Who owns the Internet and who determines how it is used and for what cost? The issue is ‘net neutrality,’ the principle that Internet service providers (ISPs) treat all data transmitted on the Internet equally, regardless of its size, type or origin. Up until January 2014, that neutrality was protected by federal rules established in 2010 by the Federal Communications Commission (FCC).
For carrier networks, net neutrality restricts possible sources of income. Without protected net neutrality, internet content companies could be required to pay extra to deliver messages or data faster or to some established specifications like high definition. Without net neutrality, individuals and businesses using Internet services may eventually face additional charges.
Did this idea just appear out of the blue? No, it did not. In 2003, a professor at Columbia University, Tim Wu, published a paper on the subject entitled “Network Neutrality, Broadband Discrimination.”  Wu anticipated that regulators and broadband providers would begin a decades-long conflict pitting the private interests of ISPs against the public’s interest in competitive innovation while using the internet. He further stated: ‘…The promotion of network neutrality is no different than the challenge of promoting fair evolutionary competition in any privately owned environment, whether a telephone network, operating system, or even a retail store. Government regulation … invariably tries to help ensure that the short-term interests of the owner do not prevent the best products or applications becoming available to end-users.’ [Excerpt]
In January, Verizon Communications Inc. won a legal victory over the FCC in a U.S. Court of Appeals in Washington. In its decision, the court struck down the previously established FCC net neutrality rules. The precedence set by the court decision opens the door for carriers like Time Warner Cable Inc. or Verizon to charge ISPs premiums for preferred access and treatment when using the Internet. The ISPs and commercial users of the Internet – for instance, YouTube, Netflix, or Google Inc. – might have to pay premium fees to continue to do business in the manner they have established. Carriers, of course, view the apportionment of bigger fees to the bigger users/biggest services as a fair business practice. The end result is inevitably higher costs for consumers.
While millions enjoy streaming of programs and information, the Internet channels are congested and strained. Netflix, the world leader in subscription streaming services, has a 32% share of all traffic at peak times across North America. In the Verizon ruling, the court pushed the job back to the FCC to rewrite the rules governing Internet use. Few countries have established rules about net neutrality; but, for the countries globally inclined toward regulation, it is a fertile space. As the debate continues over this issue, no doubt consumer services will be pushed and pulled, causing frustration from restricted and more expensive services to consumers.
In a recent development, Netflix struck a deal with Comcast that will enhance Netflix’s streaming video quality to Comcast subscribers. In the agreement, Comcast committed to provide Netflix with a direct connection to its ISP and cable network. Over the past several months, Netflix has attempted in vain to convince several ISPs to join its Open Connect program, which includes direct connections for exchanging traffic, caching, and peering. ‘Caching’ holds data, such as a web page, and keeps the data ready on the user’s hard drive to swap onto the screen much more quickly than the typical process when the computer goes to the original web page for the data. ‘Peering’ is an agreement between ISPs to arrange the exchange of Internet traffic in a particular way.
The Netflix multi-year agreement comes on the heels of Comcast’s acquisition of Time Warner Cable Inc., and, if the deal is approved, it will increase Comcast subscribers to 30 million households and make it the dominant broadband provider in the U.S. Netflix and Cogent continue to seek a resolution to deteriorating quality of streams on the Verizon network, and the Netflix/Comcast agreement may influence Verizon and other major ISPs to make compromises to secure direct connections.