Strategy for Information Markets/Network Neutrality

Proposed table of contents/summary of chapter:

-What is net neutrality?

-How does net neutrality look (i.e. history, application to phone companies and railroads?

-Who supports net neutrality? Who is against net neutrality?

-Strategies for using net neutrality (for both those in support and those against)

A journalist for The Wall Street Journal writes that net neutrality for the internet is the principle that internet providers should treat all data equally and avoid restricting or delaying access to certain sites. This means that, as network oriented market behemoths move their businesses onto the web, it would be "wrong" for them to, while supplying access to the internet, restrict or disrupt their customers from reaching or fully utilizing websites and services provided by rival companies. An example of this being earlier this year, AT&T restricted an internet-phone service from Skype so iPhone users couldn't place calls on AT&T's cellular network. At the time, AT&T cited network congestion concerns. Skype having the possibility of utilizing the contracted data services of the smart phone and placing calls through the internet, rather than on the telecommunications line, bypassing the company's fee for using more minutes or text messages than paid for under the usage contract.

The concept of Network Neutrality was born from a ruling prohibiting AT&T and its many successors from giving any phone call preference in how quickly it was connected. Since the internet was born on phone wires, the concept survived into the internet age largely by default. It has since come under fire by cable companies claiming to be content providers as opposed to phone companies and thus exempt from the informal Federal Communications Commission (FCC) pillars of net neutrality.

Some arguments for and against virtual network neutrality are as follows:

Against --> internet service providers (ISPs) and wireless carriers like AT&T and Verizon argue that the government shouldn’t intrude on their network-management operations. A company theoretically may adjust or alter the internet service provided at any time without notice to the consumers. This has been the approach used by some ISPs in restricting or blocking an internet connection that may draw greater than average bandwidth through excessive viewing and downloading of video or music and targets the spread of pirated software which would require larger than normal bandwidth to download. The main opponents to network neutrality cite capacity constraints as their primary concern.

For --> "Save the Internet" and "We Are the Web" are two activist groups believing that “the open internet” is at stake. With the internet emerging as a primary means of communication around the world, arguments abound which support protection of all information online describing the internet as a medium of speech, guaranteed in the U.S. Constitution as an unalienable right to have unrestricted. Supporters of network neutrality are those competing online firms such as google, whose primary source of revenue comes from advertisements, depend heavily upon unrestricted access of the public to their site and services. Decreasing the flow of virtual traffic through any given site would seriously impact their ability to raise revenue selling ad-space.

The FCC has issued a statement supporting network neutrality as a policy for the internet. Spurring action in Congress to begin working on legislation which would support and enforce net neutrality.

While net neutrality is supported by many activist groups, there are also many companies that will benefit from its implementation. For instance, the largest search engine Google has a page touting the benefits of net neutrality legislation. Generally, companies based on online services that utilize great amounts of bandwith - such as YouTube, Yahoo, and Amazon - are in favor of network neutrality, as they benefit from an absence of tiered pricing on their heavy amounts of traffic.

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A start-up company also benefits from net neutrality legislation. Under a net neutrality regime, a start-up company would not be able to put out especially "flashy" offerings. Once the online economy has tipped towards a company (through network effects and externalities), it becomes very hard for

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Another major issue that eventually faces business operators in the online economy is anti-trust litigation from the federal government. While the laws were originally designed for railroad and steel trusts at the turn of the twentieth century, since then they have been mostly applied against high-tech firms.

<Future lines of inquiry: case study of Microsoft, advice for firms both facing and considering anti-trust suits, how to avoid such a suit, etc.>