Teutas - Diritto & Tecnologia

The Author makes some considerations about the debate on internet policy in America and Europe. Keeping the internet open to all in the same way is a crucial challenge for industry and regulators alike, on both side of the Atlantic.

NEM Forum*: Towards Future Media Internet Content Providers and the Networks St Malo, 14 October 2008

I would like to start from the BBC's experience and perception of the internet. Then make some considerations about the debate on internet policy in America and Europe. Finally I will try to give some indications of what we think industry and regulators might do to help.

Much as I would like to, it will be hard to avoid using the phrase "net neutrality". It is acquired knowledge that the debate about net neutrality is imprecise in scope, ill-defined in its component elements, ideological, and, ultimately, American: it does not apply in Europe.

But stripped of its idiosyncratic elements, the fundamentals of that debate do resonate in some form on this side of the Atlantic. I will try to identify the parts of that discussion that can offer helpful hints of issues to look out for over here.

Moving on to the BBC's experience of the internet. The Internet is different things to different people. If you are a technologist, it's a network: a global interconnected network that uses IP and a series of technical standards and procedures. For ISPs, internet access is a retail product and a business model. For users, it is the means to access any online service and interconnected media offered by any content provider, individual or institution, usually at no extra cost beyond a flat fee.

For online content providers, the internet is a marvellous opportunity as well as a unique challenge.

It is a way of reaching an enormous audience with minimal upfront costs, and of offering content in flexible and extraordinarily creative ways. It is also a way of engaging with our public in real time and huge numbers, putting the experience and scale of our organisations at the service of previously untapped creative energies.

But interactive, networked media are a universe beyond anyone's control. It is part of its beauty. Technology transfers power away from institutions, service providers and even regulators, and delivers it in the hands of users.

To offer top quality content is crucial, but it's no longer enough. We also need sophisticated strategies to make our content findable; to allow users fully flexible access to it; and to ensure that they can engage with it in the ways they expect and demand.

For institutions grown in an age of one-way control like broadcasters, this is not one challenge: it brings quite a number of them. One of them is philosophical and organisational: we must see ourselves as genuinely multimedia, or cross-media.

This is why the BBC has made the first moves towards dissolving traditional media siloes within our own organisation. Rather than television, radio, internet, we now organise ourselves in Vision, Audio, Journalism services. We must come to see all the content we produce as capable of being attractive and successful regardless of the network over which we distribute it.

Of course, this is not as easy as saying it. We had a lot of trials and errors, and will undoubtedly have more.

Initially, like other broadcasters, we saw the internet as complementary to traditional TV and radio programmes. That worked a little, but not much. We could see that the potential for interaction with users offered by the web could only be exploited if we developed services which were native to that platform, not accessory to broadcasting. This led to the success of bbc.co.uk.

In the UK, our website is now consistently second or third in traffic among all sites, second - or third - only to Google and Microsoft, and by far the first among comparable content portals.

But the real breakthrough in terms of mutual transformative influence between traditional and interconnected media came with that oldest of our media - radio.

In 2002 we launched our on demand radio player. It was very successful. Since launch we have delivered over ½ a billion hours of live streaming and audio on demand. Currently people download 13 million hours of live streaming each month, and 4 million hours on demand. All genres work - from speech to music, from niche to popular.

One of the things we learnt very quickly was that people had a huge appetite for personalization, and they became very competent very fast. Programmes were accessed by channel, but also by genres, date of transmission, presenters and guests, by alphabetical order, and so on. Listeners were aggregating content into their own virtual and personal services.

On Christmas Day 2007, we launched the BBC i-Player, an on-demand service which enables you to catch up on the past seven days' worth of BBC Television and radio. It is currently distributed via broadband and over Virgin Cable. In essence, it is a pretty cool website. Fully integrated radio plus TV, but you can choose to navigate radio only, TV only or both.

The iPlayer was one of the most successful launches in British media history, with well over 150 million requests to stream or download content since launch.

