(16 June 2007 9:00 pm)

SINGAPORE: At the CommunicAsia convention this morning, Gilbert and Tobin partner Peter Waters looked at the implications of net neutrality regulation.

He warned that regulatory intervention to prescribe approaches to quality of service and interconnection pricing are likely to be preemptive and risky and may inhibit market development. He said that it was too early to tell what models of triple and quadruple play would emerge.

With triple and quadruple play, data and content for a variety of services or applications is sent down the same pipe to the end customer. High speed internet access, voice telephony and cable TV make up triple play with mobile services added for quadruple play.

Simultaneously, all services are delivered over the same network infrastructure. People at home, for example, can be doing all of these things at once: home shopping over the internet; watching a World Cup final on a cable TV sports channel and downloading videos to watch later; and making international calls using VoIP.

All the applications have different quality of service requirements. Without extremely high speed broadband capacity, the services and applications cannot all perform at their optimum level over a network that treats all packets equally on a best efforts basis.

The focus of technological developments within and between IP networks has been to solve the problem of a lack of quality of service which is partly due to lack of a signalling system. Additionally, a characteristic of IP networks and of NGNs is the ability to carry heterogenous traffic with different latency/jitter requirements. Packet prioritisation has been seen as the answer.

Packets are "labelled" with "priority stamps" - information in the packet header Priority Stamps indicate to network elements and to other networks how to treat the packet. Networks need the ability to prioritise high packets with high priority stamps.

Net neutrality is the idea that all packets travelling over the internet are treated in a neutral way. Proponents of net neutrality fall into three camps. The first are the net purists. They argue that all content and applications should be available across all networks, all packets should be afforded equal speed and quality regardless of ontent or origin/affiliation.

Camp two wants content/applications neutrality. While some content/applications can be prioritised, all content/applications should be treated equally. There
must be no discrimination based on origin/affiliation and no charge for prioritisation.

Camp three advocates affiliation neutrality. Content/applications can be prioritised
differentially. Content/applications providers and end users can be charged for service differentiation. Unaffiliated providers must be offered the same terms as affiliated providers by law and not telecom regulation.

The Internet Freedom Preservation Act was introduced into the US Senate on 12 January 2007. It requires network operators to run their networks in a nondiscriminatory manner. This prevents certain types of traffic/traffic from certain sources (such as Yahoo, Google, or Amazon) from being prioritised or de-prioritised. Non-partisan introduction but sponsored by all Democrat presidential contenders.

The bill reflects the AT&T undertaking. To achieve merger clearance, AT&T/BellSouth agreed not to provide or to sell to Internet content, application, or service providers (including those affiliated with AT&T/BellSouth) any service that privileges, degrades or prioritises any packet transmitted over AT&T/BellSouth's wireline broadband internet access service based on its source, ownership or destination.

In Europe some but not all of the net neutrality issues are being debated under a different guise. The question of whether to mandate Bill and Keep (Bak) pricing for IP interconnection is the focus of the debate in Europe. There is the same risk of a collision between IP interconnection pricing and quality of service issues. Cross-network QoS consumes network resources of the non-retail provider and the costs will need to be recovered.

However Waters says that the supporters of Bak are wrong in arguing that it prevails on the current internet - paid transit is the main model. In any event, Bak peering reflects the "primitive" capabilities of the current Internet/IP which packet prioritisation/NGN address. Business models for cascading inter-operator charges are now being developed to match the technical capacity for QoS

The German regulator (BNetzA) set up an industry working group to advise on the economic aspects of IP interconnection. The initial report (Vogelsang) supported a dual charging model with Bak in the access network and element based charging in the core. The final report showed mixed support for the dual model and indicated that it may be too early to impose a model.

" We are seeing the beginnings of the debate in relation to Bak interconnection in the Asia Pacific region. Hong Kong's approach to fixed/mobile convergence foreshadows a Bak regime," said Waters.