Author Archive

DSL Reports: The “Bandwidth Hog” is a Myth

by admin on Dec.05, 2011, under Uncategorized

(Original at DSL Reports)

. . . And Caps Don’t Really Address Truly Disruptive Users

by Karl Bode Wednesday 30-Nov-2011

“The correlation between real-time bandwidth usage and data downloaded over time is weak and the net cast by data caps captures users that cannot possibly be responsible for congestion.”

You might recall that back in 2009, we mentioned a piece claiming that the “bandwidth hog,” a term used ceaselessly by industry executives to justify rate hikes, net neutrality infractions, and pretty much everything else — was a myth. The piece was penned by Yankee analyst Benoit Felten and Herman Wagter, who knows a little something about consumption — as he’s the man largely responsible for Amsterdam’s FTTH efforts. The problem wasn’t bandwidth hogs, argued Wagter, the problem was poorly designed networks built by people more interested in cutting corners than offering quality product.

[. . .]

In a blog post, Felten notes that the pair took real user data for all customers connected to a single aggregation link and analyzed the network statistics on data consumption — in five minute time increments — over a whole day. What they found is that capping ISPs often don’t really understand customer usage patterns, and are confusing data consumption (how much data was downloaded over a whole period) and bandwidth usage (how much bandwidth capacity was used at any given point in time).

[. . .]

To simplify, one of our readers puts the dreaded highway metaphor, often used by ISPs to justify caps, to work in the opposite direction:

1% of vehicle drivers on the road travel a disproportionate amount of miles compared to the average driver. But they are on the road all the time. Most of the time they are on the road there is no rush hour congestion.The heavy drivers are likely to be involved in rush hour traffic jams, but only represent a small, not terribly relevant, fraction of total drivers in the traffic jam.Limiting the amount of miles a driver can drive, does nothing to widen the roads and little to keep people off the roads during traffic jams, thus does not help with congestion.

The researchers themselves note that blunt caps simply may not work, and they punish those that aren’t really causing any network problems:

Assuming that if disruptive users exist (which, as mentioned above we could not prove) they would be amongst those that populate the top 1% of bandwidth users during peak periods. To test this theory, we crossed that population with users that are over cap (simulating AT&T’s established data caps) and found out that only 78% of customers over cap are amongst the top 1%, which means that one fifth of customers being punished by the data cap policy cannot possibly be considered to be disruptive (even assuming that the remaining four fifths are).

Data caps, therefore, are a very crude and unfair tool when it comes to targeting potentially disruptive users. The correlation between real-time bandwidth usage and data downloaded over time is weak and the net cast by data caps captures users that cannot possibly be responsible for congestion.

[. . .]

 

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Susan Crawford: The Communications Crisis in America

by admin on Nov.02, 2011, under Uncategorized

(Original at Harvard Law and Policy Review)

The cable system providers will have both the motive (maintaining the money flow) and the ability (physical control of the Internet Protocol pipe to the home) to ensure that competing pure Internet businesses dependent on high-capacity connections will not be a meaningful part of the media landscape unless they pay tribute to the cable operators.

[. . .]

Let’s assume that all communications across the cable-provided pipe are “just like” Internet transmissions, in that they take advantage of the efficiencies of the Internet Protocol. Let’s further assume that all of the “channels” conveyed via that pipe are digital and thus virtual—making the capacity of cable’s DOCSIS 3.0 pipe almost unlimited. Let’s further assume that cable systems have adopted a services overlay that puts IP services into a common provisioning and management system, complete with elaborate digital rights management control; in other words, the cable industry will be able to perfectly charge for each thing you do “online,” invisibly, just like the wireless carriers do. Let’s further assume that that services overlay will allow for the personal targeting of advertisements across that pipe based on (and inserted into) your use of voice, video, Internet access, social networking, gaming, and location-based services. Let’s assume, finally, that the device wars are lost and that only devices sold by the cable network provider are allowed to access all of this information and present it to consumers.

[. . .]

