The AT&T Network Neutrality Agreement
As a condition of its merger with BellSouth, AT&T has agreed to an important network neutrality provision for its network.
The agreement is here.
My commentary, written somewhat formally, follows here:
The AT&T Merger Agreement: A Commentary
Introduction
To the lay reader the AT&T merger agreement may appear highly technical. It is, however, a milestone, and may even be remembered in internet history. Most notable is the agreement’s striking inclusion of the first strong Network Neutrality language yet seen in any broadband regulatory device.
The language in the agreement is written for a purpose: to preserve the most attractive features of the internet as it now exists. Some perspective may be useful. In the 20th century, at crucial points, technologies like radio and the recording industry moved from being lively and vital decentralized industries toward much more centralized control, often due to misguided government policy and industry consolidation. Stated simply, the agreement forms part of a general movement to prevent a similar fate for the internet.
At a level of theory, the language in the agreement is premised on a belief in the merits of a neutral networks, and in particular its cultural, political, and economic spillovers. The preservation of role of the network as a catalyst for these sectors, without unfairly restricting AT&T’s business, appears to be the motivating force behind the agreed upon language.
Analysis of the Network Neutrality Provisions
As stated above, the most striking part of the AT&T agreement is the network neutrality provisions. In them, AT&T commits to a basic set of network neutrality principles that set a baseline of great importance. They do not create a pure “bit-discrimination rule,†and is designed to be a practical implementation. As the first working rule, it may serve as a model and an experiment for what follows, which is why it merits attention.
After a first paragraph affirming Michael Powell’s “Network Freedoms,†the agreement has three crucial paragraphs:
1. An Antidiscrimination Rule,
2. A Statement of Scope,
3. Stated Exclusions, and
4. Duration.
1. The Antidiscrimination Rule.
Network neutrality rules prohibit discrimination on broadband networks. The second paragraph states:
AT&T/BellSouth also commits that it will maintain a neutral network and neutral routing in its wireline broadband Internet access service. This commitment shall be satisfied by AT&T/BellSouth’s agreement not to provide or to sell to Internet content, application, or service providers, including those affiliated with AT&T/BellSouth, any service that privileges, degrades or prioritizes any packet transmitted over AT&T/BellSouth’s wireline broadband Internet access service based on its source, ownership or destination.
This is one of the stronger, but not the most extreme forms of a basic network neutrality rule (it has similarities to a bill proposed by Senator Olympia Snowe last year). While the agreement does not use the word discrimination, it effectively bars discrimination on the basis of source, ownership, or destination. It forbids AT&T from, for example, selling Yahoo or CNN priority access to its customers over its broadband networks, and favoring those content sources over unaffiliated blogs or search engines.
But the rule does not ban all forms of discrimination. The agreement take the position that (like cholesterol) not all forms of differential treatment are bad. Interestingly, the agreement does not prevent AT&T from treating different media carried on the internet differently, so long as the carrier does not discriminate between who is providing the content. AT&T, under this agreement, may speed all the internet video traffic on its network (to compete, for example, with cable). But it cannot pick and choose whose video traffic to speed up. In short, AT&T must treat like traffic alike–that is the essence of the agreement.
“Like-treatment†is not a pure ban on bit-discrimination, and the theory behind the “like-treatment†approach merits discussion. It is, on the one hand, meant to preserve a basic parity and meritocracy as between competing internet application and content providers. For example, the video providers Yahoo-video and Youtube must be accorded like treatment. Yet carriers may improve how they carries all video — to remedy, for example, for the internet’s historical design bias in favor of data traffic. Whether AT&T will actually do so is unknown, but this rule leaves open the possibility.
2. Scope
Where the Network Neutrality rule applies can be as important as what the rule is. Paragraph 3 says:
This commitment shall apply to AT&T/BellSouth’s wireline broadband Internet access service from the network side of the customer premise equipment up to and including the Internet Exchange Point closest to the customer’s premise, defined as the point of interconnection that is logically, temporally or physically closest to the customer’s premise where public or private Internet backbone networks freely exchange Internet packets.
This language makes it clear that the network neutrality rule applies to both the “last mile†and “metro†or “backhaul†networks, but not to the internet “core†or “backbone.â€
Some might argue that excluding the backbone is too favorable to AT&T. The company is, after all, a major Tier 1 provider, and one of the two largest owners of routers on the internet core (see this map.) Arguably an anti-discrimination rule should apply everywhere.
However, there are several defensible reasons to exclude the internet’s backbone at least at the present time. The first is the existence of a working, de facto neutrality scheme. At present, the core managed on a cooperative basis, largely on a “peer†basis by a number of tier 1 and tier 2 carriers, carrying enormous volumes of internet traffic. Maintaining the proper routing of that traffic is a significant technical challenge that both carriers and router manufacturers struggle with. The existing cooperation necessary to back the backbone work leaves less room pernicious discrimination, at least for now.
Second, the agreement is also sensitive to the fact that there may be needs in the core for large scale traffic management just to keep internet traffic moving at a reasonable speed. So far there are few reports of such traffic management techniques being used for pernicious as opposed to salutary purposes.
Third and finally, AT&T’s duty to peer in the backbone are dealt with in a different part of the merger agreement. Generally, AT&T is required to maintain the same level of peering that it maintains today.
3. Exclusions
Some of the most difficult sections of the agreement are the exclusions. There are two enumerated exclusions: for “enterprise managed IP services†and “IPTV.†These two exemptions are themselves limited by a further condition on the exclusions.
“Enterprise managed IP services†are services that most consumers are largely unaware of. They include a wide variety of services that AT&T sells to large or very specialized customers, including connections between different offices, or internet connections to data centers (sites that hosting services) and many others. As matters stand, many of these service offerings are highly managed in ways that violate the network neutrality rule in paragraph two. For example, imagine AT&T were providing connectivity to servers leased by Victoria Secret, Inc., during their popular annual fashion show. It might reserve or increase the bandwidth between the Victoria Secret servers and the network backbone during the course of the fashion show (but, notably, not provide priority over the last mile). The exception would cover such “server-side†traffic management.
Not everyone will agree that the enterprise managed IP services exception is a good idea. A purer and alternative approach would demand neutrality for all services that use the Internet Protocol addressing system and numbers assigned by the Internet Naming and Numbering Authority. However that is not the approach taken by the agreement. The truth is, at this time, not enough is known about the effects and issues surrounding discrimination in enterprise managed IP services to come to any firm conclusions. However, it seems doubtful that these practices, which occur already, will substantially erode the basic service parity on the internet today. So long as YouTube or Yahoo-Video has the same right to reach a consumer through the last-mile as the hypothetical fashion show, the better content should win.
The second exception is for AT&T’s IPTV services. These services, are IP in name only. They are in practice and architecture a direct competitor to cable television services. These services use only the private infrastructure built by AT&T, and do not rely on the public Internet as described by IP addresses. Hence the exclusion of private IPTV services should be considered less controversial. In fact, were the network neutrality rules to apply to IPTV, it is doubtful that AT&T could offer its competing cable television services, leaving the cable market with even less competition.
Both exceptions are limited by an important final sentence designed to prevent the exemptions, however used, from violating the basic network neutrality requirements described above.
4. Duration
The agreement lasts two years or until Congress passes a network neutrality bill. The two-year framework should provide time to assess the impact of the rule, and consider its extension to other carriers or a broader array of wireless networks. One possibility is that AT&T will, in time, find the rule to its liking, as it provides a corporate pre-commitment against ill-advised “value-added†schemes that may prove financially disastrous. However, much remains to be seen.