Chairman Martin and Members of the Commission:
I'm extremely grateful for the opportunity to speak to you today and would like to thank you for inviting me. It's good to be back at my Alma Mater and again to be on this stage -- where I spoke and performed music several times while I was here obtaining my Master's Degree in Electrical Engineering. When I arrived at Stanford in 1983, the ARPAnet -- for that is what it was called at the time -- had just transitioned from the outdated "Network Control Protocol" to the newfangled "TCP/IP", which is now the lingua franca of the Internet. I followed the network's trials and tribulations as I studied, and also participated in a project, headed by Dr. Michael Flynn, whose goal was to develop digital radios for the recently available unlicensed 900 MHz band. As part of that project, I independently invented a digital coding technique known as Trellis Coding, which is used in all manner of modems and radio equipment today. At around the same time, our colleagues and football rivals across the Bay at UC Berkeley were working on a digital radio project called the Daedalus project. All of this work, and the work of other researchers, were eventually integrated by NCR into a product called WaveLAN -- the granddaddy of today's Wi-Fi.
years later, as
the ARPAnet was becoming today's Internet, I moved from the San
area to Laramie, Wyoming, a city with which I had fallen in love when I
much younger and where I'd decided to put down roots. Folks there had
this Internet thingie, but all that was available at the time -- except
problem, once we got
it there, was how to divvy it up among all the people who were paying
The answer turned out to be the techology upon which I'd worked here at
Stanford. We bought some of the NCR radio equipment and set up a
area network spanning downtown
Fast forward to 2003. The Internet was now well known, and the growing membership of LARIAT decided that rather than being members of a cooperative, they simply wanted to buy good Internet service from a responsible local provider. So, the Board prevailed upon me and my wife -- who had served as the caretakers of the network -- to take it private. We did, and have been running LARIAT as a small, commercial ISP ever since. But after all these years, our passion for bringing people good, economical Internet service hasn't changed. And nothing can beat the sense of achievement we feel when we hook up a rural customer who couldn't get broadband before we brought it to them -- or when we set up a customer who lives in town but has decided to "cut the cord" to the telephone company or cable company and go wireless with us. We make very little per customer; our net profit is between $2.50 and $5 per customer per month. But we're not doing this to get rich. We're doing this because we love to do it.
In other words, from the Internet's earliest days, we at LARIAT have been the strongest possible advocates of consumer choice; of free speech; of inexpensive, fast, high quality access to the Internet. It's our mission and our passion. And we are unqualified advocates of network neutrality as it was originally defined: namely, the principle that Internet providers should refrain from leveraging their control of the pipes to engage in anticompetitive behavior. It is inexcusable for the cable company to throttle or block video because it competes with their own services, or for a telephone company to block Voice over IP because it's another way of making a telephone call. And I think pretty much everyone -- except maybe some of those monopolies -- agrees.
Unfortunately, because "network neutrality" seems like such a sensible idea and has so much momentum, various parties have sought to extend the definition beyond this basic principle -- in ways that favor their own interests and which are, ironically, non-neutral. These attempts to "hijack" the network neutrality bandwagon are dangerous because many of them seek to force ISPs not to manage our networks; not to stop abuse or exploitation of our networks; and not to insist that we be paid for the use of our networks. And if rules and legislation are enacted that enforce these expanded definitions of "network neutrality," they actually could put our small, competitive provider out of business.
Several people who have spoken before this Commission and before Congress have claimed that Internet service is the province of a cable/telco "duopoly" which must be reined in by regulations to keep it from exploiting its market power. Fortunately, as of the moment, this is not true. Estimates vary, but most agree that there are between 4,000 and 8,000 small, independent, competitive ISPs such as ourselves. These small operators need to be nurtured, protected from anticompetitive behavior, and given an opportunity to grow.
