Shift to IP Networks Stokes European Net Neutrality Debate

The Internet works on a bill-and-keep transit system, but the call-termination fee model emerging in Europe is that the calling party pays, said lawyer Winston Maxwell. The underlying question is whether the models can co-exist or whether a hybrid replaces them, he said. Similarly, QoS is “best efforts” on the Internet but standardized in conventional telephony, he said. Next-generation networks will have best efforts Internet QoS, but if they also have better services, should QoS be regulated, he asked.

The best IP network charging principles are probably bill-and-keep for best-effort QoS and premium rates for better network quality, said LECG consultant Elena Gallo, author of a report on next-generation network charging principles. But bill-and-keep is a “hot potato,” because if operators don’t have to have pay each other for passing traffic, most costs borne by a caller’s network operator are passed to the caller, she said. Spam and calls carrying ads are another problem, since recipients often don’t want to pay for them, making receiving-party-pays charging inequitable, she said.

QoS questions are more complex in IP networks than in legacy systems, said Cara Schwarz-Schilling, head of the Internet economics section at German regulator BNnetzA. With no single technical mechanism for QoS across interconnected networks, IP networks use best efforts to ensure good service, she said -- but IP transport technology can be modified to make connections more reliable, through stringent systems or those based on statistics that guarantee best- effort QoS.

Companies’ direction isn’t clear, but regulators think QoS could become their major focus because it could enable new forms of discrimination between a larger operator’s services and those of interconnecting rivals, said Schwarz- Schilling. But as long as customers can switch easily to a provider with better QoS it shouldn’t be a problem, she said. National regulators should have authority to set minimum QoS standards, she said.

The European Commission long has sought a consistent approach to regulating call termination on fixed and mobile networks, said Ken Ducatel, an adviser to Viviane Reding, the information society and media commissioner. The EC is working a recommendation on mobile termination rates that’s proving controversial because of what it excludes from cost determinations, he said. Industry wants more items “piled in” to the equation, he said.

The EC doesn’t want next-generation networks with old- fashioned regulations, Ducatel said. The transition offers industry a chance to try to put regulators partly out of business, he said. The EC message is that if there’s competition, there shouldn’t be regulation, he said.

It’s a bad idea to harmonize the means of setting mobile termination rates, said Jonathan Sandbach, Vodafone Group head of regulatory economics. The EC is excluding costs that operators consider legitimate, such as those for building out coverage, he said.

What’s happening is network evolution, said U.K. Office of Communications Principal Gideon Senensieb. British Telecom’s 21st Century Network is IP, but BT has engineered it in a particular way to deal with QoS, he said. It treats voice as a separate service although it’s still considered IP, he said. Convergence will be fully service-agnostic only in the next generation of networks, not the one rolling out now, he said. Moving to next-generation networks won’t remove bottlenecks or resolve fundamental termination issues, he said.

QoS and net neutrality exert a “huge gravitational pull” on IP and next-generation interoperability issues, said Scott Marcus, who heads WIK Consult’s NGN and Internet economics department. But Toulouse School of Economics Director of Research Jacques Cremer is frustrated with the term “net neutrality,” he said. It’s better to replace the concept by handling matters one by one, he said. But anyone voicing doubts about net neutrality is branded a revolutionary, he said.

Cremer analyzed the FCC Comcast decision and a recent dispute between ISP Tiscali and the BBC over BBC iPlayer. Comcast, which degraded some services during congestion, was slapped down by the FCC, he said. Comcast now will provide second-best service to those using too much bandwidth when the network is congested, but it’s not clear that that will make a difference, he said.

Some decry discrimination based on bandwidth use, said Cremer. Others reject the idea of allowing networks to discriminate as a matter of principle based on application type -- slowing e-mail, for example, to provide good QoS for videoconferencing, he said.

Tiscali threatened to block BBC packets from crossing its network unless the broadcaster paid part of the higher bandwidth costs its online TV programs generated, Cremer said. The feud raises the questions of whether ISPs should be able to discriminate against particular Web sites, whether Tiscali should be allowed to offer the BBC better service for iPlayer if the BBC pays the ISP and whether the BBC should refund consumers part of any additional fee that Tiscali imposes, he said. These cases should be considered individually, he said, adding that he hopes this is the last time anyone mentions net neutrality.

The bottom line is that “all bits are not created equal,” also true of users and applications, said Robert Pepper, Cisco Systems vice president for global technology policy. Video applications such as high definition gaming, VoIP and telepresence are growing global consumer Internet traffic, he said. Heavy users dominate, with the top 1 percent using 35-45 percent of network resources, Pepper said. One size doesn’t fit all among users and network QoS, he said. The challenge is to raise service quality across networks, he said.