Strategy for Information Markets/Network Neutrality

Network neutrality is a restriction held on Internet Service Providers that they cannot charge internet content providers for access to consumers.

Key players in the debate

Internet service providers (ISP's) are telecommunications firms that invest in the infrastructure that supports the information markets of the internet. The concept of an information market arises from the development of the internet and the World Wide Web (web) which facilitates the massive collection of data and information, statistical referencing and analysis of this data and information . Information markets are those markets that utilize some aspect of this massive data, information and analytical services associated with these facts, figures and intelligence. The concept of an information market has its roots in the speculative markets such as stock exchanges and commodities markets which thrive on data collection, analysis and prediction activities (Nikolova & Sami, 2007). The entire concept that the data that is generated from these activities has value in and of itself has contributed to ancillary markets such as the futures markets and trading. Consequently, information markets in the latest iteration based upon internet and web driven technologies such as search engines and similar platforms are concerned with the monetization of data, information and intelligence derived from these phenomena.

Network neutrality

Net neutrality is an important concept within the framework of the global internet and World Wide Web (web). Net neutrality is a fundamental proposition within the internet access and web usage that has been a core aspect of internet and web architecture since it first become publicly available. Essentially, the concept of net neutrality relates to how individuals, corporations and government entities all access the internet via internet service providers or ISPs and refers to the principle that these ISPs should not be able to discriminate between who utilizes their services, what websites entities visit and ensures that all parties have and retain equal access. As a consequence, the internet and the web represent equal opportunity and benefit for all parties and entities rather than for just those that have some sort of strategic advantage such as capital resources or advantageous relationship.

The Concept of Net Neutrality

The concept of net neutrality has recently become an extremely contentious issue across the globe but especially within the United States (US). ISPs that are able to leverage their services for their own benefit and gain essentially control the entire topography of the internet and web. That is, major ISPs such as the nation’s largest traditional telephone companies (AT&T), cable television providers (Comcast and Time Warner) and major dedicated ISPs all desire a greater level of control over the character of the internet and web access that they provide. Such increased control results in these ISPs’ ability to essentially limit the speed at which various websites load, control the amount and speed of the data uploads and downloads of their clients and are free to redirect their clients to preferred or proprietary network website. Basically, these major ISPs prefer a business model that is based largely on the concept of “pay to play” rather than net neutrality . Consequently, this business model is one that disrupts the social equity typically associated with the internet and web.

Consequences

There are rather severe consequences for both individual internet and web users as well as for corporate users for a loss or erosion of net neutrality. The loss or erosion of net neutrality ensures that certain parties in the online forum will be privileged and other parties will be discriminated against or simply marginalized altogether. A loss of net neutrality would act to stifle virtually all of the creativity and innovation that is usually associated with the internet and the web and it would also remove control from the consumer and place choice firmly in the hands of the major content producers (Powell & Cooper, 2011). The resulting internet and web ecosystem would resemble traditional television or radio formats in which the choice of content is severely restricted and the programming is dependent upon and therefore influenced by those advertisers willing and able to pay.

Railroad as an analogy

The loss of net neutrality is not without precedent historically. There have been similar outcomes within the US relative to major communication/transportation networks in which access to these channels become controlled by a relatively small number of powerful interests. The early railroad and its supporting industry is conceptually very similar to the internet and the web in that the railroad industry during the 1800s and early 1900s consisted of extensive rail lines intersected by major rail hubs that routed people and freight throughout the nation (Levinson, 2009). In some sense this mimics the movement of data and information across the web through the architecture of the internet. However, where initially the rail industry was characterized by a significant number of participants who had relatively free access to the industry, gradually the major railroad companies such as the B&O and Union Pacific acquired the smaller regional lines and eventually came to control vast sectors of the nation’s rail lines (Levinson, 2009). In effect, these few railroad companies controlled who and what was carried on their rail lines and were free to charge whatever they desired. This type of development led to the eventual regulation of the railroad industry which removed some of these barriers but the industry was still historically free to discriminate in various ways in which US government regulation simply could not prevent.

The correlation between the historical railroad industry and the contemporary matrix of the internet and web is eerily similar. While the railroad industry of course relates to a physical network of tangible machinery and real employees and passengers, the internet consists of various hardware technologies with a system of conceptual nodes that are frequented by virtual consumers and clientele. The underlying conceptual accomplishment of these two networks, one historical and the other virtual, are quite compelling. The railroad functioned as an industry to spur the transportation and delivery of data and information across the nation much more rapidly than had been previously possible and it also allowed for the rapid shift of scarce resources from one point to another (Levinson, 2009). Essentially, this process of information and resource transfer acted to spur innovation and creativity in much the same way that the internet and the web do contemporaneously. Any force that acts to stifle this rapid transfer, storage and access to data and information is just as certain to stifle the innovation and creativity that is the result of such qualities. This is the analogy between the early American railroad industry and the contemporary internet and web that makes the concept of net neutrality so critical for future innovation and consumer empowerment.

