The Case Against an Australian Adoption of Net Neutrality Regulation

net neutrality tag cloud
Image: Sean Weigold Ferguson, some rights reserved

In light of ongoing debate around the need for increased internet regulation and management, this article critically examines the concept of net neutrality, particularly as it relates to calls for the adoption of legislation by Australian government. Here I will argue that despite legitimate concerns surrounding equality of access online and the anti-competitive business practices of internet service providers, the implementation of specific net neutrality legislation in Australia, as has been employed elsewhere around the world, may be unnecessary or even detrimental to effective network operation and management. This can be demonstrated through an examination of the existing regulatory framework that sets Australia apart from other contexts, the economic concerns of innovation and competition, as well as a technical analysis of the need for traffic shaping technology.

What is Net Neutrality?

The term net neutrality refers to the idea that internet service providers (ISPs) should be required to treat all traffic equally in transit over their networks, such that there is no discrimination based on origin, destination, or contents (DeNardis, 2014). In this sense, net neutrality advocates suggest that network infrastructure and its operators should be managed as public telecommunication utilities as opposed to private information services. In light of the broad scope of this topic, we focus here on the regulatory implications for an Australian adoption of net neutrality legislation, particularly through the lens of the recent United States implementation and repeal.

History of Net Neutrality

Initially building on the concept of common carriers as a regulatory framework for public telecommunication systems, the idea of net neutrality was first coined in 2003 and has become continually more relevant as time goes on (Wu, 2003). As the internet has become an increasingly important aspect of our everyday lives, the net neutrality debate has shifted from that of philosophy and technology, to legal policy and economics.

The recent pivotal events occurring over the course of the net neutrality debate in the United states as facilitated by the Federal Communications Commission (FCC) included: passing of the Open Internet Order of 2010 which disallowed ISPs from engaging in discriminatory practices, approval of the Open Internet Order of 2015 which reclassified internet service as a public utility, and the subsequent repeal of these regulations in favour of a more hands off approach (Hanna, 2018).

In contrast to the specific implementations addressed by the United States, Australia has not yet enacted any comparable net neutrality legislation. The governance of internet connectivity in Australia has continued under the authority of the Australian Communications and Media Authority (ACMA) to manage content blocking and access, as well as the Australian Competition and Consumer Commission (ACCC) to protect consumer rights and regulate anti-competitive business activity (Gharakheili et al., 2016).

Anti-Competitive Practices

The primary motivator of net neutrality advocate’s is in restricting internet service providers ability to take advantage of their unique position, particularly in regard to disadvantaging competitors services. This has become most noticeable in the digital media market, where a number of ISPs both in the U.S. and Australia maintain at least partial ownership of major media distribution organisations, either directly or via a shared parent company. The most obvious example of this has been demonstrated through the throttling of the streaming service Netflix by dominant U.S. ISPs, most notably Comcast, a situation that was not rectified until a deal was settled between the companies in 2014, the terms of which were never disclosed publicly (Greenstein et al., 2016). The throttling disputes involving Netflix became an important catalyst for the mainstream media’s participation in the net neutrality debate, with Netflix being used as the primary argument in a range of media coverage, notably John Oliver’s widely distributed YouTube video advocating for net neutrality legislation.

This same concern is just as relevant in the Australian context though has not been publicised to the same extent, with Telstra, the countries largest ISP, owning a 50% share of the television and digital media distribution company Foxtel. Telstra has advertised unmetered streaming of Foxtel content on their network as a benefit to consumers, though this raises concerns of anti-competitive behaviour which incentivises users towards services which Telstra has a financial interest in, disadvantaging alternative media platforms (Daly, 2016). Of particular interest here though is whether net neutrality legislation is actually necessary to limit this type of activity. Discriminatory and anti-competitive business practices are already regulated by the Australian Competition and Consumer Commission (ACCC), which is likely the reason that anti-competitive ISP behaviour has not been seen as frequently as in the United States, as well as a justification for why net neutrality laws have not been needed thus far. This suggests that within the Australian context, continual development of these existing regulations may be sufficient action in place of a more drastic net neutrality implementation (Schaffarczyk, 2014).

