Montreal, October 15, 2010 • No 282


Larry Deck is a librarian who lives in Montreal.



Is Network Neutrality Necessary?


by Larry Deck


          In July of 2005, the B.C.-based telecommunications company Telus blocked its own Internet subscribers' access to a website supporting striking Telus employees. The company claimed that the owners of the site had encouraged sabotage of its equipment and posted photographs of scabs with the intent to intimidate them. Telus sought a court injunction to prevent the site owners from posting the images. The strikers denounced the censorship of the website.


          The incident ended up being only a small part of a rancorous labour dispute that was finally settled that fall, but it remains a rallying cry for Canadian supporters of state regulation of the market for broadband Internet services, otherwise known as network neutrality.

          The would-be regulators ask, in effect: If Telus bosses can block access to a site they don't like, what's to prevent any other Internet Service Provider (ISP) from doing the same? Instead of the open and content-neutral Internet we all use and enjoy today, we may soon be faced with a balkanized system of partially-overlapping "walled gardens" in which service providers give fast and reliable access to the sites and services of their corporate partners while blocking or slowing down access to other sites that don't pay them or reflect their corporate ideology. One herald of this grim dystopian future imagines a rate-card from an ISP, offering access to various corporate sites for a low monthly rate, with access to other sites, like YouTube and Blogspot, costing much more.

          Instead of the free and open information highway, we'll have toll roads. Or so we have been hearing for a few years now, while the Tory government here in Canada, and successive governments in the US, have dragged their heels about introducing the regulations necessary to prevent the looming disaster. At present the three opposition parties in parliament agree unanimously that something must be done. Only the Conservatives are reticent.

The End of the (Virtual) World As We Know It?

          From time to time, a new development raises the threat level. Most recently, a joint deal reached by Google and Verizon to offer "premium" high-bandwidth channels for certain content over a proposed global network raised a flurry of alarms. If we miss the opportunity to protect consumers now, say proponents of regulation, if we fail to enforce neutrality with respect to sources and types of data transmitted, we face the end of the Internet as we know it.

          So far though, apart from the Telus incident and a few disputed cases of bandwidth-throttling, the most dire predictions have not come to pass. While examples of state censorship of the Internet are easy to find—from China's "great firewall" to Saudi Telecom's ban on Blackberry messaging—the supposedly inexorable corporate censorship of the Internet has been pretty slow to materialize.

"As long as there is any competition in the market for broadband Internet access, it's hard to see how a single provider could effectively censor specific sites at all. And as long as one service provider offers cheap access to popular sites like YouTube and Blogspot, how is another to profit from charging more?"

          If the incentives to censor competitors and critics and to fast-track corporate partners are so strong, why are these practices so rare? And why, if they have been technically feasible and likely to be profitable for years now, have they not caught on? It may be that for all their obvious agility and rapid innovation in other aspects of their business, the broadband service providers are simply sluggish at adopting these obviously lucrative practices. Or it may be that the prophets of doom have misunderstood the actual incentives at work in this market.

A Solution in Search of a Problem

          While Telus was blocking access to the site supporting strikers, interested netizens could still access it through competing ISPs. Indeed, Telus subscribers could view the site if they passed by way of an unblocked proxy server. (A story on the CBC website at the time of the dispute gave the address of one such detour.) As long as there is any competition in the market for broadband Internet access, it's hard to see how a single provider could effectively censor specific sites at all. And as long as one service provider offers cheap access to popular sites like YouTube and Blogspot, how is another to profit from charging more? Indeed, as long as Telus faced competition from other service providers, its censorious overreaction to the strikers' website probably hurt its business by causing subscribers sympathetic to the strikers to take their business elsewhere.

          The supposed threat of targeted censorship is only really a threat where there is no competition in the broadband market, but in Canada at any rate there is still competition.

          Proponents of regulation have rhetorically conflated the supposed threat of corporate censorship with "fast-lane" provision of certain content as if these were equally heinous outcomes. But whereas it's easy to see why censorship would be a problem if it really were feasible, it's harder to see why a broadband service provider should not enter into an agreement to provide premium service for bandwidth-intensive content like streaming video—or why consumers would suffer from such an arrangement.

          The proposed safeguard against non-neutrality—regulating the industry somehow to prevent preferential treatment of any given content—amounts to price-fixing and may therefore work the way price-fixing has worked throughout human history: leading to shortages and stifling innovation in the production of the affected commodities as long as it lasts. Anyone who thinks legislating prices for broadband is likely to have positive effects should have a look at apartment buildings in an area that has been under strict rent controls for a couple of decades and consider why they all look rather old and run-down.

          As in so many other cases, state regulation of the market for broadband Internet is a solution in search of a problem.