Convention on Human Rights, more formally the Convention for the Protection of Human Rights and Fundamental Freedoms, signed in 1950 by Member States of the Council of Europe EECMA European Electronic Communications Market Authority, see BERT ERG European Regulators Group, advisory body set up by 2002 regulatory framework for European telecoms, the grouping of the Member State NRAs ETNO European Telecommunications Network Operators, association of predominantly incumbent network owners Book 2.indb viii Book 2.indb viii 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

LIST OF ABBREVIATIONS IX EU European Union, as established in the Treaty of Maastricht 1992. Formerly the European Economic Community (EEC) EDRi European Digital Rights Initiative, a non-profit lobbying group on behalf of national privacy and Internet rights groups across Europe EB Exabyte: 1,000 petabytes (1 million terabytes or 1 billion gigabytes) FCC Federal Communications Commission, the converged broadcast and telecoms regulator for the United States at federal level FRAND Fair reasonable and non-discriminatory terms, where a monopoly provider of facilities (whether patents and other intellectual property, or physical goods) provides access to its competitors FT France Telecom, domestic incumbent in France, also owner of Orange mobile networks and formerly branded as Wanadoo ISP internationally FTTx Fibre-to-the-home: high speed Ethernet-ready transmission wire offered as FTTH (Home), FTTP (Premises) and FTTC (Cabinet ��� street furniture for telecoms normally available to each neighbourhood, therefore more local than the exchange) varieties DOCSIS 3.0 Data Over Cable Service Interface Specification, the third generation of these cable broadband data standards GB Gigabyte (1,024 megabytes) Gbps Gigabit per second (1/8th of a gigabyte per second, or 128 MBps) GERT Group of European Regulators in Telecoms, see BERT GPON Gigabit Passive Optical Network, an evolution of BPON GSM Global System for Mobile Communication also known as 2G, second- generation mobile telephony HADOPI Haute Autorit�� pour la Diffusion des Oeuvres et la Protection des Droits sur Internet (translation: ���High Authority of Diffusion of the Art Works and Protection of the (Copy)Rights on Internet���), an agency established under the 2009 French Law against copyright infringement, more formerly the ���loi favorisant la diffusion et la protection de la cr��ation sur Internet��� HDTV High Definition Television HSDPA High Speed Downlink Packet Analysis, a 3G mobile phone standard HSUPA High Speed Uplink Packet Analysis, a 3G mobile phone standard ICT Information Communication Technology IETF Internet Engineering Task Force, a self-regulating technical standards body IGF Internet Governance Forum, United Nations multistakeholder discussion forum initially held in Athens 2006, and to be held annually for at least four years thereafter IMS IP Multimedia Subsystem, a set of standards for NGNs IP Internet Protocol IPR Intellectual Property Rights IPTV Internet Protocol Television, video programming delivered over IP networks rather than broadcast (cable, terrestrial and satellite) networks Book 2.indb ix Book 2.indb ix 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

ISOC Internet Society, coordinating mechanism for Internet standards and policy ISP Internet Service Provider company providing access to the Internet for consumers and businesses. The largest ISP in most Member States is provided by the incumbent telco. ISPs often provide content, have ���portal��� pages which offer news, weather and video reports, dating, chat, search and other functions. Mobile networks are also ISPs ITU International Telecommunication Union, United Nations body established to coordinate global telecommunications, successor to International Telegraph Union founded in 1865 IWF Internet Watch Foundation, UK ���hotline��� for illegal content reporting established in 1996 KB Kilobyte (1,024 bytes) kbps Kilobits per second LLU Local loop unbundling, the regulated process whereby competitors can access the incumbent telco���s connections from telephone exchanges to the customer premises, using regulated access prices and conditions MAC Migration Authorization Code, required in the United Kingdom for consumers to switch between ISPs MB Megabyte (1,024 kilobytes) Mbps Megabits per second MEP Member of the European Parliament MMC Monopolies and Mergers Commission, forerunner to the Competition Commission, the UK general competition tribunal MPLS Multiprotocol Label Switching, a standard set for NGNs NTD Notice and Take Down, regime by which ISPs can avoid liability for potentially damaging content by removing such content on receipt of notice from a third party NGA Next Generation Access, the use of new technologies (such as FTTx) to offer high speed connections between subscriber���s premises and the main NGN NGNs ���Next Generation Networks���, all-Internet Protocol (IP) networks NRA National Regulatory Authority, in reference to independent national bodies established under national law of the Member States of the European Union, which implement the European communications framework. NRA can also be used generically to refer to any national authority, such as the Canadian CRTC or US FCC OECD Organization for Economic Cooperation and Development, ���Think- tank��� for developed nations: 30 national members membership is limited by commitment to a market economy and a pluralistic democracy. Formed in 1961 and grew out of the Organization for European Economic Co-operation (OEEC), established in 1947 Ofcom Office of Communications Regulation, UK converged regulator of broadcasting and telecoms established in 2002 and operational in December 2003 X LIST OF ABBREVIATIONS Book 2.indb x Book 2.indb x 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

