Sunday, November 30, 2008

Delusions of net neutrality

A mathematics professor at the University of Minnesota, Andrew Odlyzko, has a pretty blistering critique of Internet Service Provider's (ISPs) arguments against net neutrality and about their love of streaming over download. It's worth a read of the abstract if nothing more - his paper, The delusions of net neutrality (caution, links to a pdf) destroys many a myth of the internet and video. Having been to many a conference lately where the best minds in the room can only imagine the internet making a better tv, I appreciate some astute analysis of the reality.

Odlyzko shows that ISPs and others are pushing for a world where the goals of the internet are reduced to streaming movies, in relatively walled envrionments, and that the costs to build a network capable of this demand that net neutrality be curtailed. As he states:

Service providers argue that if net neutrality is not enforced, they will have sufficient incentives to build special high-quality channels that will take the Internet to the next level of its evolution. But what if they do get their wish, net neutrality is consigned to the dustbin, and they do build their new services, but nobody uses them? If the networks that are built are the ones that
are publicly discussed, that is a likely prospect.

What service providers publicly promise to do, if they are given complete control of their networks, is to build special facilities for streaming movies. But there are two fatal defects to that promise. One is that movies are unlikely to offer all that much revenue. The other is that delivering movies in real-time streaming mode is the wrong solution, expensive and unnecessary.

He goes on to show why their argument is wrong and along the way, makes some astute analyses. I'll quote here, because his argument is better than what I could make:

What if you build it and they don’t come? ... that is almost bound to happen if net neutrality is blocked, and service providers do what they have been promising, namely build special facilities into their networks for streaming movies...The public stance of the service providers, a stance that appears to be accepted as valid by the press, research community, and decision makers in government and industry, is based on two delusions. Both delusions are neatly captured in a single sentence by Jim Cicconi, one of AT&T’s senior executives... He said that net neutrality “is about streaming movies.” The first delusion here is that movies are the most important material to be transmitted over the Internet, and will determine the future of data networking. But video, and more generally content (defined as material prepared by professionals for wide distribution, such as movies, music, newscasts, and so on), is not king, and has never been king. (italics added) While content has frequently dominated in terms of volume of traffic, connectivity has almost universally been valued much more highly and brought much higher revenues. Movies cannot be counted on to bring in anywhere near as much in revenues as voice services do today.

Even if we allow video the dominant role in shaping the future of the Internet, we have to cope with the second delusion captured in Cicconi’s quote, namely that movies should be streamed. This is an extremely widely shared assumption... However, there is an argument that except for a very small fraction of traffic (primarily phone calls and videoconferencing), multimedia should be delivered as faster-than-real-time progressive downloads (transfer of segments of files, each segment sent faster-than-real-time, with potential pauses between segments). That is what is used by many P2P services, as well as YouTube. This approach leads to far simpler and less expensive networks than real-time streaming.
The general conclusion is that the story presented by service providers, that they need to block net neutrality in order to be able to afford to construct special features in their networks for streaming movies, is simply not credible.

Pretty interesting for those of us who think about this. It's also interesting to me because I keep arguing with people about the value of streaming. We now offer it at Reframe, but only because currently an audience exists for it. But long-term, it seems a ridiculous option. I'd far prefer to get progressive downloads and be able to watch it again later on the plane, when not connected, and not have to rely on an internet connection.

I'm also interested because of his idea that video and content as such is not king. He says that people pay for connectivity (phone or twitter) not content. This seems counterintuitive in some ways, but he shows that in aggregate this is definitely true - i.e. more revenue comes from things like VoIP and phone than will ever come from Hollywood. "For all the hoopla about Hollywood, all the movie theater ticket sales and all the DVD sales in the U.S. for a full year do not come amount to even one month of the revenues of the telecom industry. And those telecom revenues are still over 70% based on voice, definitely a connectivity service."

Undoubtedly true, but as I deal in indie arenas, the little dollars matter. That said, what he says is true for me as a consumer - I value email, twitter, and other participatory communications on the web more than finding web content. What I like even more are ways to combine the two - conversations and participation with video content. I don't think it's as separate as he makes it seem.

In his conclusion, he has some interesting thoughts:

The two myths, that movies are a gold mine, and that they should be delivered in streaming mode, are very widely held. But at the same time, it seems clear that service providers are aware this is not even the most promising avenue to explore in search for new revenues and profits. They have been devoting a lot of attention to the potential of DPI (deep packet inspection). Now DPI is not needed if you believe that you cannot have a successful video service without special channels for streaming delivery. If you do believe that, then you just build a network in which you control access to those special features that enable quality streaming. On the other hand, you do need DPI in either of two situations:
– You want to prevent faster-than-real-time progressive downloads that provide low-cost alternative to your expensive service.
– You want to control low-bandwidth lucrative services that do not need the special video streaming features.
Communications service providers do have a problem. But it is not that of a flood of video.

He argues that all of this is a cover-up for what they really want to do, and I think he may be right. Anyway, Odlyzko's article has been discussed many places, but not in the film world, where it seems to really matter so I thought it was worth linking to from here.


Art said...

Great post,

I have touched indirectly on this subject in our blog from many angles, often times directly criticizing our customers (ISPs practices) but not nearly as eloquently.

Art Reisman

Anonymous said...

I agree with you, video and participation through connectivity are converging. I'm an indie, and my next film, What We Got: DJ Spooky's Journey to the Commons, will test this notion by inviting our audience to collaborate or remix and repurpose our media as we make our version of the film. The established media networks merely want to replicate cable on the web to generate profit by enclosing channels and limited speed, then charging for both. It's contrary to innovation, and contrary to the spirit and nature of the Internet, a commons if ever there was one.