1. isen@isen.com http://www.isen.com 1-888-isen-com By David Isenberg of... Network Neutrality Reality or What’s Driving the Next Telecom Act

2. Two Different Questions Citizens: How do we change network service provisioning so the Internet survives? Telcos and Cablecos: How do we change the Internet so we survive?

3. Summary Telcos are in crisis. The Stupid Network begs “what do telcos sell? Telcos want to: (a)Enter video (b)“Participate” in application revenue Common Carriage, Net Neutrality and the COPE Bill

4. March 2007 Nov 2010 Source: FCC December 2005 Universal Service Monitoring Report, Chart 6.1 http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-262986A1.pdf (80% intercept) Telcos in Crisis

5. Telcos in crisis, cont’d Source: FCC December 2005 Universal Service Monitoring Report, Chart 8.1 http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-262986A1.pdf

6. Telcos in crisis, cont’d Source: FCC Trends in Telephone Service, Chart 5.1 http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/IAD/trend605.pdf

7. Telco Solution, Part I: Provide Cable TV network technology makes it possible US CATV Revenues Growing at 4 to 9% CAGR Problem for Telcos: 10,000 Franchising Authorities (Verizon gets 15 new video franchises a year) Solution for Telcos: Law establishes National Franchise Problem for Citizens: Zero Sum Game

8. The Stupid Network A stupid network supplies simple connections, but no “services.” Instead, “services” are created by smart, network-enabled products designed for any networked application. Bring them home and plug them in.

9. “... our engineers started with the assumption that we should find technical ways of prioritizing certain kinds of bits... we seriously explored various “quality of service” schemes... all of our research and practical experience supported the conclusion that it was far more cost effective to simply provide more bandwidth. With enough bandwidth in the network, there is no congestion and video bits do not need preferential treatment.” Internet2 Discovers the Stupid Network Source: Gary Bachula at US Senate Commerce Hearing, 2/7/06 http://commerce.senate.gov/pdf/bachula-020706.pdf

10. “Today our Abilene network does not give preferential treatment [it does] streaming HDTV, hold[s] thousands of high quality two-way video conferences simultaneously, and transfer[s] huge files of scientific data around the globe without loss of packets.... rather than introduce additional complexity into the network fabric, and additional costs to implement these prioritizing techniques, the telecom providers should focus on providing Americans with an abundance of bandwidth – and the quality problems will take care of themselves.” Internet2, cont’d Source: Gary Bachula at US Senate Commerce Hearing, 2/7/06 http://commerce.senate.gov/pdf/bachula-020706.pdf

11. “... a gigabit Ethernet connection [would need] only a $15 card. If the provider insists on dividing up that bandwidth into various separate pipes for telephone and video and internet, the resulting set top box might cost as much as $150. Simple is cheaper. Complex is costly.” Internet2, cont’d Source: Gary Bachula at US Senate Commerce Hearing, 2/7/06 http://commerce.senate.gov/pdf/bachula-020706.pdf

12. “... open, inexpensive, and simple is better than costly, complex, and closed.” Internet2, contd Source: Gary Bachula at US Senate Commerce Hearing, 2/7/06 http://commerce.senate.gov/pdf/bachula-020706.pdf

13. email, e-commerce, Web browsing, audio-on-demand, instant messaging, blogging Internet telephony massively multiplayer games et cetera... Why we should care... were created at the edge of the Stupid Network

14. When the middle of the network is empty, and bandwidth is plentiful, what do network service providers sell? Ref: Paradox of the Best Network, Isenberg & Weinberger http://netparadox.com

15. “Participation” in Apps Revenues Expense (Subsidized by Application) Monthly Income Physical Layer: Designed for App Network Layer: Designed for App Application: Specific to Network Telco, Cellco, Cableco Model Network Layer: Internet Protocol Big Question: What’s the (Business?) (Operating?) Model Commons Product & Service Income Inter-Networking Model Application: Nonspecific -- Voice, Video, Maps, Games, Anything! Physical Layer: Non-specific End-to-End Connectivity

16. The Rise of Common Carriage “Public Calling” in common law since Roman Empire Definition: open to all comers, skilled in the art, just price e.g., millers, blacksmiths, ferrymen, cabbies... US Supreme Court, re: telegraph, 1901 Duty of non-discrimination, even without statute! Communications Act of 1934, Title II “offering communications service to the public for hire”

