Structured 'Net neutrality is the key

The Internet has been a spectacular success, due in no small part to the fact that governments and large corporations have done little to limit it.

Some lawmakers support laissez-faire free enterprise, in which content freedom will be restricted by an oligopolistic web of deals. Others support the lesser evil of mandated 'Net neutrality, which would preserve the benefits of today's Internet but inhibit its growth tomorrow. Few seem to realize they can have their regulatory cake and eat it, too.

Internet legislation should preserve radical openness in two areas: Internet bit transport, which is what the laissez-faire proponents are focused on, and Internet content and applications, which is what the 'Net neutrality supporters want to protect. Fortunately, both goals are achievable through a scheme that follows seven policy-design principles:

* 'Net neutrality should be preserved for the "Jeffersonian" part of the Internet. Research, teaching, political discourse, and small-business commerce are supported successfully by today's unmetered bandwidth and unguaranteed QoS. Don't fix what isn't broken.

* In general, content and application providers should be left almost wholly unregulated.

* It's OK to regulate telecom carriers. They are natural oligopolists and are used to it.

* It's OK to charge for high QoS. The "Edisonian" part of the Internet will be stifled without substantial investment; somebody has to pay for it.

* Any payment arrangements between content and application providers and consumer-facing carriers should be formulaic. There should be no scope for negotiation, so bias can't creep in.

* Content and application providers should be allowed to subsidize communication costs. Consumers don't like paying on a bit-by-bit basis; they prefer subscriptions or free or ad-supported models.

* Content and application providers shouldn't have to subsidize communication costs. There should be no business-arrangements requirements limiting innovators from getting started on the Internet.

Tariff rebate passthrough is a policy and regulatory framework that satisfies all these principles. It works as follows:

* Internet service is provided to consumers and small business in QoS tiers.

* Tiering is the only basis allowed for price differentiation.

* The lowest tier of service is unmetered.

* Web site owners and other content or application providers can choose to absorb the metered cost for a higher tier of service; if they choose not to do so, the consumer is billed.

* Regulators should enforce adherence to QoS guarantees, and possibly also the standardization of tier definitions and reasonableness of pricing.

More on tariff rebate passthrough and the Jeffersonian/Edisonian Internet split can be found here. 

Monash is president of Monash Information Services, an analysis and consulting firm focused on software and related technology areas. He can be reached at curtmonash@monash.com.

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