Of course, the BBC i-Player doesn't exist in isolation: on the contrary. Whether it's on YouTube or Hulu or on abc.com, audiences around the world expect to be able to access great TV and radio on the web as well as on the TV today.

And this is my point. The digital, converged audience is not a future audience - it's a mass audience today. The BBC's presence in traditional media and on the internet, in linear and on demand form, on broadcast and IP based platforms, is increasingly one and the same thing. For users, channels and individual services are fast becoming transparent, invisible. And so are networks.

In 1943 the Chairman of IBM, Thomas Watson, said: "I think there is a world market for maybe five computers". You could say he got it wrong by about a billion - or that he exaggerated by four: In effect, you could argue that the internet can be considered a single global computer, the only computer there is. And it is transforming the media into a single universal medium delivering content to everybody everywhere all the time.

This is perception. Reality as we know it today is not exactly like that. In fact we are almost faced with the opposite: an ever more complex patchwork of networks.

Apart from transforming themselves and their services, dealing with this complexity in distribution is another major challenge for content providers. Publicly funded media like the BBC have special universality obligations which make this issue particularly problematic. But reaching everybody, with any kind of content, is what interconnected media are about, regardless of who you are.

The value chain now stretches across many new links, from navigation to enabling software, metadata, rights management filtering, delivery technology, positioning and presentation, and the networks themselves. Each of those steps offers a degree of control and must be reckoned with.

Enter those old companions of the media policy debate: access, vertical integration and competition issues. And their corollary: the discussion between free market, regulation and the balance between the two.

What is the link between that debate and the internet? Well, the perceived jeopardy is not very different from issues raised in the debate about broadcasting at the time, back in the nineties, when European regulation was first developed.

In the American debate on net neutrality, there is widespread anxiety about the possibility that internet openness might be under threat because of concentration in the control of the network. A drive for profit by the internet gatekeepers would lead to diversified access to bandwidth and service quality, which in effect would entail the creation of different content and service tiers.

The services offered directly by network providers, or by their preferred and highest paying partners, would take priority over third parties - including small and minuscule businesses and the millions and billions who use the web for personal expression and interest. Let's remember the origin of the debate: A couple of very unhelpful quotes from people with a lot of power. For example, in 2006 the CEO of Verizon, Ivan Seidenberg, said, "We have to make sure that they [application providers] don't sit on our network and chew up bandwidth. We need to pay for the pipe." A couple of months later, his opposite number at AT&T, Edward Whitacre, echoed him in characteristically frank style: "there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?To expect to use these pipes [for] free is nuts!"

The discussion has moved to ever more impassioned and emotional tones. As well as a policy debate, it is now a major issue in the ideology clash between free market radicals and interventionists.

In reality, the internet's growth is the result of a continuous, complex interplay between public policy and the free market.

In the US, comparatively small interventions by regulators, especially the FCC, have played a key role in ensuring that the internet remains open to all, at least so far. I will discuss one of those interventions in a moment. But it is worth recalling the so-called "Four Internet Freedoms", formulated by the FCC in 2005 at the time of the decision on the Madison River case, and reconfirmed in a slightly amended version earlier this year:

• Consumers are entitled to access the lawful internet content of their choice

• Consumers are entitled to run applications and services of their choice subject to the needs of law enforcement

• Consumers are entitled to connect their choice of legal devices that do not harm the network

• Consumers are entitled to competition among service providers, application and service providers, and content providers

In Europe, ex ante regulation of access to networks, based on the old principle of common carriage, delivered a competitive ISP market, different from the effective duopoly that runs the network in the US.

Finally, in the States, all attempts at regulation have involved the recognition that the ISP's own vertically integrated services should be allowed to receive preferential treatment. On the contrary, the philosophy of European regulation is predicated on separation between network and retail businesses.

Does that mean that in Europe there is no problem comparable to those raised in the American net neutrality debate? Yes and no.

The structure of the European ISP market offers little incentive for drastically and visibly reducing internet openness and limiting users' access to available services. It would make little sense given the choice of providers. People can vote with their mouse and change provider.