Net neutrality application

The very concept of net neutrality at one time was a simple by-product of the relative ignorance of the underlying technology infrastructure and design of the internet and the web. Basically, at a fundamental level the internet’s over-arching system of network routers, network switches and network cables was incapable of examining specific data that moved across the overall platform. The reality of net neutrality existed simply because this technology infrastructure relied only upon the data packets of messages moving across the internet but more specifically only in the data headers contained within these data packets (Riley & Scott, 2009). This is the data that informed the internet infrastructure about where to direct the messages while the rest of the message itself existed solely within the data field which this technology infrastructure traditionally ignored. Thus, ISPs and other internet technology firms were incapable of examining in detail the actual message but only concerned themselves with the header which functions as the address of where the message is supposed or intended to go. Presently, this technological limitation that initially supported the concept of net neutrality no longer exists and this development has led to the gradual erosion of the concept and the principle of net neutrality.

Once the firms that own the internet architecture and infrastructure are able to decipher and access the actual character of the messages that travel across the web, they become much more empowered in their ability to monetize this knowledge. In essence, having access to the actual messages that navigate the internet and that inform the web converts these firms from gateway providers to resellers as it were. The technology that has facilitated such a shift is identified as Deep Packet Inspection or DPI technology which allows firms to process not just the message header in the data packets but also to process the data in the message packets which contains information such as the identity and location of the sender, the data in the message (email, text, video, music file, etc…) (Riley & Scott, 2009). This knowledge allows those firms with both the gateway business model and the DPI technology to insert themselves into the transaction process between the sending and the receiving parties. It allows such firms to decide which parties to limit in terms of bandwidth, which parties to facilitate and even, potentially which parties to block perhaps. The very development of this type of DPI technology is a direct assault on the neutrality of the internet and the web.

Within the burgeoning information market and information marketplace supported by the internet and web, there are a variety of different market participants. There are participants whose sole purpose is to amass and store data and information such as Wikipedia; participants whose sole purpose is to gather and create data and information such as news sites and similar; participants whose purpose is to analyze data and information such as search engines; and finally, participants who target specific types of data and information in order to create a niche within the information market such as web analytics and similar (Linde & Stock, 2011). Currently, the character of the newly emergent information marketplace is still developing in tandem with the ongoing growth of the web itself.

Network neutrality opponents

Those who oppose network neutrality include free market fundamentalist economists as well as advocates of the ISP industry. They argue that not were the FCC not to allow them to cap users' bandwidth, this would be similar to setting a price ceiling and therefore congesting the internet. Also, they view the ability to charge content users the right to operate on their networks as a right and as essential to keeping the ISP business profitable.

Marginal cost of bandwidth

At this point in the course, we have treated the marginal cost of producing an additional information good as essentially zero. According to net neutrality opponents, this assumption is not valid. They claim that the trend of explosive growth in internet content and data over the last decade is cause for worry that modern broadband investment is reaching diseconomies of scale. For instance, the

The inherent inequality of internet data bits

Those who oppose network neutrality criticize the value that proponents put on the equal treatment of all content providers on two fronts. First, they argue that all content should not be treated equally because not all content is equal in terms of speed, latency, or throughput. For example, an email message will most likely have less latency than an online video game because by its own nature an online video game consumes many more bits. In addition, an email is asynchronous, meaning that the message will not perish in between the time that the user sends it and the receiver reads it, whereas the online video game requires a steady stream to the user with little or no disruption in order for the experience to be successful. For this reason, an online video game would take preference over an email in the event that a network becomes congested with bandwidth. Secondly, net neutrality opponents point to the fact that consumers prefer different tiers of quality in regards to connectivity quality, and that some are willing to pay more for quality than others. For instance, every major

The creation of an information market

Security

Network, platform and data security must all be achieved in order to support an information market so that the market’s various participants can ensure that their products and services are protected.

Technology

The underlying networking software and hardware must be compatible in order to ensure that new participants can enter the information markets and that consumers within the market can access it at any time.

Data forms

Data and information within the information market must be based on an open systems/open language approach in order to allow service providers and consumers to actually utilize the data in the form of intelligence.

Reference

Linde, F. & Stock, W. (2011). Information markets: A strategic guideline for the I-commerce. Walter De Gruyter, New York.

Nikolova, E. & Sami, R. (2007). A strategic model for information markets. Proceedings of the 8th ACM conference on electronic commerce, 06(11-15), pp.1-10.

Levinson, D. (2009). Network neutrality: Lessons from transportation. Review of Network Economics, 08(01), pp.41-57.

Powell, A. & Cooper, A. (2011). Net neutrality discourses: Comparing advocacy and regulatory arguments in the United States and the United Kingdom. The Information Society: An International Journal, 27(05), pp.311-325.

Riley, M. & Scott, B. (2009). Deep packet inspection: The end of the internet as we know it? Freepress, 03(01), pp.1-18.