Avoiding disruption [of the cable Pay-TV model] depends on making over-the-top services of all kinds—not just entertainment, but any interactive engagement that depends on reliably real-time high-bandwidth communication, like videoconferencing, news, and certainly sports—less attractive to consumers. Unless, of course, those over-the-top services are willing to do a deal with the cable companies on their terms by giving them a piece of their money flow, in which case the companies have every interest in prioritizing them and calling them “specialized services,” which are not subject to any net neutrality rules. The cable distribution industry is interested in having more people sign up for its high-speed Internet access services, because that’s where future growth lies. The industry just wants to make sure that the services being accessed by consumers are in the right kind of commercial relationship with the cable distributors: providing a piece of equity, or paying for carriage. Given all of these assumptions and predictions, the existence of a single, powerful pipe to many homes in America raises a number of troubling policy questions. We will be discussing these problems for years.

The cable system providers will have both the motive (maintaining the money flow) and the ability (physical control of the Internet Protocol pipe to the home) to ensure that competing pure Internet businesses dependent on high-capacity connections will not be a meaningful part of the media landscape unless they pay tribute to the cable operators. Because the cable operators will be providing both pay-TV distribution and high-speed Internet access distribution, they are well positioned to prevent the outbreak of competition and new business models made possible by the higher-speed Internet.

[. . .]

The emergence of a de facto cable monopoly in high-speed wired Internet access in most of the country cannot stay a secret. At the least, affordability concerns will become salient at some point. Despite the best efforts of the National Cable & Telecommunications Association (NCTA) and the cable companies’ lobbyists, legislators may begin to care about telecommunications policy because the American people may begin to care.

What tools are available to confront the looming cable monopoly? At some point, the Telecommunications Act of 1996, which required basic “telecommunications” providers to be subject to regulation but has been effectively avoided through litigation and regulatory legerdemain, will need to be re-written. A mosh pit of stakeholders will do their worst.

[. . .]

It will take time, and hard work, but surely we are capable of taking on the overall question of data access without assuming that the current market structure is the right one for all of us.

CONCLUSION

The looming cable monopoly is prompting a crisis in American communications. As the big squeeze continues, the genuine economic and cultural problems created by this monopoly may become more obvious to all Americans. We could tell this story by comparing the market power of the major cable companies in this country to the worst days of the railroad and oil trusts of the early 20th century; we could do it by comparing our country’s policies on high-speed Internet access—policies pushed relentlessly forward by the incumbent network operators—to the plans of our developed-country brethren; we could do it by gathering anonymous anecdotes from people who have tried to do transactions with the cable companies and are now afraid of retribution from them. Finally, we could take a deep breath and examine our country’s approach to “culture”—once we had the courage to say the word—and the effect of these singular giant pipes on our shared future. However we decide to proceed, we should pay attention to these pipes.

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Bob Frankston: Thinking Outside the Pipe

by admin on Oct.18, 2011, under Uncategorized

(Original at Bob’s Blog)

Monday, October 17, 2011

We’ve unnecessarily restricted the benefits that we and our economy can enjoy from [the Internet's] abundance because of the artificial limitations of the telecommunication industry’s limited palette of services.

 

A picky eater can be undernourished amidst abundance. The Internet has given us a taste of the abundance all around us. But we’ve unnecessarily restricted the benefits that we and our economy can enjoy from that abundance because of the artificial limitations of the telecommunication industry’s limited palette of services.

Connecting a mobile pacemaker to a physician’s office is simple using Internet protocols but it becomes difficult when the telecommunications providers control the path and need to assure that they make a profit from each message. It’s similar to the problem of asking a railroad to serve a small town that doesn’t buy many tickets. Fortunately we have an alternative – roads serve the communities without having to be profitable because they benefit the community.

Cities provide roads everywhere because they don’t need every inch of pavement to be a profit center. When New York City’s private transit companies failed, the city took them over instead of letting them fail.

The wires that run along our streets cost very little by comparison to roads, so why are we investing so much effort to prevent us from communicating unless we pay a provider?

[. . .]