The "hot button" issue in the recent hearings has been ISPs' throttling or blocking of so-called "P2P" activities, including those carried on via software such as GNUtella, BitTorrent, eDonkey, and KaZaA. Because my time here is brief, I've summarized the situation in two slides. Here, in the first slide, you see the way that content and services are normally delivered on the Internet. The provider of the content or service sets up a server -- usually in a building called a "server farm" -- where Internet bandwidth is cheap and plentiful. The information travels across the Internet backbone and reaches the ISP, which pays much higher prices for bandwidth -- often as much as $300 per megabit per second per month. (By the way, these prices have lately been increasing -- not decreasing -- due to mergers and consolidation in the backbone market.) The ISP also maintains the expensive infrastructure that connects users to the backbone. The user pays the ISP to do this. This situation fulfills the implicit contract of the Internet which has been in place ever since it stopped being the government funded ARPAnet: everyone buys his or her connection to the backbone.
In the second slide, you see what happens when you have P2P. In this case, the content or service provider doesn't pay its full freight for connectivity to the backbone. Instead, it turns the users' computers into servers, which in turn distribute its content or services. And users often don't even know that this is occurring. All they know is that they installed the "downloading software" or other software that let them access the product.
situation is great
for the content provider; its bandwidth costs are reduced to nearly
the customer -- who in the
is clearly the
motivation of companies like Vuze -- and also of BitTorrent, which
software -- in asking that P2P throttling be prohibited. But what about
Press and the other petitioners who claim that limiting P2P harms free
a strident advocate of free speech myself, I can say that their hearts
to be in the right place, but they do not seem to recognize where the
threats to free speech lie. Throttling or prohibiting P2P activity is
threat to free speech, because any content or service which can be
via P2P can also be delivered by conventional and fair means. (I've
cited a few examples
in my third slide.)
What would be a threat to
consumers and to
free speech is the elimination of competition -- which, ironically, is
what would happen if rules were imposed which prevented ISPs from doing
something to rein in P2P. If this Commission grants the petitions
Vuze and of Free Press et al, it will sting some of the large providers
Comcast. But it would drive smaller competitors with higher backbone
costs out of business -- and thus would likely create the "duopoly"
about which many are justifiably concerned. You may have seen the news
There are other problems with P2P as well. It congests networks, degrading quality of service for other customers. It exploits known weaknesses in the TCP/IP protocol -- which became obvious when I was here at Stanford but have never been adequately fixed -- to seize priority over applications such as voice over IP that really need priority. And it's mostly used for piracy of intellectual property -- something we can't condone.
What's the answer to this problem? Some parties claim that we should meter all connections by the bit. But this would be bad for consumers for several reasons. Firstly, users tell us overwhelmingly that they want charges to be predictable. They don't want to worry about the meter running or about overage charges -- one of the biggest causes of consumer complaints against cell phone companies. Secondly, users aren't always in control of the number of bits they download. Should a user pay more because Microsoft decides to release a 2 gigabyte service pack for Windows Vista? Or because Intuit updates Quicken or Quickbooks? Or because a big virus checker update comes in automatically overnight? We don't think so. And we don't need to charge them more, so long as they are using their bandwidth just for themselves. It's when third parties get hold of their machines, and turn them into resource-consuming servers on our network without compensating us for those resources, that there's a problem. Thirdly charging by the bit doesn't say anything about the quality of the service. You can offer a very low cost per bit on a connection that's very unsteady and is therefore unsuitable for many things users want to do -- such as voice over IP. And finally, a requirement to charge by the bit could spark a price war. You can just imagine the ads from the telephone company: $1 per gigabyte. And then the ads from the cable company: 90 cents per gigabyte. And then one or the other will start quoting in "gigabits" to make its price look lower, and so on and so forth. All Internet providers will compete on the basis of one number, even though there's much more to Internet service than that.
The problem is, small ISPs cannot win or even compete in this price war, especially when -- as is true in most places -- the monopolies backhaul their connections to the Internet and thus control their prices. Again, we wind up with duopoly.
would submit that the
best answer is that, rather than micromanaging ISPs' businesses or
dictate their business models or price structures, the FCC should do
things. Firstly, it should make strong rules prohibiting
behavior, since this is something nearly everyone agrees on. Secondly,
should ensure that all ISPs have access to the Internet backbone at a
reasonable cost -- something which, again, has become harder and harder
mergers and acquisitions and refusal to deal. (For example, the three
backbones traversing the
Please consider that document -- which I have also submitted as an attachment to an ex parte memo in the docket -- as a basis for sound regulation that will help, rather than hurt, the cause of true network neutrality.
Glass, Owner and