Network Neutrality and the Economics of Congestion

Yoo, Christopher S., "Network Neutrality and the Economics of Congestion" . Georgetown Law Journal, Vol. 94, June 2006

Abstract:

The Supreme Court's recent Brand X decision has reignited the debate over broadband networks' ability to restrict end users' ability to access content, run applications, and attach devices. In this Article, Professor Christopher Yoo draws on the economics of congestion to propose a new analytical framework for evaluating such restrictions. He concludes that when transaction costs make usage-based pricing prohibitively expensive, imposing restrictions on bandwidth-intensive activities may well enhance economic welfare by preventing high-volume users from imposing uncompensated costs on low-volume users. Usage of bandwidth-intensive services can thus serve as a useful proxy for congestion externalities just as port usage served as a proxy for consumption of lighthouse services in Coase's classic critique of the economic parable of the lighthouse. The case against network neutrality also draws on other economic considerations. Claims that network neutrality is needed to foster innovation are misplaced in the context of the Internet. Furthermore, allowing network owners to differentiate their services can mitigate the sources of market failure that require regulatory intervention in the first place. Finally, the classic telecommunications precedents invoked by network neutrality proponents were adopted during an era in which local telephone companies represented the only available means of transmission and in which the traffic consisted solely of person-to-person communications. Concerns that telephone companies may prevent end users from using their DSL connections to access VoIP at most justify targeted regulatory intervention. They do not justify a blanket prohibition of restrictions on end users' ability to access content, run applications, or attach devices.

Facts on voip

• One must note that the maximum upstream in your Internet connection is the final throttle and service is not as good as standard telco services.
• Voice over IP traffic might be deployed on any IP network, including ones lacking a connection to the rest of the Internet, for instance on a private building-wide LAN.
• Implementation challenges Because IP does not provide any mechanism to ensure that data packets are delivered in sequential order, or provide any Quality of Service guarantees, VoIP implementations may face problems dealing with latency (especially if satellite circuits are involved), and jitter. They are faced with the problem of restructuring streams of received IP packets, which can come in any order and have packets delayed or missing, to ensure that the ensuing audio stream maintains a proper time consistency. Another main challenge is routing VoIP traffic to traverse certain firewalls and NAT. Intermediary devices called Session Border Controllers (SBC) are often used to achieve this, though some proprietary systems such as Skype traverse firewall and NAT without a SBC by using users' computers as super node servers to route other people's calls.

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