Do conduit neutrality mandates promote or hinder trust in Internet-mediated transactions?

Abstract

As the Internet evolves and matures, Internet Service Providers (“ISPs”) have devised increasingly diversified business models for serving downstream end users and upstream content providers. The need to accommodate subscriber demand for more bandwidth also necessitates efforts by ISPs to generate higher revenues by differentiating service on the basis of subscriber access requirements and other customer-specific demand characteristics. ISPs have identified new strategies to diversify their offerings on the basis of price, quality of service, transmission speeds, permissible amount of capacity uploaded and downloaded, legitimate network management objectives and the demand for customer-specified network features.

Advocates for limiting price and service discrimination contend that absent a “network neutrality” mandate, ISPs will discriminate in ways that harm competitors by favoring corporate affiliates and selected third parties. Network neutrality supporters claim that ISPs have both the incentive and ability to engage in harmful discrimination, typically characterized by ISPs as necessary network management, or a legitimate response to the specific requirements of a customer.

This article will consider ISP conduit neutrality in the context of whether and how legislatures and national regulatory authorities can enhance trust and network reliability. It will assess how network management techniques can offer both quality of service improvements and deliberately inferior service. Starting from the observation that technological innovations provide the ability to build trust in Internet-mediated transactions, the article aims to identify legislative and regulatory strategies that can pass judicial review while also promoting network management goals that enhance cloud computing, electronic commerce and other transactions without affording ISPs unconditional opportunities also to harm competition and consumers.

Using the United States network neutrality debate and legislation in that country designed to insulate ISPs from liability for carriage of harmful content, the article suggests that nations need to craft and use flexible solutions to access disputes. Fixed laws, regulations and policies in the U.S. have reduced trust in part because they either have questionable legality, or generate unintended incentives for ISPs to refrain from implementing techniques and strategies from enhancing the reliability and safety of personal and commercial transactions. The article concludes with a recommendation that nations implement flexible administrative mechanisms for dispute avoidance and resolution.

Introduction

As the Internet evolves and matures, Internet Service Providers (“ISPs”) have begun to create increasingly diversified business models that deviate from plain vanilla, one-size fits all terms and conditions. The substantial cost in accommodating subscriber demand for fast broadband connections necessitates ISP efforts to diversify service offerings on the basis of subscriber bandwidth requirements and other customer-specific demand characteristics. ISPs have identified new strategies to differentiate their offerings on the basis of price, quality of service, transmission speeds, permissible amount of capacity uploaded and downloaded, legitimate network management objectives and the demand for customer-specified network features.

Changing market conditions support ISP efforts to customize service, but the technical means used to achieve this goal have proven controversial. Advocates for restricting price and service discrimination contend that absent a “network neutrality”¹ mandate, ISPs will use techniques to discriminate in ways that harm competitors by favoring the content of corporate affiliates and selected third parties. Network neutrality supporters claim that ISPs have both the incentive and ability to engage in harmful discrimination, typically framed as necessary network management, or a legitimate response to the specific requirements of a customer.

In addition to the debate about what ISPs can do to manage their networks and provide service enhancements is the issue of whether and how ISPs can avoid liability for harms resulting from their carriage of content. In the United States ISPs can avoid liability for their carriage of harmful content generated by others² as well as copyright infringing content.³ To qualify for these free from liability “safe harbors,”⁴ an ISP need only eschew the use of network management techniques so that it can claim to operate as a neutral conduit. ISPs that do not induce copyright infringement by subscribers, or lack knowledge that a subscriber has engaged in copyright infringement, will not incur secondary liability in the United States.⁵ The Digital Millennium Copyright Act creates incentives for ISPs to refrain from actively managing their networks, or to install techniques that would support digital rights management.

This article will consider ISP conduit neutrality in the context of whether and how legislatures and national regulatory authorities can enhance trust and network reliability. It first will assess how conduit neutrality impacts trust and how network management techniques can offer both quality of service improvements and deliberately inferior service. Because technological innovations provide the ability to build trust in Internet-mediated transactions, it will subsequently use as a case study legislative and regulatory strategies in the United States. The article will argue that these strategies have largely failed to provide lawful and flexible procedures that promote network management and competition without stifling innovation or creating disincentives for ISPs implement ways to enhance consumer trust in cloud computing,⁶ electronic commerce and other transactions.

The U.S. case study will identify the harms resulting from a process that combines likely regulatory overreach with an apparent inability for stakeholders to compromise. The article will suggest that absent better ways to anticipate and resolve conflicts the U.S. may suffer from a legal and regulatory environment that stifles innovation and incentives for ISPs to implement techniques that can enhance greater user trust in Internet transactions. Finally, it will recommend that nations implement flexible administrative mechanisms for dispute avoidance and resolution.