Internet Basics Monopoly Concerns & Review TC 310 May 22, 2008

Internet Basics Analog v. Digital  Continuous waves  Bits (binary)‏  Benefits of digital Compression Packet v. Circuit Witching  Non-central intelligence  Reassembly of message

Advantages of Internet Modularity  Layers are interchangeable  Vertical integration not needed Regulator Layer  Physical  Logical  Application  Content

Infrastructure Backbone  Transport facilities: Node to node Access Facilities  Last mile: computer to node Complete Deregulation  No interconnection  Peer rates and transit rates

Types of Connection Narrowband  Dial-Up: Call ISP, ISP converts Broadband  DSL: Splits signal by frequency Data/Voice routed differently ADSL: Privileges downstream over upstream  Cable ISP has headend, goes to hub Hand-off to residential cables

Monopoly Concerns Modularity of Internet has allowed services to be offered over Internet  Infrastructure, Content same  Logic, Application different Can offer services without having other layers  Phone can't; Vonage can No guarantee layers will remain independent

Which Layer Can Dominate? Where is the bottleneck? Solutions  ISPs do in broadband what have done in narrowband Application competition makes platform profitable  Net Neutrality Force accountability  Competition at bottleneck

Computer Inquiries Background on present day concerns Computer I (1971)‏  Data networks emerging  Regulate? Message Switching Data Processing Hybrids Historical note, not in use...why?

Computer II “Smarter” Terminals; Digitization Create new distinctions  Basic (common carriage)‏  Enhanced Basic can include data, but only the transmission of data Enhanced includes other layers Preemption

Encouraging Data Structural Separation  Big telcos must create affiliates for data  Computer II unbundling Data transmissions must be separate and available to anyone to use at higher layers Transmission ALONE is unbundled, not service  DSL lines unbundled, not DSL service

Computer III Structural Separation relaxed  Take advantage of vertical integration with cautions.. Open Network Architecture and Comparably Efficient Interconnection  Function like facilities unbundling Retain preemption and forbearance Essentially Untouched by 1996 Act

Enter Broadband New Broadband Challenges  Broadband makes convergence real.  ISPs mitigated by broadband Narrowband notice ISPs Broadband service limited by connection  Cross-Platform competition reduces risks? Economies of density Perfect substitutes One monopoly profit, complementary externalities

Solution 1 Keep ISPs relevant  Go beyond homepage!  Physically separate transmission and ISP functionality How to categorize cable  Cable winning broadband  Title II for physical layer  Title VI or I for higher levels

Solution 2 Net Neutrality  More direct than ISP solution  Does not promote competition at physical or logical layers- only anti-discrimination  Network intelligence is at the “ends” not within the network Little evidence that concerns are real Costs- don't want totally dumb networks  Limits innovation, investment  Limits voice capabilities

Solution 3 Physical Competition  UNE again? CLECs, ILECs, and Cable Facilities, not services  Line sharing: using same line, two companies Fiber policies  Next gen networks  ILECs still have obligations to CLECs Not in brand new developments, with all fiber

Problems? ISPs  Do they really prevent monopoly? What happens when they merge with others? AOL/Time Warner? Net Neutrality  Too preemptive? No problems yet, not incentive for problems? Physical  Real competition? Investment? Still only “telephone” company concerns

Exam Review Format  30 Multiple Choice Questions  4 Short essays Questions?