I will state up front my predilection is freedom of choice over the rights of the owner (read telco) to arbitrate content and applications. As I discuss below the argument boils down to two essential positions, the first is the right of the consumer to choose, and the second is the right of the owners of the infrastructure to do what they see fit with there networks. On the face of it, these are both reasonable and market driven positions, the consumer is the ultimate arbiter of markets, and the network owner will yield to the demands that the consumer places on the network owner.
Unfortunately that is where these arguments then diverge dramatically.
I want firstly to dispel some myths because they don’t help the understanding of the problem. I am going to look partisan because many of the myths are perpetrated by the network owners.

Myth One – Free Ride (Non) Argument

This one is easy to dispel because it is so obviously false. I do reject out of had the notion that content providers are getting a free ride. Infrastructure like Google costs millions, if not billions of dollars to provide on a daily basis, and the telcos benefit from this content, (that is not say the millions of dollars that Google pays for its peering arrangements). Indeed without compelling content, there is little reason to use broadband, email works fine at 256K.
All parts of the Internet value chain are adding value, otherwise they would have been discarded long ago with Compuserve and Prodigy. (Extra credit if you remember these services). This argument that there is non a mutually benefiting relationship currently going on is bogus.

Myth two – There is Competition in Broadband

Myself and millions of other home broadband users have practical experience on this matter. There is no real competition in the provisioning of broadband. There are two vastly dominant means for the delivery of data services, DSL and Cable. All other services, satellite, wireless, fiber, Ethernet over power are years away from width spread adoption. Important Point: The dominance of telcos and cable providers for broadband is based on an existing monopoly subsidizing the delivery of Internet Services. DSL rides on existing copper, Cable Internet resides on existing coax. Any one who tries to compete will need to figure out how to compete with this substantial cost advantage. (The exception is Ethernet over Power but the Power companies are years away from this.)
This cross subsidization is not a bad thing per say. It allows it to be delivered to consumers at a lower cost that would otherwise be possible, however that lower cost was provided under a regulatory environment favorable to the Telcos and Cable companies for many years. A problem however, which remains to be tested, is that it is illegal to use dominance in one market to extend that dominance into other markets, such as the provisioning of data services for the consumer.

Myth Three – Broadband Providers cannot offer virtual services with Net Neutrality (or the concept of) or cannot provide it currently.

The variation on this argument is that they cannot provision stratified content services currently, and the argument is not true. An example would be the use of QOS for IP Telephony transmission, a technology that is already available now and is being used by some cable providers now (example Rogers Telephony). It does not stop cable companies from implementing multiple independent streams on their networks, otherwise cable TV and Dataservices could not coexist on networks.
The currently regulatory environment does not stop carriers from implementing QOS for Telephony for their devices, but it does stop them from blocking Skype or competing services on non QOS networks. There is nothing technically stopping them from implementing QOS nor VLANs nor VPNs if they so desire. Our network in our offices has VLANs and QOS for Telephony that runs along side the existing Data VLANS seamlessly. The users have no idea that voice traffic has priority over data traffic.

Myth 4 – We haven’t seen Internet Discrimination Yet

Trouble on the line – Guardian

Vonage Canada Asks CRTC to Investigate Shaw’s VoIP Tax – TMC

Battle of the VoIP-Call-Blocking Telecoms Round 2: Justice Catches Up With Blocker – TMC

Telus cuts subscriber access to pro-union website

You get my point.

Ownership Rights

The arguments for the rights of the owners of the infrastructure to determine what can and cannot run on their networks is consistent with private ownership rights of infrastructure. These are not dissimilar to the rights that the cable companies have to largely provide the content in the manner that they feel fit. The market demand gauges what is provided as content, and this approach has worked well. They are however regulated as to how much they can charge for their service because they have a natural monopoly. It is the same type of natural monopoly that telephone companies had traditionally enjoyed under a regulatory regime.

I generally agree with the rights of the owners of infrastructure to provision their infrastructure as they see fit, and to ultimately maximize profits from that infrastructure. This right however can only be granted if the right of the consumer to enjoy and evaluate that freedom to choose. What I mean by this that the consumer should have a choice of broadband providers who genuinely compete to meet the needs of the consumer. In the absence of that freedom, then governments are free to regulate and control natural monopolies. Remember natural monopolies are markets that either are unable to function as free markets and/or the public good is best served by regulating the market.

