TCS Daily

VoIP and Internet Freedom

By Kevin Werbach - September 10, 2004 12:00 AM

There's a secret factor in the remarkable success of Google and other online powerhouses like eBay,, and Apple's iTunes music store. It's also a key reason voice over IP promises to deliver so much innovation and cost savings to customers. I'm referring to the fundamental freedom of Internet users to choose where they go and what they do. It's what makes the Internet great. And it's in jeopardy.

The Internet has generated tremendous benefits for both businesses and consumers thanks to a simple premise: anyone connected can take advantage of any applications and content available on the network. In other words, network connectivity -- what Internet access providers offer -- is separate from applications.

In contrast to most other communications or media platforms, providers of services and content on top of the Internet can focus on delivering the best possible offering to their customers. They need not receive permission from the government, nor from some monopoly gatekeeper. The Googles of the world can win by building better mousetraps. It's a true free market, in which users vote with their clicks and their dollars. The network doesn't decide which applications win; customers do.

Yet some broadband access providers aren't happy with the Internet's level playing field. Instead of letting you choose which applications you enjoy online, they want to choose for you. And they want to charge you for the privilege.

This issue, often called network neutrality, has been quietly bubbling in Washington policy circles for the past few years. With the rise of VoIP, it is about to boil over.

The basic openness of the Internet is something we take for granted. Fire up your browser, type in an address, and you can reach any site on the World Wide Web. Dash off an email message, and you can send it to any Internet user worldwide. That's what makes the Internet the Internet. The company that you pay for your connection to the network may offer you applications, such as Web-based email or online photo albums, but you're free to use competing services. Access is access, and applications are applications.

Some phone companies don't see things that way. From their perspective, providing you with a pipe to access the Internet entitles them to control over what you do with that pipe. If there's money to be made in Internet applications, they want a piece of it, whether their users like it or not. The model here is the traditional phone network. By owning the wires into your home, phone companies controlled the capabilities of the network. Voice mail appeared when they wanted it to, at a price they set, with little or no competition. The contrast to the vibrant Internet application market is striking.

The ramp-up of broadband deployment and VoIP creates an opportunity to migrate away from the old limited model of the phone network. In essence, VoIP transforms voice from network access into an application. Voice becomes just one of many valuable services that can be delivered over a broadband pipe. Suddenly, your telephone service starts looking like your search engine, multi-player gaming service, online music store, or photo-sharing application. You have a choice of competing providers offering different features, prices, and service quality. And that helps turn VoIP into a killer app that could help sell lucrative DSL and cable modem subscriptions.

Unfortunately, some phone companies want to go in the opposite direction. BellSouth is forcing customers that buy its DSL service to also purchase analog phone service, whether they use it or not. It is, in effect, annexing the voice application to its broadband access pipe. Fearful of competition, phone companies could use packet filtering or quality-of-service mechanisms to degrade or block third party VoIP offerings. And those tactics aren't limited to VoIP - they could just as easily be applied to streaming video, photo sharing, search, instant messaging, or any other popular application.

Not all broadband access providers have pushed in this self-defeating direction. A few phone companies such as Qwest have taken a more moderate line. Several cable operators recently signed resale arrangements with VoIP providers such as AT&T and Level 3. They don't seem to have any problem treating VoIP as an application separate from their broadband access offering.

FCC Chairman Michael Powell raised a red flag on the network neutrality issue in a speech at the beginning of this year. Powell challenged the broadband industry to preserve the "Internet freedom" prevailing until now. His not-so-subtle threat was that, if access providers don't commit to network neutrality, the FCC may mandate it. This from someone who has made deregulation a cornerstone of his broadband agenda. Freeing providers from burdensome regulation shouldn't mean killing off the freedoms that users enjoy.

A rainbow of application providers makes the network itself more valuable, to everyone's benefit. More people pay for Internet access to take advantage of the applications, which in turn feeds growth and development of those very applications. That's the lesson from the past decade of the Internet's development. More than one billion users and many billions of dollars in value creation later, the Internet stands as an engine of growth and innovation for the global economy of the 21st century. Let's not abandon what got it there.


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