We need to free ourselves from the past and recognize that the Internet is based on a very different concept.

To understand this we can look at the packets, or containers, we use to ship goods across the oceans. They can be loaded on boats without the ship owner knowing what is inside. The containers can take any path across the ocean – they aren’t restricted to channels and you can even use airplanes.

If you are shipping an entire factory you split up the components and place them in containers. When they get to the destination you reassemble them in order and if some get lost you ship replacements.

One might not be so casual about delays and replacements for expensive gear; but with Internet packets that all happens within a thousandth of a second.

[. . .]

 

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Verizon Asks Federal Appeals Court to Halt FCC Open Internet Order

by admin on Oct.01, 2011, under Uncategorized

(Original at Reuters)

By Jonathan Stempel

Fri Sep 30, 2011 6:19pm EDT

(Reuters) – Verizon Communications Inc on Friday asked a federal appeals court to block the Federal Communications Commission from imposing new rules on how Internet service providers manage their networks.

The FCC last Friday said its so-called net neutrality rules were scheduled to take effect on November 20.

[. . .]

In a filing with the federal appeals court in Washington, D.C., Verizon said the FCC was “arbitrary” and “capricious” and acted beyond its statutory authority in imposing the rules.

The rules “impose potentially sweeping and unneeded regulations on broadband networks and services and on the Internet itself,” Michael Glover, deputy general counsel at Verizon, said in a statement.

[. . .]

Some public interest groups have also criticized the FCC rules, saying they are weak and favor some phone and cable companies with large Internet presences, such as AT&T Inc and Comcast Corp.

The D.C. Circuit in April threw out a challenge by Verizon and MetroPCS Communications Inc to the rules, calling it premature.

[. . .]

The case is Verizon v. FCC et al, D.C. Circuit Court of Appeals, No. 11-1359.

[. . .]

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Video: Dynamic Coalition on Core Internet Values

by admin on Sep.28, 2011, under Uncategorized

Meeting of the Dynamic Coalition on Core Internet Values at Internet Governance Forum 11 in Nairobi, Kenya on Sep 28 2011.

Panel: Alejandro Pisanty, Vint Cerf, Scott Bradner, Sivubramanian Muthusumy

(Click for video)

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Free Press Petitions for Review of FCC Open Internet Order

by admin on Sep.28, 2011, under Uncategorized

(Original at PC World)

By Grant Gross, IDG News

[. . .]

Free Press filed the lawsuit Wednesday in the U.S. Court of Appeals for the First Circuit in Boston, just days after the FCC published the rules in the Federal Register, the last step before they go into effect.

The regulations, sometimes called open Internet rules, bar wireline broadband providers from “unreasonable discrimination” against Web traffic, but don’t have the same prohibition for mobile broadband providers. The rules prohibit mobile providers from blocking voice and other applications that compete with their services, but don’t prohibit them from blocking other applications.

[. . .]

The FCC will likely see more challenges from companies on the other side of the net neutrality debate from Free Press.

Earlier this year, Verizon Communications and MetroPCS filed challenges to the rules, but the U.S. Court of Appeals for the District of Columbia rejected the lawsuits because the companies filed before the rules were published in the Federal Register. Verizon, which has said it plans to refile a lawsuit, has argued that the FCC does not have the authority to regulate broadband.

[. . .]

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FCC Files Open Internet Final Rule

by admin on Sep.22, 2011, under Uncategorized

Selections from the FCC’s Final Rule in the Open Internet Proceeding, filed with the Federal Register today:

SUMMARY: This Report and Order establishes protections for broadband service to preserve and reinforce Internet freedom and openness. The Commission adopts three basic protections that are grounded in broadly accepted Internet norms, as well as our own prior decisions. First, transparency: fixed and mobile broadband providers must disclose the network management practices, performance characteristics, and commercial terms of their broadband services. Second, no blocking: fixed broadband providers may not block lawful content, applications, services, or non-harmful devices; mobile broadband providers may not block lawful websites, or block applications that compete with their voice or video telephony services. Third, no unreasonable discrimination: fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic. These rules, applied with the complementary principle of reasonable network management, ensure that the freedom and openness that have enabled the Internet to flourish as an engine for creativity and commerce will continue. This framework thus provides greater certainty and predictability to consumers, innovators, investors, and broadband providers, as well as the flexibility providers need to effectively manage their networks. The framework promotes a virtuous circle of innovation and investment in which new uses of the network—including new content, applications, services, and devices—lead to increased end-user demand for broadband, which drives network improvements that in turn lead to further innovative network uses.