Public Good

Just a word on Public Good, there is substantial Public Good in the delivery of Internet and broadband services to as wide a public as possible. It is a tool that the public derives tremendous benefit from in terms of education, economics, commerce, politics, and free speech among numerous other benefits. The absence to access to the Internet creates serious limitations to the social mobility of people and governments are well within their mandate to support the wide propagation of rights of access to services with less regard to the economic considerations of the deliver of such access.

Myth 5 – Right to freedom of choice.

I think that the whole net neutrality debate comes from the preconceived notion that the consumer purchased the freedom to choose to access the Internet, they paid their $24.95 per month and got unfetted access to content. Indeed this access is what motivated many to connect in the first place, mainly because the scope of content satisfied numerous tastes, provided.

However freedom of choice is not an absolute right, it is a conditional right based upon the ability of the market to provide. For example I would like to see Top Gear all day every day on the TV, that is not possible (not at the moment anyway).

I can’t help but think that the issue has only come to a head because services traditionally under control of natural monopolies are now being eroded. Telephony and IPTV, traditionally services that guaranteed audiences and profits is now under threat by the very infrastructure they originally willingly roll out. I say this because Shaw Telecom has already had their hand slapped over attempting to block Vonage and Skype. Vonage works continuously to maintain their service through the use of regulatory bodies.

Myth 6 – Network Neutrality Never Existed

The Telco’s are claiming that any new legislation will change the playing field. According to handsoff advocacy group aligned with the Telcos,

In fact, it is the absence of regulation over the past decade that has allowed engineers, entrepreneurs and innovators to build the Internet into the amazing tool for communication, learning, entertainment and commerce that it has become.

Hands Off Newsletter

But according to Kevin Drum of Washington Weekly.

The 1996 Telecommunications Act defined two different types of service, information services (IS) and telecommunications services (TS), and cable companies were originally classified as IS and telephone companies as TS. Although both cable companies and telcos provide local internet access, the backbone of the internet is carried exclusively by telcos, which were regulated as common carriers under the tighter TS rules. The common carrier rules effectively enforced the principles of net neutrality on the internet backbone.

In 2005 a series of Supreme Court cases resulted in DSL and Cable data servers being reclassified as IS services, thus

The Federal Communications Commission today adopted a policy statement that outlines four principles to encourage broadband deployment and preserve and promote the open and interconnected nature of public Internet: (1) consumers are entitled to access the lawful Internet content of their choice; (2) consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement; (3) consumers are entitled to connect their choice of legal devices that do not harm the network; and (4) consumers are entitled to competition among network providers, application and service providers, and content providers.
Although the Commission did not adopt rules in this regard, it will incorporate these principles into its ongoing policymaking activities. All of these principles are subject to reasonable network management.

FCC Press Release

Here are my concerns

1. At the end of the day the motivation of the broadband providers is not so much to gain the right to provision superior services on their network, which they have the technology and that right to already, but the right to discriminate again traffic they deem undesirable from a commercial or potentially political aspect.
2. The broadband providers are subsidizing Internet Services through their existing monopolies and this has not been taken into account in the debate. They are allowed to defray costs over pre-existing monopolies and therefore can use this advantage over others who seek to enter the market for the delivery of Internet Services.
3. The codification of the right to enhanced services also without careful thought will result in the codification of the right to degrade services. For example, you ask for the right to build a toll road next to a public highway, then remove one lane from each side of the public highway in order to create the toll road. Then you say that trucks because they are being paid to transport goods cannot use the public road, they need to use the toll road. In fact trucks are getting a free ride.

Final Arbiter

I would argue that there is one and only one arbiter to this whole argument, and that is the right and freedom for the consumer to choose and consume the service that best meets their needs and desires unfettered. This is totally consistent to both free market advocates and regulatory advocates. Regulators should only act to maintain that right and both sides should work towards that issue.

Does this mean that freedom of choice trumps ownership rights?. This is settled law, by that I mean, that in a truly free market environment, the consumer chooses freely and the owner can exercise their rights. For example purchasing a car, the consumer is free to choose from the hundreds of models of car and the manufacturer is free to build what ever car they like. However the market works at the intersection of those two behaviors.
In a monopoly, the government intervenes to make sure that the behaviors converge in a reasonable fashion in so far as it can. In the phone example, the government regulated prices to maximize number of citizens with phones whilst allowing infrastructure a fair return on their investment, this is a fair and reasonable use of regulation to enhance the overall goal of width spread usage of telephony.
What it probably boils down to is that the current status quo is probably the best posture at the moment as we evaluate the situation, however it is my understanding that the Big Infrastructure companies are the advocates for change.

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