Can you remember the first time you connected to the internet? If you were born in the mid-1980s or earlier, this probably involved connecting a telephone cable to a dial-up modem, typing the telephone number of your internet service provider (ISP), and listening to the electronic crackles and beeps until a connection could be established. It is a strangely nostalgic sound for many, evoking a time when the internet seemed like a magical and boundless place — despite the expense of per-minute tariffs and the inconvenience of slow download rates.
The ISPs converge
The chances are that the ISP you used in the 1990s no longer exists today — while there were many regional and national ISPs to choose from at the turn of the millennium, this was followed by a period of intense consolidation, whereby ISPs, telephone companies, cable operators, and media firms merged to produce large conglomerates. This is the reason why many people now get telephone, internet and television from the same provider.
Although this brought about efficiency savings, it also meant less competition and choice for consumers. Nowadays, the ISP landscape in most major territories is effectively an oligopoly, with three or four companies dominating the industry. In the US, there are only two genuinely high-speed broadband providers to choose from in most states. The UK fixed broadband market is dominated by four providers which have a combined market share of 93%, and a similar pattern can be observed throughout most of Europe.
A new concept emerges
As early as 2003, Columbia University professor Tim Wu coined the phrase “network neutrality,’’ a principle that asserts that ISPs should treat all legal Internet traffic equally. The case for net neutrality is perhaps most succinctly expressed by the man often credited with inventing the modern internet, Sir Tim Berners-Lee:
“When I invented the web, I didn’t have to ask anyone for permission, and neither did America’s successful internet entrepreneurs when they started their businesses. To reach its full potential, the internet must remain a permissionless space for creativity, innovation and free expression. In today’s world, companies can’t operate without internet, and access to it is controlled by just a few providers.”
Thus, advocates of net neutrality are chiefly concerned about two things — protecting freedom of expression, and ensuring free and fair competition online. On the economic front, the fear is that in a world of fewer ISPs, the major players could use their dominance to stifle innovation. For example, if a video streaming company like Netflix did a deal with a major ISP to prioritize its traffic, this could potentially make it much harder for a smaller competitor to gain customers. A more extreme real-life example is the Facebook Free Basics service, which promises to provide free internet access to users in certain regions of Asia, Africa, and Latin America — with the major caveat that they are blocked from all content other than Facebook and about 40 other websites.
The devil’s in the detail
But while net neutrality sounds like a simple and uncontroversial concept in principle, it has proven to be complex to implement in practice. In the US, it has become a political tug of war between Republicans and Democrats, with Obama-era net neutrality rules recently being overturned by the Trump administration, which claims that it is unnecessary regulation. The EU did pass regulations in 2015, but they were also criticised by net neutrality supporters as containing too many loopholes.
All apps are equal, but some are more equal than others
One of the thorniest aspects of net neutrality is a practice known as a “zero rating” which has become increasingly prevalent since the emergence of smart devices and mobile connectivity. Zero rating is a practice whereby an ISP excludes a particular service from counting towards a data cap.
For example, one of the major ISPs in the US, AT&T, created its own video streaming service called DirecTV Now and exempted it from counting towards their data cap. This meant that AT&T subscribers could watch as much DirecTV Now content as they wanted on mobile devices, whereas rival services would count against their data cap.
In the US, zero rating is not specifically prohibited, but the FCC is tasked with judging on a case-by-case basis whether it harms competition. The practice is also not banned completely in the EU, where national regulators are free to decide whether to allow it or not in their territory.
In the UK, for example, mobile operator Three was found not to be in breach of EU net neutrality rules for zero rating a number of media apps, including Netflix and Apple Music. However, in the Czech Republic, O2 was judged to be breaking the rules for allowing customers to continue to access Spotify after their data cap had been reached. The key difference here is whether the zero-rated service remains available after all data is exhausted. If only one service is available after the cap has been reached and all other internet traffic is blocked, this is a breach of EU regulations.
While zero rating is often marketed to users as a “free service”, a comparative study of 30 European countries found that in territories which allow it, consumers face higher mobile internet bills over time. This led the Electronic Frontier Foundation to conclude that “zero rating is anti-competitive, not ‘free data’”.
Towards a two-tier internet?
The EU has classified a number of “specialised services” that are allowed to be put in a “fast lane” in order to ensure that they function adequately. These include quite obvious exemptions like remote surgery, driverless cars and counterterrorism measures, but also commercial services that operate over closed networks like live broadcast Internet television (IPTV) and high-quality voice calling.
Net neutrality advocates fear that these specialised services could become a loophole — if tech giants were to alter the underlying technology of their services to meet the technical definition of a specialised service, this could pave the way for a two-tier internet where the established players receive preferential treatment.
Another relevant concept here is “traffic management”. ISPs are permitted to slow down demanding services at peak times to ensure the stability and reliability of the overall network. However, European ISPs in these cases are only allowed to discriminate between categories of internet traffic, but not individual services. Thus, returning to the example of streaming video, an ISP would not be allowed to slow down Netflix to manage congestion without also slowing Amazon Prime Video and other similarly demanding services.
Changing the rules of the game
You have probably encountered some of these issues without paying much attention to them. After all, it is hardly surprising that ISPs and large internet companies act out of rational self-interest.
However, it is important to recognise that if our networks become too centralised, great ideas will remain unrealised and great companies will never flourish. That is why at Catalyst, we are developing a distributed network that is fast, light, scalable and interoperable. Using distributed ledger technology, net neutrality is embedded into the core architecture of the Catalyst Network while maximising security and speed.