National Regulation of a Global Network

global world wide web graphic
Image: TheDigitalArtist, CC0 Creative Commons

Just as the potential abuse of power by ISPs is a major point of concern for those in favour of net neutrality, so too is the potential abuse of power by governmental bodies a concern for those opposing net neutrality legislation. While a strong argument against net neutrality could be made on this point alone, it is highly reliant on each individual’s ideologies, as well as dependent on the political climate of the specific country in question. This idea becomes particularly difficult to navigate when considering the internet as an international network, such that regulations imposed by each single nation has ramifications for global connectivity and productivity, with Australia already being one of the strictest internet regulators (Stover, 2010). Independent of this context, the concern remains that power granted to governments with good intentions today may be misused in the future as both technology and related political stances continue to evolve. Arguments against net neutrality are not however dependent on any inherent distrust of government procedures, as there are also strong arguments surrounding the economic and technical implications of net neutrality.

Network Innovation and Competition

In the American market, the most common argument cited by ISPs in opposition to net neutrality was that it would limit incentive to invest in infrastructure and reduce market competition between internet service providers, the two foundational economic forces responsible for technological innovation and lowering prices for consumers (DeNardis, 2014). While we obviously should not whole heartedly trust the word of those organisations with financial motivations in the debate without further evidence, the U.S. Federal Communications Commision (FCC) also cited these concerns in their repealing of net neutrality (FCC, 2018), based on evidence of more than a 5% drop of investment in broadband networks under title II regulation (Brake, 2017). With lowered infrastructure investments furthering bandwidth scarcity and the reduced potential for ISPs to generate revenue through strategic partnerships with digital media distributors, the implementation of net neutrality legislation in Australia could result not only in a reduction of technological progress, but likely an increase in costs to consumers, which has been estimated to be anywhere from an additional $10 to $55 per month (Stratecast CSS, 2010).

The Need for Traffic Shaping

internet connectivity graphic
Image: Josh Sorenson, free for commercial and noncommercial use

Often ignored or misrepresented in the portrayal of the net neutrality debate due to its complex technical nature, the specifics of underlying network protocols and existing packet routing standards are highly relevant to discussions of net neutrality. Inherent in the concept that net neutrality advocates demand that ISPs must treat all information in transit across their network equally, comes the concern that some forms of network prioritisation may be beneficial or even required for optimal network operation. Bandwidth is not a metaphorical concept like the cloud, instead it refers to the real physical and electrical limitations of networking infrastructure to transmit a certain volume of data at any one time based on hardware specifications, while the demand for bandwidth consistently increases at a rate of 50% per year (Nielsen, 1998-2018). Because of this, traffic shaping based on bandwidth can be an essential practice, particularly in densely populated areas, in order to reduce specific over-consuming individuals’ throughput so as to meet the demands of a larger group. More controversially, packet type traffic shaping is routinely utilised to throttle or prioritise certain internet protocols more so than others. Common examples of this include the throttling of resource intensive file sharing protocols such as BitTorrent, as well as the prioritisation of protocols that rely heavily on real-time updates such as video conferencing and gaming (Mueller, 2012). While this technology certainly opens the doors to the potential for abuse, such as the prioritisation of content owned by an ISP or their financial interests, a blanket ban of traffic shaping at the network infrastructure level could dramatically increase the rate of negative network issues experienced by users when utilising protocols that are particularly sensitive to jitter and latency, side effects of a poorly optimised network (Endres, 2009).

