Myths about “Paid Prioritization”: Net Neutrality and Freedom to Buy Connections and Locations  

The civilizational significance of the Internet comes from its extreme distributed architecture: control is at the ends, not at the center. Ideally, at the ends, people can attach all different kinds of devices to send and receive all different contents potentially to all of their peers, without getting any prior approval from someone powerful, a feat that could not be achieved with legacy media (broadcasting and newspaper). In order to protect that significance, the net neutrality rule came into being: uniformity in the center allows diversity and freedom at the ends.

Now, some users use traffic much more than others because their contents are more popular than average users. A typical example is Netflix. Netflix is also just one node on the Internet. www.netflix.com. Now, a lot of people visit that site and Netflix shoots out a lot of data to those people in the form of movies. But it is still one node like a hypothetical website hosted on my PC. Now, to connect to the Internet, Netflix will enter into a deal with a local ISP like I will have to enter into such deal. Should Netflix pay for its connection to the local ISP that has been already connected to 10 million people, or should ISP pay Netflix, the lone node? Well, ISP also benefits because now its 10 million customers can also use Netflix but Netflix can also sell to 10 million members of ISP. Who do you think will pay?

Now, the important thing is NOT who will actually end up paying but it is that, whoever pays for the connection, it is not a net neutrality violation. Truth is, to make sure good service, Netflix usually pays for connection and buys connection from several ISPs, not just one ISP. By being connected to more ISPs, Netflix’s data, yes, travels in greater quantity to people out there than when Netflix did not pay for all those connections. But, that is not a net neutrality violation but a legitimate market response to ISP’s equal treatment of all data. Because each ISP treats data equally, Netflix requiring more connection capacity must buy more capacity from several ISPs or more capacity from each ISP to operate properly.

Generally, paying for connection is not a net neutrality violation. Internet is a network of networks. Each ISP forms a network. Each ISP tries to connect with other ISPs so that its customers can send data to and receive the data from the customers of the other ISPs. Now, let’s say each ISP can connect with one another, and one ISP has 1 million subscribers and the other ISP has 10 million subscribers. If two ISPs connect, which ISP benefits more? The one with 1 million, correct? So in those cases, small ISPs will pay to get connected to the ISP with bigger memberships. Now, let’s take it to an extreme. I as an individual can connect to the Internet through an ISP. That ISP has already connected to 10 billion people. If I join, 10 billion people can exchange data with me while I can also exchange with them, but who benefit more? Me, right? So, I pay for being connected. That is why you are paying for your Internet connection at home.  If I don’t pay, I don’t get connection. Yes, my joining ISP and thereby being connected will benefit all other people that has been already connected to ISP but the benefit to them will be just the ability to connect to one more person but the benefit to me is the ability to connect to 10 billion people. So, who is likely to pay money to make that connection? Me who is all alone? or ISP who is connected to 10 billion already. Now, how about someone who is not willing to pay for that connection? Well, no service for him or her. If ISP discriminates against that non-payor and blocks traffic to that person, that is not a net neutrality violation.

Actually, not just Netflix but all content providers pay to be connected. They pay more than individual users because they need bigger pipelines for instance 1T bps as opposed 1 Mbps. These online content providers paying for bigger pipes are called “OTT” by the cable TV industry and network operators providing their own IP TV or other content services who want to characterize the online content providers as something foreign. The critique of OTT for “free-riding” on networks is very misleading.

Now, the recent controversies about the Netflix-Comcast deal is that Netflix used to get global connection through what is called transit service providers as many OTTs do, not directly from ISPs. The transit providers are the ones who, instead of making money by registering more end users, make money by making connections to big ISPs around the world and sell their “connectedness” to other ISPs or companies like Netflix. Now, at some point, Netflix was not satisfied with the services of one of its transit companies and decided to connect directly to one of the big ISPs, Comcast, that that transit company used to provide connection to. After the deal, instead of paying the transit providers, Netflix is now paying Comcast. Some net neutrality proponents called foul, calling it “paid prioritization”: Netflix paid more to accelerate its content delivery to the users. Violation?

