Both sides have a point in net neutrality

Last week we brought up some of the most critical telecom policy issues for 2006. Top of the list is net neutrality. Congress started hearings on the topic a few weeks back, and both telcos and content providers are lobbying hard (share your thoughts in our net neutrality forum).

There are two main camps – call them “pay for use” and “equal access.” The pay-for-use folks – chiefly telcos – argue that different types of traffic differentially affect the network, and they should therefore be able to charge for higher-impact traffic, the same way postal services charge more to ship 10-pound packages than 2-ounce letters, and more for guaranteed overnight delivery than best-effort service. Similarly, highway tolls are higher for 18-wheelers than a family Toyota.

Equal-access folks – chiefly the content providers such as Google and Yahoo – say telcos shouldn’t discriminate based on what the traffic is or where it’s headed. The argument is that postal services don’t charge more to carry your mortgage payment than, say, a birthday card. By analogy, telcos have no right to charge more for Google clicks or eBay hits.

Who’s right? Both are. Certain types of traffic – voice, video and some interactive applications – do stress the network more than others, and this impact is particularly severe at last-mile broadband links, where congestion is most likely. Yet having telcos prioritize some Web sites over others not only destroys the innovative any-to-any nature of the Internet but also runs counter to several centuries of historical de facto net neutrality.

Take postal services: Ben Franklin launched one of the first, to distribute his Philadelphia newspaper to readers in Boston and New York. Even though his service would also carry mail, he refused to carry papers for competing publishers – early precedent for service providers exercising control over content distribution.

But that first precedent was pretty much the last. Once the postal service became government-regulated, the rules changed, and even unregulated services (such as FedEx) abide by them. Today, the effective policy is equal access combined with pay per use: The post office can’t refuse to carry ads for FedEx, but it can charge more for heavier boxes and overnight guarantees. Similarly, traditional telcos can’t charge you more to gossip with your sister than to place trades with your broker, but they are free to charge more for longer calls or those placed to far-off geographies.

These examples point the way toward a workable compromise for net neutrality. Google and Yahoo are right to insist that the telcos not charge differently for traffic to their sites. The telcos do have the right to charge more for traffic types that stress the network. In other words, telcos should be able to charge higher rates for VoIP-grade Internet access – which consumers are free to purchase or decline – but not for the use of specific services such as Vonage, or for access to sites such as Google.