Conclusion

As has been outlined above, strict net neutrality regulation may not be required in Australia to maintain a fair and accessible internet for everyone. Existing regulatory bodies could be granted appropriate additional controls and empowered to rectify the disconnect between financial incentives and the ethical provision of internet access. Furthermore, net neutrality legislation such as was implemented in the United States was repealed due to significant detrimental market effects and therefore should be be considered only if absolutely necessary. The arguments in favour of net neutrality seem to be founded on good intents, particularly those based on internet freedom and equality, but I would argue that we should take care to tread lightly on imposing additional national governance over a global network, such to preserve the integrity of the internet as a shared platform for free communication and collaboration.

global network graphic
Image: Free Press, some rights reserved

References

Australia Competition and Consumer Commission (ACCC). (2018). Retrieved from https://www.accc.gov.au/

Australian Communications and Media Authority (ACMA). (2018). Retrieved from https://www.acma.gov.au/

Brake, D. (2017). Broadband Myth Series, Part 1: What Financial Data Shows About the Impact of Title II on ISP Investment. Retrieved from https://itif.org/publications/2017/06/02/broadband-myth-series-part-1-what-financial-data-shows-about-impact-title-ii

Daly, A. (2016). Net neutrality in Australia: The debate continues, but no policy in sight. In Net Neutrality Compendium (pp. 141-155). Springer, Cham.

DeNardis, L. (2014). Internet Access and Network Neutrality. In The Global War for Internet Governance (pp. 131-152). New Haven: Yale University Press.

Endres, J. (2009). Net neutrality – how relevant is it to Australia? Telecommunications Journal of Australia, 59(2), 22-1.

FCC (2018). Restoring Internet Freedom. Retrieved from https://www.fcc.gov/restoring-internet-freedom

Federal Communications Commission (FCC). (2018). Retrieved from https://www.fcc.gov/

Federal Communications Commission. (2010). In the matter of preserving the open internet broadband industry practices. Retrieved from https://docs.fcc.gov/public/attachments/FCC-10-201A1_Rcd.pdf

Federal Communications Commission. (2015). In the matter of protecting and promoting the open internet. Retrieved from https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-24A1.pdf

Federal Communications Commission. (2018). In the matter of restoring internet freedom. Retrieved from https://docs.fcc.gov/public/attachments/FCC-17-166A1.pdf

Gharakheili, H. H., Vishwanath, A., & Sivaraman, V. (2016). Perspectives on Net Neutrality and Internet Fast-Lanes. ACM SIGCOMM Computer Communication Review, 46(1), 64-69.

Greenstein, S., Peitz, M., & Valletti, T. (2016). Net neutrality: A fast lane to understanding the trade-offs. Journal of Economic Perspectives, 30(2), 127-50.

Hanna, M. J. (2018). Net Neutrality: A Brief Overview of the Policy and the FCC’s Ruling to Upend It. Computer, (4), 78-81.

HBO. (2014). Net Neutrality: Last Week Tonight with John Oliver. Retrieved from https://www.youtube.com/watch?v=fpbOEoRrHyU

Mueller, M. L., & Asghari, H. (2012). Deep packet inspection and bandwidth management: Battles over BitTorrent in Canada and the United States. Telecommunications Policy, 36(6), 462-475.

Nielsen, J. (1998-2018). Nielsen’s law of internet bandwidth. Retrieved from https://www.nngroup.com/articles/law-of-bandwidth/

Schaffarczyk, K. (2014). Australia’s net neutrality lesson for the US. Retrieved from https://theconversation.com/australias-net-neutrality-lesson-for-the-us-22245

Stover, C. M. (2010). Network neutrality: A thematic analysis of policy perspectives across the globe. Global Media Journal, 3(1), 75.

Stratecast Consumer Communication Services (CSS). (2010). Net Neutrality: Impact on the Consumer and Economic Growth. Retrieved from http://internetinnovation.org/files/special-reports/Impact_of_Net_Neutrality_on_Consumers_and_Economic_Growth.pdf

Wu, T. (2003). Network neutrality, broadband discrimination. J. on Telecomm. & High Tech. L., 2, 141-176.

Timothy
About Timothy 5 Articles
Full time student studying a Bachelor of Liberal Arts and Science majoring in Biology and Digital Cultures at the University of Sydney.

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