17. The Fall of Common Carriage Computer Inquiry 2 (CI-2), 1980 Basic services ARE subject to Common Carriage Enhanced services are NOT subject to Common Carriage (1996 Telecom Act: Telecom and Info Svcs) The content-conduit split that made the Internet possible FCC since 2000, FTTx is not subject to Common Carriage Brand X (2005) Cable Modem is Information Service FCC Order (2005) DSL is Information Service FCC inaction: Exempts Verizon from Title II and CI-2

18. i.e. the Internet’s success is because it is Content and service agnostic. Source and destination agnostic. Device and application agnostic. Network Neutrality is Common Carriage Non-discrimination w/r/t What is carried Where it came from Where it is going

19. Two Views of Discrimination Citizen’s ViewTelco’s View

20. Technology of Discrimination is here! Old days: net couldn’t discriminate if it wanted to Today’s discrimination tools include: contingent routing, port blocking, application detection deep packet inspection Technology Adds Means Economics adds Motive Weakening of CC adds Opportunity

21. COPE Bill of 2006 Communications Opportunity Promotion and Enhancement Barton-Rush Bill Title I. Franchise Reform Title II. Enforcement of Broadband Policy Statement Title III. 911 for VOIP Title IV. Municipal Services Title V. Stand-alone Broadband Services

22. FCC Broadband Policy Statement Powell FCC Freedom to Access Legal Content Freedom to Run Applications Freedom to Attach Devices (re SP) Freedom to Get SP Information Source, Powell, 2/8/04 Martin FCC 4 Entitlement to Access Legal Content Entitlement to Run Applications 1 Entitlement to Attach Devices (re SP) 2,3 Entitlement to Competition Source, FCC, 05-151, 9/23/05 http://tinyurl.com/ow4tp 1 Subject to the needs of law enforcement 2 Legal devices 3 Devices that do not harm the network 4 All these principles are subject to reasonable network management.

23. Weaknesses in COPE Title II Reminder: Entitlement to Access Legal Content Entitlement to Run Applications 1 Entitlement to Attach Devices (re SP) 2,3 Entitlement to Competition Subject to Reasonable Network Mgmnt Specifically Forbids FCC Rulemaking for Enforcement Adjudication of “violations” on Case-by-Case Basis Four Principles do not cover Access to content Offering of tiered services to content providers Offering of degraded or impaired access or attachment Bundling and other forms of price discrimination Whole new category of law? How do you enforce principles that expressly are not laws?

24. Two Different Questions Telcos and Cablecos: How do we change the Internet so we survive? Answer: Make discrimination legal, allow “participation” in application revenues. Citizens: How do we change network service provisioning so the Internet survives? Answer: Not so obvious!

25. Breaking News!

26. We’re gonna lose Prognosis... However, Lessig turned the Eldred loss into the CC revolution... and I’m looking for how to do that in Layer 0-3 I’m still fighting, but...

27. It Takes Smart People to Fight Laws that Destroy the Stupid Network Kids, Don’t Eat This

28. Telco Reaction “We will not block, impair, or degrade content, applications, or services... If you can go there today, you can go there tomorrow. The functionality you have on the Internet today, you will have tomorrow... [but] Instead of new laws, we believe in the discipline of the marketplace... alongside the continued, proven vigilance of the FCC..” Walter B. McCormick, Jr., President of the U.S. Telecom Association Network Neutrality as Quid Pro Quo for Franchise Reform, Feb 7, 2006 http://commerce.senate.gov/pdf/mccormick-020706.pdf

29. Wireless Revenues Under Pressure (The cry of the “shrinking ARPU”) Source: Telegeography, 2005 http://www.telegeography.com/press/releases/2005-10-19.php

30. Lower Your Garden’s Walls, Lower Your ARPU Voice revenues are maxed Lock-in achieved via (a)hosting (which leads to liability), or (b)arms-length billing relationship, which Leads to (a) very slow growth (b) untrustworthy relationships and turned-off customers (b’) fear of another 900 number-type debacle (c) stupid “innovations” like ring-back tones driving arpu In other words, walled-garden app growth doesn’t scale The main competition for mobile services is the Internet Solution: Neutralize the competition. http://www.intercastingcorp.com/blog/archives/2005/10/lower_your_gard.html