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Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford University @vanschewick 11th International CRC Workshop on Regulation August 29, 2016

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Page 1: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network Neutrality Rules

for a Digital Economy

Barbara van Schewick

Professor of Law and (by Courtesy) Electrical Engineering,

Stanford University

@vanschewick

11th International CRC Workshop on Regulation

August 29, 2016

Page 2: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

I. Background

II. Criteria for Evaluating Net Neutrality Rules

III. Rules

IV. Zero-rating

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Page 3: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

I. Background

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Page 4: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

What is network neutrality?

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Page 5: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Original Internet

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Page 6: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network is application-blind

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Page 7: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network can’t control

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Page 8: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Users decide

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Page 9: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Today network can control

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Page 10: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network neutrality rules

limit network providers‘ ability to interfere

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Page 11: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

I. Background

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Page 12: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

II. Criteria for Evaluating Net Neutrality Rules

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Page 13: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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Page 14: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Factors

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Page 15: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Story 1

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Page 16: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford
Page 17: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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Page 18: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Architecture

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Page 19: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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The End-to-End Arguments

(Broad Version)

Network to provide only general services

of broad utility across applications

Network not optimized in favor of specific applications

All application-specific functionality at end hosts

Page 20: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Two versions

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Page 21: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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The End-to-End Arguments

(Broad Version)

Network to provide only general services

of broad utility across applications

Network not optimized in favor of specific applications

All application-specific functionality at end hosts

Page 22: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network is general

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Page 23: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Innovators decide independently

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Page 24: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network is general

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Page 25: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Users decide independently

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Page 26: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Low cost of innovation

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Page 27: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Many different people can innovate

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Page 28: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Innovation without permission

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Page 29: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Innovation without permission

User Choice

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Page 30: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Innovation without permission

User Choice

Low costs of innovation,

very large and diverse group of innovators

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Page 31: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Story 2

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Page 32: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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Page 33: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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Page 34: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Architecture

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Page 35: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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The End-to-End Arguments

Broad Version

Network only general services of broad utility across

applications

Network not optimized in favor of specific applications

All application-specific functionality at end hosts

Consequence: Network is application-blind

Page 36: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network is application-blind

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Page 37: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network can’t control

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Page 38: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Today network can control

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Page 39: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Increase profits

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Page 40: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Unwanted content

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Page 41: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Manage bandwidth

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Page 42: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Network can control.

Innovators don’t innovate.

Investors don’t invest.

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Page 43: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Users decide

vs.

Network providers decide

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Page 44: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

The Impact of Changes

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Market?

€$

€ $€$

Potential Innovator

Benefits > Costs?

Yes:

InnovateNo:

Do not Innovate

Economic Theory

CostsBenefits

Page 46: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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Market?

€$

€ $€$

Potential Innovator

Benefits > Costs?

Yes:

InnovateNo:

Do not Innovate

Economic Theory

CostsBenefits

Page 47: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Many different innovators decide.

User decide.

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Page 48: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

More and more diverse

vs.

Fewer and less diverse

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Page 49: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Under uncertainty or user heterogeneity

More and better innovation

that better meets user needs

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Page 50: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

More and more diverse innovators

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More and more diverse ideas

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Page 52: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

More ideas realized

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Page 53: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Less and less diverse innovators

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Page 54: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Less ideas realized

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Page 55: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Widespread experimentation

Large, diverse group of innovators

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Page 56: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Users decide

vs.

Network providers decide

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Page 57: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Innovation without permission

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Page 58: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Innovation without permission

User choice

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Page 59: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Innovation without permission

User choice

Network can’t control

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Page 60: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Innovation without permission

User choice

Application-blindness

Low costs of innovation,

very large and diverse group of innovators

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Page 61: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

III. Rules

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Page 62: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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Blocking

Discrimination

Limits on Charging Application Providers

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Blocking

Discrimination

Limits on Charging Application Providers

Page 64: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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Blocking

Discrimination

Limits on Charging Application Providers

Page 65: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

No discrimination

Between applications and classes of applications

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Page 66: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Netflix & YouTube vs. XFinityTV.com

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Internet telephony vs. Online video

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Page 68: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

No discrimination

Between applications and classes of applications

Allow application-agnostic discrimination

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Page 69: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Exception:

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Page 70: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Reasonable network management

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Page 71: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Targeted, tailored

As application-agnostic as possible

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Page 72: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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Blocking

Discrimination

Limits on Charging Application Providers

Page 73: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Limits on Charging

* for access to users

* for preferential treatment

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Page 74: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

No discrimination based on provider payments

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Innovation and economic growth

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All sectors of the economy

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Democracy and culture

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Collateral damage

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Page 94: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

The devil is in the details

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Network Neutrality and Quality of Service

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Page 96: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

IV. Zero-rating

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Page 97: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

Zero-rating

Exempting applications from data caps

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How to think about zero-rating?

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makes zero-rated apps more attractive

Page 100: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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makes zero-rated apps more attractive

powerful tool to favor some apps over others

Page 101: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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makes zero-rated apps more attractive

powerful tool to favor some apps over others

same problems as technical discrimination

Page 102: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

data

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Page 103: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

powerful impact on user behavior

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users strongly prefer zero-rated content

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Page 105: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

zero-rating directly limits user choice

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Page 107: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

unlimited video

vs.

9 min per day

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four forms of zero-rating

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zero-rating for a fee

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zero-rating for a fee

zero-rating some apps, but not similar apps

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zero-rating for a fee

zero-rating some apps, but not similar apps

zero-rating all apps in a class

Page 114: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

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zero-rating for a fee

zero-rating some apps, but not similar apps

zero-rating all apps in a class

application-agnostic zero-rating

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zero-rating for a fee

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zero-rating for a fee

same problems as fast lanes

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zero-rating some apps, but not similar apps

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zero-rating some apps, but not similar apps

(no fee)

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Page 119: Network Neutrality Rules for a Digital Economy · Network Neutrality Rules for a Digital Economy Barbara van Schewick Professor of Law and (by Courtesy) Electrical Engineering, Stanford

zero-rating some apps, but not similar apps

(no fee)

same problems as speeding up some apps

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zero-rating all apps in a class

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zero-rating all apps in a class

(no fee)

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slippery slope

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environment for innovation

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who gets to chose

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harm to consumers

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application-agnostic zero-rating

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application-agnostic zero-rating

(no fee)

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More:

@vanschewick

http://cyberlaw.stanford.edu/about/people/barbara-van-schewick

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Interconnection with last-mile networks

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Is this a network neutrality problem?

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