In addition, European regulators are well aware of the access and competition implications of internet policy, and in recent months they have proposed and discussed legislation to address them at least to some extent.

Commissioner Viviane Reding noted recently that keeping the internet open for both users and service providers is one of her key concerns. The European Parliament showed that it shares that concern by supporting draft provisions on minimum content quality on the internet by a very large majority.

Surely improvements are possible and desirable. The regulation may also well be complicated - "hugely detailed, opaque, capable of confusing any electorate in 12 languages", as one American magazine described it recently. But so is the issue. The internet has been described as "the first thing that humanity has built that humanity doesn't understand". In Europe, so far, regulation has delivered a competitive and growing market.

Of course, complacency would be wrong and dangerous. Indeed, it is becoming increasingly difficult to predict when and how markets will fail. In the past few months, the sentence "This is not something that could ever become a problem over here" is one that many have learned to regret.

A fast growing market is by definition uncharted territory. Vertical integration is growing rapidly. Just a few examples: In July both Sony and Microsoft announced the launch of online video stores for their games consoles. Through its own production houses MGM and Sony Pictures and deals with other studios like Fox, Warner and Disney, Sony will offer 1,200 full length TV episodes and 300 movies, all transferable to PSP handheld devices. The service will launch in the US and then roll out into Europe possibly even before the end of the year. Almost at the same time, Sony and Sky announced the launch of GoView! a premium on-demand TV JV for the U.K. which will see TV content made available to PSP handheld consoles.

Microsoft joined forces with U.S. DVD rental company Netflix and offered around 10,000 movies and TV episodes to users of its Xbox 360 consoles. This is on top of 6,000 hours of movies and TV series already offered via the Xbox Live Marketplace Video Store, from 45 licensors. Users will be able to watch movies together simultaneously from different locations through the Live Party feature.

Despite some anxiety about its sustainability, investment in infrastructure is continuing. In the UK, BT has announced it will invest £.15 billion in super-fast broadband, anticipated to roll out to 10 million U.K. homes by 2012. Connection speeds will be around 100mbps (50 times faster than those enjoyed today). Virgin Media claims it will achieve 50mbps as early as next year.

Coupled with competition among ISPs, this will increase financial pressure on the whole sector. And it will make vertical integration - be it through consolidation or strategic partnerships - even more appealing.

Per se, vertical integration is not a bad thing. It can sustain investment, allow innovation, and maintain user prices low. Up to a point - and the trick is recognising that point: the balance beyond which the benefits of market pioneering become the disbenefits of limited competition and possible market foreclosure. What is required is not ideological strife between free-marketeers and interventionists. It is recognition by regulators that this balance is worth preserving; that it is likely to be fragile; and that it will require a lot of vigilance.

In terms of internet openness, the potential problems are particularly insidious. The Comcast case which the FCC ruled upon last August offers a good example of how hard to define and identify abuses can be.

Kevin Martin, the Chairman of the FCC, summed up the substance of the case: "Comcast was delaying subscribers' downloads and blocking their uploads. It was doing so 24/7, regardless of the amount of congestion on the network... Even worse, Comcast was hiding that fact by making affected users think there was a problem with their internet connection or the application."

The FCC ordered Comcast to stop discriminating against certain applications, including BitTorrent, and to answer a number of questions about some of the remedies they propose. The ruling came after complaints in 2007 that Comcast was discriminating between applications and content transmitted over its network. The investigation took over a year. At first, Comcast denied the allegations. Then it admitted to the practice but tried to justify it as a traffic management requirement to avoid network congestion.

The supplementary questions asked by the FCC are interesting. They point at how hard it is to pin down the definition of what constitutes an abuse. What is a protocol-agnostic management technique? Will there be bandwidth limits? Will be they be hourly? Monthly? How will consumers know if they are close to a limit? And if they exceed that limit, is their traffic slowed? Is it terminated? Is their service turned off?