ONP Open Network Provision, the principle behind interconnection of telephone networks that helped liberalize European telecoms in the late 1990s. The Directives that established this are known collectively as the ���ONP Directives���, from 1990 onwards P2P Peer-to-Peer, usually used in reference to fi le sharing amongst many peers, an efficient form of many-to-many information sharing as compared to a broadcast model using a central server. P2P is the method of distribution used by Skype, BitTorrent and many other information-sharing programmes PON Passive Optical Network standards including Broadband PON (BPON) and Gigabit PON (GPON) PSB Public Service Broadcaster, granted special licensing conditions ostensibly in exchange for meritworthy, educational and news programming. The United Kingdom has four: the British Broadcasting Corporation [BBC] is publicly owned and publicly fi nanced without advertising Channel 4 is publicly owned but fi nanced by advertising two, ITV and Channel 5 are privately owned and advertising-financed. PVR Personal Video Recorder, a hard drive based recorder in the subscriber���s home (known in the United States by the brand TiVo) QoS Quality of Service, protocols and standards designed to offer guaranteed QoS have been mooted for many years, but none has yet been successfully marketed on the public Internet PB Petabyte: 1,000 terabytes (1 million gigabytes) RLAN Radio Local Access Network, including standards with popularized names WiFi or WiMAX SMP Significant Market Power, measure of dominance in European competition law, with a specific application to telecoms law SMS Short Messaging Services or ���texting���, ubiquitous 160-character or less messages sent from GSM mobile phones SRO Self-regulatory organization, institution designed to provide guidance and enforcement of conduct or content standards, in our case including a broad spectrum from ���self-organized��� to co-regulatory forms Telco Telecommunications provider, term normally used for incumbent former national monopoly provider. There are also ���competitive telcos��� ��� all other providers of switched telecommunications services except the national incumbent TB Terabyte: 1,000 gigabtyes (1 million megabtyes) TVWF Television without Frontiers, directive of 1989, formally Directive 89/552/EC as amended in Directive 97/36/EC UMTS Universal Mobile Telecommunications System, also known as 3G, third-generation mobile telephony UNE ���Unbundled network elements��� or the US equivalent to LLU (see above) USO Universal Service Obligation, for European consumers the right to a 33 kbps telephone line for European consumers. USO will be upgraded as broadband network speeds increase VDSL Very high speed DSL LIST OF ABBREVIATIONS XI Book 2.indb xi Book 2.indb xi 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

VOD Video-on-demand, provision of video programming at individual demand rather than by an editorial controller in a scheduled sequence VoIP Voice over Internet Protocol, technology to digitize sound in packets sent over the Internet. Its primary advantage is that distance does not affect the cost of the call between two VoIP enabled phones (or computers attached to the phone or a data system) VDSL and Very high speed (20���80 Mbps) asymmetrical versions of DSL VDSL2 W-CDMA Wideband Code Division Multiple Access, a third-generation mobile telephony standard WAP Wireless Application Protocol, used to enhance Internet use by delivering specially programmed, simplistic and graphic-poor pages over narrowband networks Web 2.0 Social networking applications using blogs, podcasts, wikis, social networking websites, search engines, auction websites, games, VoIP and P2P services. These services, which are based in part on the Ajax mark-up language, makes user-generated and distributed content central to consumers��� Internet experiences WiFi Wireless Fidelity, standard for WLAN designed to Institute of Electrical and Electronic Engineers (IEEE) 802.11a/b/g specification WiMAX Worldwide Interoperability for Microwave Access, a broadband wireless technology WIK Wissenschaftliches Institut f��r Kommunikationsdienste GmbH, a telecoms economics research institute based in Bonn, well known for its work on behalf of the EC, German regulators and DT and its subsidiaries, and many other clients WLL Wireless Local Loop, a broadband mobile solution offered by RLAN technology WWW The World Wide Web, a set of standards including those for graphical user interfaces using hypertext mark-up languages for displaying Internet information, invented by Tim Berners-Lee, now standardized by the WWW Consortium, a Self-Regulatory Organization ZB Zettabyte, 1,000 exabytes ��� future measure of network capacity XII LIST OF ABBREVIATIONS Book 2.indb xii Book 2.indb xii 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

