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Nathan Pedersen
Eng. A111
K. Virden
11.24.2014
The Uprising Debate of Network Neutrality
The network neutrality debate is something that has been boiling up for the past
decade. It is considered an economic, social, and political debate of public information networks,
mainly the Internet, and the private carriers duties. Most information networks include cable
companies, telephone, and other Internet service providers (ISPs). Network neutrality has many
different aspects but there is one issue that is most important: the de facto rule in practice but
not necessarily ordained by law. A lot of different ISPs such as Comcast, AT&T, Time Warner
Cable, and many more owe to the public by virtue of their necessity to economic and social
welfare (Wu, 2003).
What exactly is the problem in this debate? Net neutrality is quite a hard topic to
understand considering a lot of people are not familiar with how the Internet is provided. The
internet that comes from a place to a consumers house is provided by what is called an ISP or an
Internet service provider. A common one here in Alaska is GCI or MTA. An ISP, no matter who
it is, has complete control of how your internet works. There are many factors to the Internet:
download speed, upload speed, and the places the ISP will allow its customer to go. There are
many more factors but those are the major ones.
One example of what is debated about net neutrality is bandwidth throttling the
intentional slowing of internet service by an ISP. This can be either a decreased upload speed or
download speed which are the most common forms of what is debated. There is another layer to
this though. An ISP does not just throttle the Internet for no reason. An ISP can throttle the
Internet when a specific task such as YouTube or Netflix are being done. A decreased download

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speed will result in buffering of YouTube videos or shows on Netflix. A decreased upload speed
would result in a very slow process of putting pictures, videos, etc. on the Internet.
Another example would be an ISP completely blocking off a part of the Internet from its
customers. In March 2006, AOL is alleged to have blocked subscribers access to all emails
containing a link to a web site called DearAOL.com, the founders of which were protesting a
company proposal to allow messages to bypass the companys junk mail filters in exchange for a
fee (Dyson, 2006; Karr, 2006). Also, in 2007, Comcast was caught interfering with their
customers use of Bit Torrent and other peer-to-peer file sharing. This example brings up the
other side of the debate of which until now seemed nonexistent.
Bit Torrent, UTorrent, and other peer-to-peer downloading clients are used to download,
through the internet, something to a computer from another computer, hence peer-to-peer. The
most used website to advertise peer-to-peer downloading is The Pirate Bay. The Pirate Bay is
used by millions of people to illegally share videos, games, textbooks, novels, and pretty much
anything else that could be thought of. If a new game comes out on the 11th of November, it will
be on The Pirate Bay the next day for free to download, which is illegal of course. This is why
there is the other side of the debate. It is debated that ISPs should just completely shut off a
customers use of the Internet when using peer-to-peer downloading to protect industries such as
the film and music industry. A common use of peer-to-peer downloading is illegally
downloading music and/or movies for free. Some of which may not even be released yet.
Another common use is from college students, beginning a new semester, downloading their
textbooks online for free. An argument to this is that not all peer-to-peer sharing is illegal. A lot
of time people will put papers that they write on a peer-to-peer sharing website for others to see
and use at their own will or to get random critiques.

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The general practices of net neutrality emerged as a consequence of how the Internet was
designed and how it spread (Wu, 2003). The Internet was brought up very poorly. It was made
and then put in the laps of everyone to use at their own freewill. Almost like having ten people
on a deserted island with no law or order. The Internet needed to be brought up more carefully.
Announced with a set of rules that needed to be followed in order to keep it a safe, virtual place.
Internet neutrality, again, is a consequence for how the internet was brought up. People took
advantage of it and eventually turned into huge ISP companies that make billions off the internet
and are able to control it however they please.
President Barrack Obama talked about net neutrality and asked the Federal
Communications Commission (FCC) to reclassify Internet service under title 2 of a law known
as the telecommunications act. President Obama emphasizes how the internet has become an
essential part of everyday life and communication. The FCC is an independent agency meaning
there decision to do so is up to them. The public has commented nearly four million times asking
the FCC to make sure that consumers, not the cable company, get to decide which sites they use
(President Barrack Obama). The Presidents outlook on the debate is one sided and obviously
influenced by what the public wants. Considering that, doing this was in his best interest. Either
way, saying something about it brought attention to the matter, but again, the decision is up to
the FCC.
The FCC attempted to do this on January 14th, 2014. A federal court of appeals declined
the FCCs Open Internet Order, which was designed to prevent ISPs from blocking or slowing
users connections to online content. The court did not say the validity of the rules but said that
the FCC had used the wrong legal foundation to justify them. Oddly, on May 15th, FCC
Chairman Tom Wheeler released flawed Internet rules that would let ISPs charge content