DATES: Effective Date: These rules are effective November 20, 2011.

[. . .]

Synopsis of the Order 

I. PRESERVING THE FREE AND OPEN INTERNET

In this Order the Commission takes an important step to preserve the Internet as an open platform for innovation, investment, job creation, economic growth, competition, and free expression. To provide greater clarity and certainty regarding the continued freedom and openness of the Internet, we adopt three basic rules that are grounded in broadly accepted Internet norms, as well as our own prior decisions:

i. Transparency. Fixed and mobile broadband providers must disclose the network management practices, performance characteristics, and terms and conditions of their broadband services;

ii. No blocking. Fixed broadband providers may not block lawful content, applications, services, or non-harmful devices; mobile broadband providers may not block lawful websites, or block applications that compete with their voice or video telephony services; and

iii. No unreasonable discrimination. Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic.

We believe these rules, applied with the complementary principle of reasonable network management, will empower and protect consumers and innovators while helping ensure that the Internet continues to flourish, with robust private investment and rapid innovation at both the core and the edge of the network. This is consistent with the National Broadband Plan goal of broadband access that is ubiquitous and fast, promoting the global competitiveness of the United States.

[. . .]

We recognize that broadband providers may offer other services over the same last-mile connections used to provide broadband service. These “specialized services” can benefit end users and spur investment, but they may also present risks to the open Internet. We will closely monitor specialized services and their effects on broadband service to ensure, through all available mechanisms, that they supplement but do not supplant the open Internet.

[. . .]

II. THE NEED FOR OPEN INTERNET PROTECTIONS

[. . .]

A. The Internet’s Openness Promotes Innovation, Investment, Competition, Free Expression, and Other National Broadband Goals

Like electricity and the computer, the Internet is a “general purpose technology” that enables new methods of production that have a major impact on the entire economy. The Internet’s founders intentionally built a network that is open, in the sense that it has no gatekeepers limiting innovation and communication through the network.3 Accordingly, the Internet enables an end user to access the content and applications of her choice, without requiring permission from broadband providers. This architecture enables innovators to create and offer new applications and services without needing approval from any controlling entity, be it a network provider, equipment manufacturer, industry body, or government agency. End users benefit because the Internet’s openness allows new technologies to be developed and distributed by a broad range of sources, not just by the companies that operate the network. For example, Sir Tim Berners-Lee was able to invent the World Wide Web nearly two decades after engineers developed the Internet’s original protocols, without needing changes to those protocols or any approval from network operators. Startups and small businesses benefit because the Internet’s openness enables anyone connected to the network to reach and do business with anyone else, allowing even the smallest and most remotely located businesses to access national and global markets, and contribute to the economy through e-commerce4 and online advertising.5 Because Internet openness enables widespread innovation and allows all end users and edge providers (rather than just the significantly smaller number of broadband providers) to create and determine the success or failure of content, applications, services, and devices, it maximizes commercial and non-commercial innovations that address key national challenges—including improvements in health care, education, and energy efficiency that benefit our economy and civic life.

