Assessing the Merits of Network Neutrality Obligations at Low, Medium and High Network Layers

Abstract

The often contentious network neutrality debate typically cleaves along an absolute for or against dichotomy based largely on one’s philosophy about the Internet’s past and future direction, the ability of marketplace forces to promote self-regulation, and the degree of confidence in governments’ ability to remedy acute problems. Such a macroscopic perspective promotes a large difference of opinion with plenty of opportunities to disparage the opposition. Thoughtful scholarly literature, which can examine nuances in the debate, can become subordinate to sponsored research designed to influence policymakers with a preconceived point of view. A “big picture” analysis ironically leads to viewpoints at polar opposites and advocacy that finds no middle ground.

The issue of whether the Internet requires some degree of government oversight, dispute resolution and stewardship requires serious consideration rather than sloganeering and dueling web pages. An essential element for such analysis breaks down the Internet into at least three layers having different characteristics that can affect the arguments for or against the application of network neutrality rules. A physical layer provides the infrastructure needed to establish a basic communications link between two or more parties. Ridding on top of this basic bitstream transmission conduit are communications protocols and standards like the Transmission Control Protocol that manage the routers that select networks to carry traffic and the Internet Protocol that establishes a globally used addressing system. Farther atop the physical layer and the layers that set up and process transmissions lay the content, applications and software that provide various services.

This paper will consider the network neutrality debate in the context of these three different layered components of the Internet. The paper will show that compelling arguments for enforceable network neutrality rules are strongest at the low layer, contestible at the middle layer and unnecessary at the high layer. Such a nuanced view of network neutrality explains that the need for government involvement depends on which part of the Internet’s networking infrastructure one examines. For one comfortable with government involvement and network neutrality rules, the paper will challenge the need for such oversight in the competitive marketplace for Internet-mediated content, applications and software. For others uncomfortable with any government involvement, the paper will identify instances where market failure or the lack of competition necessitates fair dealing by a limited number of operators providing Internet access. In the middle layers, where Internet Service Providers use protocols and technologies to manage their networks, but possibly also to favor corporate affiliates and certain third party providers of content, the paper suggests the need for a government referee authorized to resolve disputes and to examine causes of congestion and service interruptions.

Keywords: network neutrality, layered regulation

JEL Classification: K23, L96