Juha Saarinen: Why net neutrality no longer matters

There are more nuances to net neutrality, but it sounds like a great and good thing right? Photo / 123RF

Net neutrality is a loaded term.

In theory, it signifies the notion that all traffic on the internet should be treated equally. That means internet providers and telcos should be barred from prioritising - or slowing down or even blocking - certain data packets for commercial or other reasons.

There are more nuances to net neutrality, but it sounds like a great and good thing right? You pay for an internet connection, and whatever you do with it is your business - and the data you choose to send and receive should reach all corners of the net unimpeded.

In the United States, John Oliver, the scourge of New Zealand politicians, is at war with Trump Administration-appointed Ajit Pai who chairs the Federal Communications Commission. Oliver is pro net neutrality, Pai wants the current FCC rules around net neutrality to be scrapped.

This is where things get difficult, and Oliver is probably a bit too black and white in his stance on net neutrality.

Net neutrality was born out of all sorts of shenanigans and dirty tricks between internet providers and telcos in the past. Bigger telcos and providers with large customer bases have tried to bully smaller ones into paying extra for access to subscribers, for instance.

Mostly though, these things have been resolved through customer rebellion against the provider that tries to limit how and to where people connect.

I'm sure that most local internet providers would much rather run their own streaming video and music services and earn money from those than simply being the connections to Netflix, Apple Music and Spotify.

Unfortunately for connection providers, their subscribers buy service because they want to watch streaming video or listen to music from whichever site they choose. Telling them that "no, you can't go to that site, but here's our one instead" just isn't going to fly in 2017.

As the internet has evolved, it is precisely those "over the top" service providers like Netflix, Google, Facebook and others that have made net neutrality a meaningless concept.

They are huge, with hundreds of millions of customers and have become global internets of their own, where users are the product to be sold.

They capture most of the revenue on the internet, and don't need to provide direct, physical network connections to customers, which is expensive, to earn it.

In comparison, the telcos and other providers who roll out connections to your house get just a monthly customer subscription charge that has to pay for network builds, maintenance and support staff.

The companies that connect you to the internet are enviously eyeing the massive amounts of money that their customers hand over to over-the-top (OTT) providers, wondering how they can get a slice of that action. So far, the only thing that has worked to a degree is industry consolidation. To take on the big OTT players, internet providers and telcos have merged so that there are fewer companies left, with more subscribers each.

Complicating things further for providers, the architecture of the internet is changing rapidly. Not so long ago, you would connect to servers directly and exchange data with them.

That meant you got better performance from servers close to you than from those far away. A web service delivered from New Zealand would be faster and work better than one situated in the US for instance.

Thanks to content delivery networks however, the popular web apps, streaming content and other services are delivered from a data centre near you, and not from a faraway country.

The companies that connect you to the internet are enviously eyeing the massive amounts of money that their customers hand over to over the top providers.

Big services providers can afford to put data centres near customers and cache content there. Others use content delivery networks such as Akamai, Amazon Web Service, and Cloudflare that sit between the customer and the service provider.

For internet providers, connecting to a CDN means happy customers who get their content fast and efficiently from nearby server farms.

If a service provider isn't on nearby CDNs however, it simply won't perform as well for most people. They will see "buffering..." and certain features in web apps might time out or not work properly.

By optimising data transmissions like this, CDNs in effect violate net neutrality as they make some sites perform much better than others, and they break the end-to-end rule of the internet. CDNs are here to stay however, and there's no suggestions that they should be covered by net neutrality rules.

There you have it: the internet business battlefield in 2017 features big internet providers, big service providers and big caches that serve up content.

It's an uneasy constellation where interdependent players fight it hard to amass large volumes of customers in a market that's still growing. In that scenario, it'd be a foolhardy provider who would tamper with customer traffic and risk alienating customers - even if the providers are local monopolies.

Net neutrality was an important idea a few years ago. Nowadays though, we're probably better off expending our energy elsewhere, like how to keep a diverse and competitive internet provider and telco market alive in New Zealand.