What the U.S. can learn from international net neutrality, broadband policies

Broadband investment, return to common carrier rules could improve U.S. 'Net quality, some experts say

Broadband investment, return to common carrier rules could improve U.S. 'Net quality, some experts say.

As the Obama administration begins to enact tech policy, two of its biggest challenges will be deciding how to deploy national broadband services and whether to impose strict net neutrality rules on American carriers.

If the administration decides to look abroad for answers, it will see that see that countries such as Japan, South Korea and France have developed faster and less expensive broadband networks, but have also refrained thus far from implementing strict net neutrality rules.  

One reason for this, some analysts say, is that these countries have retained the bandwidth-sharing rules for carriers that the United States discarded in 2005. Under the old common carrier rules in the United States, incumbent telecom companies such as Verizon and AT&T were required to allow ISPs such as Earthlink to buy space on their DSL broadband networks at discount prices. The idea was to have incumbents wholesale access to their networks to other ISPs that would compete with each other to sell Internet services to consumers and businesses.

Bar chart showing country comparison of speed and cost of broadband

However, the incumbent telecom carriers successfully lobbied the FCC to revoke these rules in 2005 by arguing that rival cable companies weren't required to let other ISPs use their networks and thus had an unfair competitive advantage over the telcos. Harold Feld, the senior vice president for the open media advocacy group Media Access Project, says that the FCC's decision to revoke common carrier requirements sparked fears that ISPs could start blocking their competitors' content and services in order to give priority to their own.

This led many consumer advocacy groups and Internet companies to promote strict enforcement of net neutrality rules, the principle that ISPs should not be allowed to block or degrade Internet traffic from their competitors in order to speed up their own. The major telcos, meanwhile, have uniformly opposed net neutrality by arguing that such government intervention would take away ISPs' incentives to upgrade their networks, thus stalling the widespread deployment of broadband Internet.

While Feld supports implementing net neutrality regulations on ISPs in the United States, he concedes that it isn't an ideal situation.

"Network neutrality has always been a second-best option," Feld says. "Before 2005 we didn't need it because we had a separation rule where carriers had to sell access to their underlying network. AT&T and Verizon were never allowed to touch Earthlink's DSL operation."

Net neutrality or regulated competition?

Not only have many other countries kept their common carrier rules intact for their traditional telecom providers, but they have extended these policies to cable providers, thus ensuring that cable companies don't have an unfair competitive advantage over DSL providers.

"We're probably the only major country that never had legislation to extend common carrier obligations across other lines," says Mike Weisman, an attorney who specializes in telecom law and who has been a policy advisor for advocacy group Reclaim the Media. "When we settled the question of whether to extend common carrier rules to cable companies, we settled it the wrong way."

The wholesale model for providing Internet access is used in countries such as Japan, South Korea and France, where state-regulated telecom monopolies are required to give access to retail providers. Harvard Law School professor and Web guru Lawrence Lessig, who is also a proponent of net neutrality, has written that this model of delivering Internet service has led to "fierce competition" that in turn has led to a faster, less expensive Internet in other countries. Like Feld, Lessig thinks that net neutrality is a "thin and light substitute" for policies that promote more competition and invest government money directly into building out broadband infrastructure.

Indeed, Feld says that another major reason why enforcing net neutrality is less of a priority in other countries is that governments have helped their carriers pay for building fiber networks. After all, he says, ISPs in Japan and South Korea are less likely to feel the need to throttle traffic when their pipes can deliver data at rates that dwarf speeds in the United States.

"In Japan and South Korea, the governments made a deal with their incumbent carriers where they'd help them to build out fiber networks in high-cost areas," he says. "When you have 100Mbps of capacity, then arguing that you need to block content is unreasonable."

What the U.S. can learn from abroad

The problem with directly comparing overseas network access rules to today's rules within the United States is that the U.S. no longer has a "Ma Bell" telephone monopoly that the government can force to open up its network to competitors. In the absence of these rules, Weisman and Feld think that enforcing net neutrality is the next-best option for promoting effective competition. Weisman says that enforcing net neutrality in other countries is less of an issue because governments have already set expectations for how they expect ISPs to behave and regulators merely watch for anticompetitive behavior rather than inspect the Web for traffic throttling.

"You don't find regulators in Japan or Europe watching every bit that passes through the network," he says. "People have thrown up this image of the FCC having a control room to police networks all the time like traffic on a freeway, but that's not something we would intend to do."

Instead, Weisman says that regulators simply allow companies to come to them with evidence of anticompetitive behavior on the part of ISPs and then decide whether or not to pursue the case.

David Farber, a professor of computer science and public policy at Carnegie Mellon University, thinks that traditional American political culture represents one of the biggest barriers to deploying an effective national broadband network and to promoting effective competition for broadband services. In short, he says governments in South Korea and Japan have no problems ordering their big companies to help foster competition at their own expense. The American government, on the other hand, has traditionally taken a more hands-off approach and has been squeamish in forcing telecom carriers to share their bandwidth with competitors.

Nippon Telegraph and Telephone (NTT) is essentially Japan's version of the government-regulated monopoly that AT&T used to have in the United States. Farber says that because of NTT's special position as Japan's dominant telecom carrier, the government has no qualms about telling it what to do.

"Basically, Japan's ministry of communications advises NTT of what they would like to see happen," he says. "And NTT unsurprisingly says, ‘Yes sir.'"

Farber says that the only reason Japan can get away with bossing around its big telecom company is because NTT has traditionally seen its work through the spirit of nationalism; in other words, while the company may not be as profitable as it would be if it were free from government meddling, its leaders see their work as necessary for the betterment of Japanese telecommunications.

"If the government promotes competition by demanding that their big carrier gives other ISPs access to their own fiber, then it becomes hazier what their motivation is for increasing their capacity and capabilities of something they know they're going to have to share," he says. "If you have national spirit about it embedded within the corporate culture then it can work. But that's not built into American corporate culture."

But beyond the pros and cons of how to foster more effective broadband competition within the United States, Feld thinks that the most important lesson that the country can learn from international broadband policy is the need to have government invest in helping carriers build out better networks. He believes that the broadband provisions contained within the Obama administration's economic stimulus package are a good start and he's pleased to see money going toward grants to help pay for projects that deliver measurable speed upgrades.

"We need to be more willing to have the government invest in infrastructure," he says. "If the government says that it will do the hard part of building the infrastructure, ISPs will provide better services."

Copyright © 2009 IDG Communications, Inc.

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