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companies for priority treatment regulating all other content to a slower tier of service.
(http://www.savetheinternet.com/net-neutrality).
His plan would let economically giant telecommunications pick winners and losers online
and discriminate against online content and applications which would destroy the open internet.
Without net neutrality, big companies like Comcast, AT&T, Verizon, etc. would be able to come
up with new ways to charge users more for access and services. Making it harder to
communicate online and easier for companies to take away our freedom of speech.
An example of a closed internet is simply television. GCI provides phone, cable, and
internet all in one. Phone and Internet obviously use Internet so why doesnt cable? Well, cable
does use the Internet, a closed internet. The guide menu on a TV is the internet browser (Firefox,
Chrome, etc.). The ability to search for TV shows on the channels in certain packages are
available to you because that is what is bought. Nothing more, nothing less. The internet could
come to resemble TV, where your provider can exert control over where you go and what you
see.
The economic standpoint of this topic is also highly debated when contrasting Internet
with telephone and cable television. Currently, Internet users pay access and usage fees to their
ISP and then can reach any other user who is similarly connected to the Internet. The overall
network does not distinguish between content providers and users. Therefore, content providers,
who may also be users, are also able to reach an audience consisting of every single Internet
user. These models and expectations, which have created a de facto ban on termination fees,
stands in stinging contrast to what is standard practice on other important information networks.
(Wu, 2003)

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Internet users can be indirectly contacted by other ISPs. This creates competition between
ISPs and can be unhealthy competition. In exaggerated terms a customers current ISP can
completely block off a part of their Internet. Therefore, since an ISP can also be a user, an ISP
can advertise that blocked portion of the Internet for them and cause them to change ISPs. This is
unhealthy because this could cause a consumer to change ISPs multiple times, causing great
discomfort for the consumer and possibly more money to be spent.
The Internet is a two sided market. The Internet can be seen as a market or intermediary
that facilitates the interaction of two main groups: Users and content providers. Other two sided
markets for example would be hardware/software markets like videogames or operating systems;
matching markets such as jobsite or night clubs; and payment systems, such as credit cards or
online services (Lee, 2003). There are many more examples but the main point is the aspects of
two-sided markets. One aspect is the presence of network effects. Where the value of a service
generally increases in the number of users. There are also indirect network effects in that users
benefit from more content providers, and these providers also benefit from having more users to
reach. With positive network effects there are negative network effects. In networks with
congestion (too many consumers), the value of using that network may decrease with additional
users.
There is something also to consider: subsidizing that is, possibly charging one side
below the marginal cost of providing service. Subsidizing has been predicted to be the most
optimal pricing decision for a social planner and a monopolist platform provider (Wu, 2003).
One prime example of this are credit card companies. Credit card companies do not charge both
sides of the market equally. Both sides being the merchants and the consumers. They charge a
transaction fee to merchants and typically reward consumers for using their cards with frequent

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flier miles or other benefits. This encourages the consumer to use their credit card because its
not only free to the consumer, but in fact subsidizing. How does this play a role in net
neutrality? Well, this is only a theory for the most optimal way the market should work for the
Internet. The consumer should be rewarded for using a certain plan provided by the ISP while
the ISP suffers a bit in profit.
If there were no transaction costs or limitations on side-payments, the division of pricing
between two sides of a market would not influence transaction volume; instead, any division
would merely be a transfer between how the two sides of the market are charged is unnecessary
(Lee 2003). Meaning transaction costs are important in keeping the market stable. The division
of pricing is unnecessary as it would not influence transaction volume.
In conclusion, the net neutrality debate is something that will be going on for a long time
considering how corrupt the market is. Every provider wants more money and every consumer
wants to save money. Considering there are not many notable ISPs in the United States the
chance of a monopoly is very likely which could make the use of the Internet a very expensive
luxury. Actions need to be taken by the public in order to keep the Internet as neutral as possible.
There are many corrupt people in the market of the Internet which is also controlled by the
government where there is also a strong likelihood of corruption. That being said, the United
States has the most neutral and open Internet on the planet. North Korea is only showed on the
Internet what their leader wants them to see. Making them think that they live in a nice country.
America will never come to this point but something needs to be done as far as the market goes
to keep the Internet a part of our daily lives and a strong tool to help us with everyday
obligations.

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