The Internet’s openness is critical to these outcomes, because it enables a virtuous circle of innovation in which new uses of the network—including new content, applications, services, and devices—lead to increased end-user demand for broadband, which drives network improvements, which in turn lead to further innovative network uses. Novel, improved, or lower-cost offerings introduced by content, application, service, and device providers spur enduser demand and encourage broadband providers to expand their networks and invest in new broadband technologies.6 Streaming video and e-commerce applications, for instance, have led to major network improvements such as fiber to the premises, VDSL, and DOCSIS 3.0. These network improvements generate new opportunities for edge providers, spurring them to innovate further.7 Each round of innovation increases the value of the Internet for broadband providers, edge providers, online businesses, and consumers. Continued operation of this virtuous circle, however, depends upon low barriers to innovation and entry by edge providers, which drive enduser demand. Restricting edge providers’ ability to reach end users, and limiting end users’ ability to choose which edge providers to patronize, would reduce the rate of innovation at the edge and, in turn, the likely rate of improvements to network infrastructure. Similarly, restricting the ability of broadband providers to put the network to innovative uses may reduce the rate of improvements to network infrastructure.

[. . .]

B. Broadband Providers Have the Incentive and Ability to Limit Internet Openness

[. . .]

The record in this proceeding reveals that broadband providers potentially face at least three types of incentives to reduce the current openness of the Internet. First, broadband providers may have economic incentives to block or otherwise disadvantage specific edge providers or classes of edge providers, for example by controlling the transmission of network traffic over a broadband connection, including the price and quality of access to end users. A broadband provider might use this power to benefit its own or affiliated offerings at the expense of unaffiliated offerings.

[. . .]

Second, broadband providers may have incentives to increase revenues by charging edge providers, who already pay for their own connections to the Internet, for access or prioritized access to end users. Although broadband providers have not historically imposed such fees, they have argued they should be permitted to do so. A broadband provider could force edge providers to pay inefficiently high fees because that broadband provider is typically an edge provider’s only option for reaching a particular end user.17 Thus broadband providers have the ability to act as gatekeepers.18

[. . .]

Third, if broadband providers can profitably charge edge providers for prioritized access to end users, they will have an incentive to degrade or decline to increase the quality of the service they provide to non-prioritized traffic. This would increase the gap in quality (such as latency in transmission) between prioritized access and non-prioritized access, induce more edge providers to pay for prioritized access, and allow broadband providers to charge higher prices for prioritized access. Even more damaging, broadband providers might withhold or decline to expand capacity in order to “squeeze” non-prioritized traffic, a strategy that would increase the likelihood of network congestion and confront edge providers with a choice between accepting low-quality transmission or paying fees for prioritized access to end users.

Moreover, if broadband providers could block specific content, applications, services, or devices, end users and edge providers would lose the control they currently have over whether other end users and edge providers can communicate with them through the Internet. Content, application, service, and device providers (and their investors) could no longer assume that the market for their offerings included all U.S. end users. And broadband providers might choose to implement undocumented practices for traffic differentiation that undermine the ability of developers to create generally usable applications without having to design to particular broadband providers’ unique practices or business arrangements.25

[. . .]

C. Broadband Providers Have Acted to Limit Openness

These dangers to Internet openness are not speculative or merely theoretical. Conduct of this type has already come before the Commission in enforcement proceedings.

[. . .]

These practices have occurred notwithstanding the Commission’s adoption of open Internet principles in the Internet Policy Statement; enforcement proceedings against Madison River Communications and Comcast for their interference with VoIP and P2P traffic, respectively; Commission orders that required certain broadband providers to adhere to open Internet obligations; longstanding norms of Internet openness; and statements by major broadband providers that they support and are abiding by open Internet principles.

[. . .]

D. The Benefits of Protecting the Internet’s Openness Exceed the Costs

Widespread interference with the Internet’s openness would likely slow or even break the virtuous cycle of innovation that the Internet enables, and would likely cause harms that may be irreversible or very costly to undo. For example, edge providers could make investments in reliance upon exclusive preferential arrangements with broadband providers, and network management technologies may not be easy to change.38 If the next revolutionary technology or business is not developed because broadband provider practices chill entry and innovation by edge providers, the missed opportunity may be significant, and lost innovation, investment, and competition may be impossible to restore after the fact. Moreover, because of the Internet’s role as a general purpose technology, erosion of Internet openness threatens to harm innovation, investment in the core and at the edge of the network, and competition in many sectors, with a disproportionate effect on small, entering, and non-commercial edge providers that drive much of the innovation on the Internet.39

[. . .]