The ruling is clearly a vindication of the aims of internet neutrality and openness. At the same time it exposes the vagueness of the concepts that underpin those goals. In practical terms, it raises two crucial issues: enforcement, and transparency.

In a competitive environment, not only visible access limitations for users would be self-defeating: traffic management practices genuinely designed to improve traffic flow are likely to be publicised rather than concealed by ISPs as an asset for customers.

But discrimination can take different and subtle forms. Positive discrimination in favour of partners could in practice become hard to distinguish from negative discrimination against competitors and innocent bystanders: individual internet users. Privileges based on quality-of-service for certain services could deter or defer upgrades and quality improvements across the rest of the network.

And transparency about traffic management practices to third parties - be it final users or content providers - is an absolutely crucial point.

So, what can we conclude?

· The importance of the internet for content providers is growing fast. The internet is rapidly becoming central to the delivery of rich media content to audiences.

· The debate on net neutrality in the United States has in part taken on the ideological overtones of a fundamental clash between free-market and interventionist ideals. In practice, the market is highly concentrated; but at the same time the FCC is building a record of vigilance in internet policy matters. Legislation may come back on the agenda or not depending on who wins the presidential election.

· In Europe regulators continue the tradition of complementing competition law action with light touch ex ante regulation that takes specific account of internet traffic issues. This has led to a competitive market where the threats to internet openness seem relatively low so far. But rapid evolution, competitive pressure and the need to sustain infrastructure development will put ISPs and other players under strong pressure to maximise returns.

· Investment in infrastructure matters, to users and content providers alike. At the same time, incentives must be balanced against the need to keep the internet open and content-neutral in the interest of fairness to small players and individuals, innovation, universal access and freedom of speech. In the UK, a debate about the financing of the network has acquired momentum following the launch and success of the BBC's iPlayer. There are those that claim that increasing demand for access to bandwidth-hungry online video are making the business models of ISPs unworkable, and that rich content providers should shoulder some of the costs. I have no intention of going into detail here. But, clearly, ISPs and carriers discriminating between different types of content goes against the notion of an open and neutral internet. A dangerous principle: It could lead to strong differences between the access to internet for people with deep pockets and for others. And this will ultimately mean less content available for all.

· What is missing in Europe is a mechanism to improve our understanding of potential problems, increase the speed with which these problems can be identified, and exchange best practice, particularly about enforcement and transparency. The interpretation of words like "reasonable" in the proposed EU legislation, or "technical", or "protocol-agnostic" in the Comcast ruling, can be pivotal and determine whether the rule is effective or not. EU policy makers should consider ways of complementing binding regulation with a monitoring tool at EU level, a forum bringing together stakeholders from every segment of the industry and national regulators, with the task of monitoring developments, exchanging best practice and supporting effective enforcement through expert advice.

· From the start, internet development has been a joint act by governments, regulators and the market. In the years ahead, this tripartite group will need to assess which types of network investment are most urgently needed, which are at risk of underinvestment and which are more strategic - for example Next Generation Access. It will also need to consider whether public investment will be necessary to guarantee that everyone has access to tomorrow's internet.

· As a public service broadcaster, the BBC is uniquely placed to see both sides of this debate. We have learned from our experience with interconnected media and are as keen to get our services to people as we are for them to engage with us, through a freely and fairly accessible network.

· We want access for both our content and theirs. And we want to continue to meet users' demand for genuine convergence: content of their choice on devices of their choice, regardless of the transmission network.· Along with an obligation to make our services universally available, with have a clear purpose to ensure that everyone enjoys the benefits of interconnection - to "drive digital Britain", as the Royal Charter says. We want to work with others to ensure that business models remain viable, and that the investment that is necessary for network development happens.

Guy Almes said that there are three kinds of death in this world.  There's heart death, there's brain death, and there's being off the network.  This might be a tad emphatic. But clearly keeping the internet open to all in the same way is a crucial challenge for all of us, industry and regulators alike, on both side of the Atlantic.

* Networked and Electronic Media (http://www.nem-initiative.org/)

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