What is paid prioritization? Prioritization is like the opposite of throttling. In throttling, because you pay less, your data travels slower. In prioritization, your data travels faster because you pay more. It is discrimination between data based on the amount paid, ergo, net neutrality violation, so the argument goes. Now, that you paid more accelerates your speed may not sound too bad if you think of Internet as some sort of luxury. If you go to theme parks, there are designated lines for people who paid more so that they can get on the rides faster than other people. Now I know that it is not that simple. Let’s say the government did the same for water, gas, electricity, or even telephone. Would you live in a society where rich people can pay to get cleaner water or more stable electricity from the utility companies? Or do you think that for some necessities, people all should get equal shares and should not be allowed to outbid others. Now, a corollary of the net neutrality is that we want to treat Internet connection like water, power, and other common carrier goods. Then, isn’t the Netflix-Comcast duo doing exactly that, getting better speed for money — the critics are asking?

Answer: No. They are not prioritizing Netflix data. Netflix is just buying connections and locations, which is in general not a net neutrality violation. Selling a form of higher speed that requires certain discriminatory measures is a net neutrality violation. If ISPs treat data packets differently on the basis of how much people paid for each data packet, it is a violation, and it cuts against the rule that the guys in the middle must pass on the data to the next guys, the rule underlying people’s freedom to attach any device to and feed any message into the network without worrying about whether it will be discriminated against. When one user pays to connect to ISPs and the other user does not pay, their data will be discriminated on the basis of whether payment has been made. We do not call that a violation. If you have money, you can also buy bigger pipelines or more connections where you can do crazy things like supercomputer, AI, VR, etc. That is not a violation. Do you need all that capacity? Because you don’t need it, you are paying only $20-30 for monthly use while companies like Netflix are probably paying millions a month. Buying connection and getting only the connection that you bought and not more is NOT a net neutrality violation. It is not because it does not require ISPs to do anything affirmative to discriminate. They are charging the same amount of money for the data but it is people that want different amounts of data.

Now, what Netflix actually did was a little different. They did not buy bigger pipes or more lines but they relocated their connection points to better spots on the Internet, better in terms of delivery to the end users. If you understand the concept of CDN, you will understand this better. CDN is content delivery network where data otherwise hosted in one server is copied and hosted in different servers scattered across the globe so that the end users can get the contents faster by connecting the copy server near their locations. Having multiple servers at different locations will of course expedite services to people all the world. Spending money to build CDNs is not a net neutrality violation.

Previously Netflix just used CDNs provided by their transit providers, which may or may not be located at the best places for Netflix’s purposes because transit providers’ CDNs must serve different customers. You see, CDNs must be placed at the edges but not too far off but at “local centers” so that a lot of people in the edges can benefit from the closer distance. It is likely that Netflix thought that they should identify ther customer base’s local centers and that is why they wanted to build their own CDNs. Having their own CDNs (and probably not satisfied with transit providers’ services), Netflix was rational in making connection deals with ISPs directly.

Spending money to connect at better spots or more spots on the Internet to speed up your data is not a net neutrality violation because ISPs will not actually accelerate your data. They will treat the same equally with all other data but because of your location, your data will travel faster because now your contents directly feed into ISP’s network and do not go through transit providers who serve several ISPs same time. Actually spending money or whatever to change connections and locations is the freedom that net neutrality is trying to protect. If we call that a net neutrality violation, we must be doing something morally wrong when we are not doing anything to speed up data going to and coming from users or content providers located at strategically disfavored positions, like Johannesburg. If that is a net neutrality violation, then physically moving the main servers closer to the “local centers” through CDNs will also be a violation. There is nothing wrong with selling or buying connection or location. It is selling or buying speed or preferred treatment that is a violation of net neutrality.

This is why FCC in the 2015 Open Internet Rule banned paid prioritization “at the last mile” while not banning “paid peering” “upstream”. Of course, there is no center on the Internet which the content providers will pay to be closer to. As you can see from CDN, content providers will pay to be on the edges. So, the “last mile” sounds foreign. The term “last mile” makes sense only in relation to the distance between OTTs and their customers. Last mile is where the customers of OTT make connections to ISPs, and they most of times connect to the nearest ISPs. They do not buy connections or change locations. OTTs can change locations and connections depending on whether they use CDNs or they go through transit. That is what FCC meant (I hope): they were restating a rule that buying connections or locations is ok as long as ISPs treat all the data coming through those connections and locations equally. Hopely, they were not saying ISPs can treat data differently depending on money paid for that data “upstream”.