There is no evidence that prior open Internet obligations have discouraged investment;41 and numerous commenters explain that, by preserving the virtuous circle of innovation, open Internet rules will increase incentives to invest in broadband infrastructure. Moreover, if permitted to deny access, or charge edge providers for prioritized access to end users, broadband providers may have incentives to allow congestion rather than invest in expanding network capacity. And as described in Part III, below, our rules allow broadband providers sufficient flexibility to address legitimate congestion concerns and other network management considerations.

[. . .]

Finally, we note that there is currently significant uncertainty regarding the future enforcement of open Internet principles and what constitutes appropriate network management, particularly in the wake of the court of appeals’ vacatur of the Comcast Network Management Practices Order.

[. . .]

III. OPEN INTERNET RULES

[. . .]

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Bob Frankston at OneWebDay: Infrastructure Commons – The Future of Connectivity

by admin on Sep.15, 2011, under Uncategorized

(Announcement at ISOC New York)

ISOC-NY OneWebDay Event:

Bob Frankston – “Infrastructure Commons – the Future of Connectivity”

 

The 6th annual global OneWebDay celebration will be Thursday September 22 2011. ISOC-NY’s contribution will be to host respected computer scientist and Internet iconoclast Bob Frankston who will present on the theme “Infrastructure commons – the future of connectivity”.

The subways, roads and sidewalks are vital infrastructure. The Internet should be no different – our economy, health and safety depend on our ability to communicate. Yet its provision and economy are based on outdated, inequitable, and inefficient telecom models. How do we move to a connected future?

What: Bob Frankston “Infrastructure commons – the future of connectivity”
When: OneWebDay, Thu Sep 22 2011 – 7.15pm – 9pm
Where: Rm. 202, Courant Institute NYU, 251 Mercer St NYC
Who: Public welcome. In person or by webcast.
Webcast: http://livestream.com/internetsocietychapters
Twitter:@isocny, #onewebday, @bobfrankston
facebook: https://www.facebook.com/event.php?eid=175684272508607
shorturl: http://bit.ly/frankston

 

We are happy to also announce that Dave Burstein of DSL Prime has agreed to moderate the session. Dave will also talk about the practicalities of establishing community networks.

About Bob Frankston

Bob Frankston is a native Brooklynite who first started working with computers in 1963 when he was just 13. He later graduated from MIT. He is best known as the co-author of VisiCalc – the spreadsheet program that was the original killer app that sold a million Apple II’s. This has led to many awards. Working for Microsoft in the 90s Frankston was very much responsible for the integration of Internet functionality into the Windows operating system, thus jumpstarting popular adoption of the network. In recent years, Frankston has been an outspoken advocate for reducing the role of telecommunications companies in the evolution of the Internet. He has coined the term “Regulatorium” to describe what he considers collusion between telecommunication companies and their regulators that prevents change. (Bio)

About Dave Burstein

As the editor and publisher of industry newsletter DSL Prime since 1999 Dave Burstein probably knows more about the state of the U.S. broadband industry than anyone else alive. He is an author and an award-winning broadcaster.

 

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A Choice of Futures: Dan York on Moving to a New Role at ISOC

by admin on Sep.14, 2011, under Uncategorized

(Original at Disruptive Telephony)

[. . .]

We have before us a choice of futures.

One choice leads to a future where innovative companies like Voxeo can emerge, thrive, disrupt and succeed.

Another choice leads to a future where what little “innovation” there is exists only at the will of the gatekeepers to the network after appropriate requirements and/or payments are met. Other choices lead to outcomes somewhere in between those polarities.

How will we choose?

[. . .]

[N]ow we see services like Facebook, Google+, Twitter and more that seek to provide a nice pretty space in which you can exchange messages, photos and more… without ever leaving the confines of the service… they are a walled garden with just many ways to access the garden and to look over the walls.