XIII Preface This book arose from three strands of research that I found myself involved in over the last decade, by my extreme good fortune. They are a European research project on Internet self-regulation at Oxford in 2004 research conducted with Jonathan Cave, Ian Brown, Colin Blackman, Jon Crowcroft and others in Cambridge in 2005���7 an ongoing intellectual engagement with a group of brilliant US lawyers and economists enabled by Viktor Mayer-Schonberger and Kevin Werbach (as well as the Telecoms Policy Research Conference) over a ten-year period. First, Oxford. I had spent 2003 on self-reinforced sabbatical in Barcelona following the dot-com meltdown (specifically my video-on-demand start-up ShortMedia, with inspirational co-founders Doug Laughlen and Ivan Croxford) and more particularly the grotesque fraud at MCI WorldCom, following which I had resigned on principle in July 2002. The lack of consumer broadband in the period 2000���2 ended the hopes of many for a rich multimedia Internet at that point ��� there was capital, but no users to consume or help create mash-ups from licit or illicitly distributed content. The chance dropped out of the blue to help Damian Tambini to complete research and write the fi nal report of selfregulation.info, as well as investigate the groundbreaking mobile content Code of Conduct, and help write up the results of ���Losing Liberty in Cyberspace��� with Christian Ahlert. My thanks to Damian and Christian, to Danilo Leonardi, Marcus Alexander and Louise Scott. That project put me into a short-term research position at the Oxford Internet Institute, thanks to Bill Dutton and Vicki Nash, and from there I met the brilliant Jon Crowcroft, who helped introduce me to the extraordinary work being created at Cambridge. I also thank my colleagues and friends on frequent visits to Tokyo, Adam Peake, Ken Cukier, Motohiro Tsuchiya, Keisuke Kamimura, Izumi Aizu, and others in business and government, as well as those in Seoul, who helped me on my visits to the Far East to understand what leapfrogging is really about. Second then, Cambridge. There are three strands to this connection. First, Colin Blackman and I had known each other since the late 1990s, and Colin had been very supportive of my early work, publishing in ���info���, himself publishing a conference review in my start-up journal International Journal of Communications Law and Policy (ijclp.net), and latterly making me Associate Editor of ���info��� from 2007. This is a good moment to also thank Martin Sims, editor of Intermedia who published my most ���progressive��� articles in 2003���4. Second, I had met the ���brilliant mind��� game theorist Jonathan Cave, and had jumped at the chance to work with him at RAND Corporation���s European operation in Cambridge (which itself had a traumatic year after I joined, closing its Leiden headquarters and satellite Berlin offices, and shutting down my Information Society team with the loss of my two line managers!). Book 2.indb xiii Book 2.indb xiii 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

XIV PREFACE By 2006, Jonathan and I had carved out of the chaos a thriving little Internet regulation practice, conducting ground-breaking research on content regulation for Ofcom, for Google, Microsoft, Yahoo! (disappointingly unpublished), the UK Cabinet Office, British Telecom, governments of Japan, Netherlands and Ireland, and the European Commission. In all cases, we investigated net neutrality and explained the cost-benefit trade-offs of regulated ���walled gardens��� and the open Internet, even though it was never in the brief! Third, Jon Crowcroft re-established my contacts with David Clark and Bill Lehr, to whom I had presented local video-on-demand strategies in 2000 at Massachusetts Institute of Technology, their home base. Dave asked me the implausibly optimistic question: ���Where are the Internet-literate social scientists with whom we can conduct trans-disciplinary trans-Atlantic research?��� I found a few, self-servingly including myself, and we did some good work in the Cambridge-MIT Institute Communications Research Network (CMI CRN!), led by the ebullient David Cleevely, with Ian Brown coming on board to conduct critical coordination work on information security. What I know of the link between content regulation and information security I learnt at Cambridge and MIT, and more importantly the bars in-between. I should add thanks to Dave Reed, Mark Handley, Frank Kelly, Emanuele Giovannetti and Eddie Murphy. Third, the United States, or actually fi ve places: Los Angeles, New York, Harvard, Philadelphia and Rueschlikon, Switzerland. On my ���exile��� in Barcelona (the best place to be exiled!), I had paid visits to Jon Aronson���s research group at University of Southern California Annenberg School, including Hernan Galperin, Francois Bar and Manuel Castells. There we talked about WiFi deployment and telco and mobile resistance to the prospect of open decentralized Internet models at low cost. Side trips from Los Angeles had previously given me rich experiences at workshops at Stanford (on WiFi and spectrum commons organized by Larry Lessig), and at Berkeley several times (thanks to Mark Lemley and Pam Samuelson). I also paid several visits to Eli Noam and the Columbia Business School, for conferences of the Columbia Institute on Tele-Information. Eli is undoubtedly the most coruscatingly insightful and diverse mind in telecoms policy, and I have always been inspired by his gatherings and conversations. I should add the equally diverse and superb Alex Wolfson, who was at this point at Nokia applying research to reality, and Bruce Egan, who applied himself vigorously in all things. Tom Hazlett, Eli���s long-time sparring partner on the FT New Technology Policy Forum and elsewhere, has been a constant wise source on the ways of the Bells and of the Beltway (whether we agree or especially not). Though it has been a while since heard of, a further member of this eclectic group is the legendary Dennis Gilhooly. That���s Los Angeles and New York, but mention of Dennis brings me to my formal link to the United States, my residential fellowship at Harvard���s Kennedy School in Book 2.indb xiv Book 2.indb xiv 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM

PREFACE XV 1999���2000 (yes, nine years is a long gestation for a book), for which I must thank Deborah Hurley. Fortuitously I was there the same academic year as Dennis (working with Jeffrey Sachs) and Herbert Ungerer (at the Weatherhead Center), and between us we put the world of telecoms regulation to rights, and have continued to do so since. I could not mention the Kennedy School without mentioning Jean Camp, a straight-talking colleague and pioneering Internet security researcher, as well as Tony Oettinger and John LeGates at the Programme on Information Resources Policy. As with Eli at Columbia and Herbert at the EC, it helps to have opinions from wise people who knew the Internet way back when, and AT&T when it was still Ma Bell: history matters. Harvard, like Oxford, is the most political of intellectual environments, and I learnt of the secret tunnel that runs from the Kennedy School atrium directly underground to the White House, 100 m away (if you don���t believe me, consider how else they could pull rank on so many White House staff and Secretaries?). Oxford also has one, under the Bodleian ��� So on to Philadelphia, where Kevin Werbach and Andrea Matwyshyn were such great hosts for formidable workshops in 2005���8. Kevin has been a special influence on my telecoms research, with his combination of startling insight and practical application, at Supernova conferences and FCC, an example of how a policy-influencing academic can make a difference. These workshops proved excellent venues to watch spirited discussions of net neutrality between Tim Wu, Chris Yoo, Rob Frieden, Phil Weiser, Rick Whitt, Joe Waz, Susan Crawford, Monroe Price, Ed Baker and others. Note the media law influence of the latter three, and I should mention that Monroe and also Monica Arino were excellent reference points on the connection between global media and Internet policy. Finally, Rueschlikon. Those of you who have kept awake this far will notice that the Zurichersee is not in the United States. That���s true, but Fritz Gutbrodt of Swiss Reinsurance and Viktor Mayer-Schonberger and Lew Branscomb from Harvard put on spectacular discussions around a variety of innovation and risk issues there for seven years from 2001. As the website tells you: ���The host and sponsor is Swiss Re���s Rueschlikon Centre for Global Dialogue. The conferences forge a transatlantic bridge to advance dialogue on the central issues of the information economy.��� I don���t know what good things I did in a past life to deserve it, but I was always invited, and had wonderful conversations (almost all after dinner outside their wonderful bar, the best bar in my world) with an incredible list of telecoms and Internet luminaries, including (in no particular order) John Gage, Mike Nelson, Sacchio Semmoto, Niklas Zennstrom, Cory Ondrejka, Brian Thompson, Olaf Lundberg, Yochai Benkler, Larry Lessig, Hal Varian, Philip Evans, Steve Abernathy, Gilles Bregant, Ed Felten, John Seeley Brown, Craig Mundie, Peter Siepel, Thomas Hoeren, John Browning, Peter Cowhey, Takeshi Natsuno, Jonathan Sallet, Ron Burt, Urs Gasser, Joi Ito, Andrew Book 2.indb xv Book 2.indb xv 12/18/2009 7:37:36 PM 12/18/2009 7:37:36 PM