Net Neutrality: The Oxford Street Dilemma

The Hon Ed Vaizey MP, Minister for Culture, Communications  and Creative Industries, remarked in his recent speech at the Financial Times World Telecoms Conference 2010 (16 & 17th November) that:

‘Unlike in the UK, in some parts of the US consumers have no choice which ISP they use because only one offers a service in their area. So the debate has particular resonance there. ISPs could have total control over which services and applications a consumer has access to, and could give preferential treatment to those they favour.’

But in a previous blog post we examined the fact that choice becomes a mere paradox when a behaviour becomes the ‘new normal’ in the market.

Professor Economides, from the New York University Leonard N. Stern School of Business, describes this situation in a working paper entitled ‘Why Imposing New Tolls on Third-Party Content and Applications Threatens Innovation and will not Improve Broadband Providers’ Investment’ (2010, p.7)

‘every [...] content provider that can afford it will choose to pay to be in the “priority lane.” What is the result? The [...] content of the remaining active firms would all arrive at the same speed as before, competition would remain the same among the firms that can afford the payment, but all these firms would pay a higher price to broadband providers.’

This could be exemplified through the Oxford Street dilemma.

In December 2000, creative minds at advertising agency Tugboat launched ‘The Fast Lane Campaign’, drawing attention to the growing pedestrianisation turning London’s Oxford Street into Europe’s most congested shopping street. The following figures were used as an illustration: at an average 4 miles (+- 6.5 km) per hour, the 1.25 mile (+- 2 km) walk shouldn’t take more than 19 minutes; but practice showed different with 28 minutes in general, up to 38 minutes at peak times and so long as an hour during the Christmas rush. This led them to envisage a ‘slow’ and ‘fast’ lane concept, dividing those ‘windowshoppers’ from the hurried office workers – an idea that seems not to have died out.

Simulation by the BBC

So imagine, for a moment, Oxford Street as a living lab for net neutrality. And imagine the City of London Corporation investing in creating such a ‘fast’ lane, whilst asking a 0.5 GBP fee for passage over it, in an attempt to earn back its investments. Those who can afford it will pay extra – on top of their taxes – to walk faster over the city’s pavements. While the others in the meantime would remain stuck as before between the ‘windowshoppers’. To get more pedestrians on the ‘fast’ lane, the city could attempt to  lure in more tourists to further crowd the ‘slow’ lane.

But as more pedestrians prefer the ‘fast’ lane, this becomes the ‘new normal’ and once it gets as crowed as the ‘slow’ lane, new forms of pedestrian traffic managment need to be put in place to create the illusion of a speed difference between the two lanes – the sine qua non condition to keep the fees flowing in.

Thus linking this back to the Internet, professor Economides remarks in his working paper (p.8) that:

‘If unrestrained, the broadband provider has an incentive to create artificial congestion in the “slow lane” that will make consumers value more the prioritized information packets (in the “fast lane”) and value less the ones that did not pay for prioritized service (in the “slow lane”).’

This leads us to the conclusion Commissioner Kroes reached in her ‘Net neutrality in Europe’ address at the ARCEP conference (13th April 2010), where she stated that:

‘Given that so much of this debate is about different forms of traffic management, let me use a road traffic analogy.  There are many ways to manage traffic: by improving infrastructure, adding tolls, creating junctions or roundabouts to improve bottlenecks. But creating new rules and crowding the street with signs does not automatically help the traffic to flow. Indeed, putting a police officer at a busy corner can often deliver the slowest traffic of all.’

Therefore the question remains how long this vicious spiral can go on before we come to a standstill?

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