Everyone wants to own your eyeballs… to host your content… to provide your identity…

And we see companies like Apple, Google and Microsoft seeking to control a large degree of how we connect to and use the mobile Internet…

And we see a change from “permissionless innovation” where anyone can set up a new service… to a model where you have ask permission or agree to certain “terms of service” in order to connect your new service to other services or to have your app available on some platforms…

And we see countries that want to throw up a wall around their citizens… sometimes to keep information from coming in… and sometimes to keep information from going out… and sometimes to be able to shut down all access…

And we see players who did control our communications systems always looking for opportunities where they could maybe, just maybe, stuff the proverbial genie back in the bottle and regain that control they lost…

[. . .]

[T]his coming Monday, September 19th, I will join the Internet Society as a staff member.

The Missing Link

The particular project I will join within ISOC is a brand new initiative targeted at helping bridge the gap between the standards created within the IETF and the network operators and enterprises who are actually deploying networks and technologies based on those standards. To help translate those standards into operational guidance… to help people understand how to deploy those standards and why they should, what benefit they will see, etc

The initiative is currently called the “Deployment and Operationalization Hub”, or “DO Hub”, and while that may or may not be its final name, the idea is to find/curate content that is already out there created by others, create content where there are gaps, make it easy to distribute information about these resources… and promote the heck out of it so that people get connected to the resources that they need. The initial focus will be, somewhat predictably, on IPv6, but also DNSSEC and possibly another technology. It is a new project and the focus is being very deliberately kept tight to see how effective this can be.

[. . .]

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(Europe/UK) Robert Kenny Rebuts AT Kearney’s “Viable Future Model for the Internet”

by admin on Aug.26, 2011, under Uncategorized

(From Benoit Felten’s blog and Communications Chambers)

Developments in Europe . . . Benoit Felten, A Slap in the Face of Net Discrimination Lobbyists:

Under the title Are Traffic Charges Needed to Avert a Coming Capex Catastrophy?, economist Robert Kenny builds a systematic refutation of the AT Kearney paper. Kenny disects each of the arguments that forms the AT Kearney reasoning and breaks each one of them down with clinical precision.

The starting point of Kenny’s piece is potentially the most important one: that the need for a change in traffic management is taken as a postulate by AT Kearney and in no way demonstrated. This to me is the most important messages for policy makers and regulators: before meddling with internet traffic management, make sure you understand exactly what is happening, don’t take anyone’s word for it.

From the Introduction to Robert Kenny’s rebuttal:

The net neutrality debate is now gathering steam in Europe, both at the Commission level and in member states. Against this background, four European telcos commissioned a report from AT Kearney [ATK], to support their opposition to net neutrality regulation. This report, A Viable Future Model for the Internet, claims that carriers are facing ballooning capex requirements to fund the growth of internet traffic and that the best way to address this structural problem is via traffic charges to online service providers [OSPs].

If massive capex is required, and this needs to be recovered from OSPs, that would be a significant argument against net neutrality regulation, since it would necessarily end the principal that consumers could access any (legal) site they wished – ISPs would block access to sites that had not paid the charges the ISPs had chosen to impose.

Broadly the logic of ATK’s report as follows:

  • Telco investors are already seeing lower returns than investors in other players in the internet value chain
  • Telcos face ballooning capex
  • This capex is unsustainable
  • OSPs are not contributing to the costs of traffic
  • In a two-sided market, both sides pay
  • Traffic charges are necessary because otherwise OSPs have no incentive to constrain traffic costs
  • OSPs can easily afford increased charges
  • Increasing retail prices will be challenging
  • It is practical to implement traffic charges to OSPs
  • Enhanced quality services can be introduced without degrading the basic internet

However I believe both its starting assumptions and its logic are open to significant challenge. This paper reviews the ATK report, from technical, economic and regulatory perspectives, and makes the case that ATK’s conclusion (that the best way forward is traffic charges to OSPs) is not at all well-founded. I consider in turn each of the logical steps above.

Note that the focus of the economic analysis in this paper is primarily on fixed networks, though the qualitative arguments apply equally to both fixed and mobile networks.

 

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