Network neutrality is the current model under which Internet service providers (ISPs) operate.
Under this model, ISPs must allow customers equal access to content and applications, regard-less of the source or nature of the content. That is, Internet backbone carriers (discussed later in this chapter) must treat all Web traffi c equally on a fi rst-come, fi rst-serve basis.
Telecommunications and cable companies want to replace network neutrality with an arrangement in which they can charge differentiated prices based on the amount of bandwidth consumed by the content that is being delivered over the Internet. These companies believe that differentiated pricing is the most equitable method by which they can fi nance the neces-sary investments in their network infrastructures.
To bolster their argument, ISPs point to the enormous amount of bandwidth required to transmit pirated versions of copyrighted materials over the Internet. In fact, Comcast (the second largest ISP in the United States) reported in 2010 that illegal fi le sharing of copy-righted material was consuming 50 percent of its network capacity. In 2008, the company slowed down the transmission of BitTorrent (www.bittorrent.com) fi les, a form of peer-to-peer transmissions that is frequently used for piracy and illegal sharing of copyrighted materials.
(We discuss BitTorrent later in this chapter.) In response, the Federal Communications Com-mission (FCC) ordered Comcast to restore its previous service. Comcast then fi led a lawsuit challenging the FCC’s authority to enforce network neutrality. In April 2010, the Washington DC Circuit Court of Appeals ruled in favor of Comcast, declaring that the FCC did not have the authority to regulate how an ISP manages its network. By endorsing differentiated pricing, the court struck a major blow against network neutrality.
ISPs further contend that mandating net neutrality will hinder U.S. international com-petitiveness by decreasing innovation and discouraging capital investments in new network technologies. According to this scenario, ISPs will be unable to handle the exploding demand for Internet and wireless data transmission.
Meanwhile, proponents of network neutrality are petitioning Congress to regulate the industry to prevent network providers from adopting strategies similar to Comcast. They argue that the risk of censorship increases when network providers can selectively block or slow access to certain content, such as access to competing low-cost services such as Skype and Vonage. They also assert that a neutral network encourages everyone to innovate because they do not have to obtain permission from phone companies, cable companies, or other authorities. Finally, they contend that the neutral Internet has helped to create many new businesses.
Most analysts expect that those users who consume the most data eventually will have to pay more, most likely in the form of tiered pricing plans. Americans, however, have never had to contend with limits on the amount of data they upload and download, so there may be some pushback from users.
Despite the 2010 court ruling against network neutrality, on December 21, 2010, the FCC approved network neutrality rules that prohibited broadband providers from blocking cus-tomer access to legal Web content. The new rules bar wireline-based broadband providers—
but not mobile broadband providers—from “unreasonable discrimination” against Web traffi c.
175
CASE In January 2011, Verizon fi led a legal appeal challenging the FCC’s authority to enforce these
new rules.
The Results
U.S. wireless networks have already moved in the direction of tiered-pricing plans. In June 2010, for example, AT&T discontinued its all-you-can-use $30 per month data plan, replacing it tiered-pricing plans for its mobile consumers.
One iPhone user related the following story. For 4 years, he had been using his iPhone to perform the same basic functions: checking e-mail, listening to Pandora Internet radio, accessing Google Maps, browsing the Web, and shopping online. In 2011 he averaged about 1.76 gigabytes of data per month. In January 2012, however, he surpassed a limit established by AT&T (his wireless carrier). In response, AT&T sent him an e-mail, suggesting that he consider using Wi-Fi whenever possible for applications that use the greatest amounts of data, such as streaming video apps and remote Web camera apps. To state that he was unhappy would be an understatement. He promptly began searching wireless plans at competing com-panies. Further complicating this issue is the fact that there is little, if any, agreement on what constitutes excessive data usage.
On October 1, 2011, AT&T began to reduce speeds for the 5 percent of their unlimited-plan customers who used the most bandwidth. Signifi cantly, AT&T subscribers who sign up for tiered plans do not have any bandwidth limitations. Instead, they have to pay a higher price if they exceed the data limits specifi ed in their plans. In addition, new customers are no longer allowed to sign up for unlimited plans. The AT&T model may foreshadow the direction that many Internet and cable providers will need to take in the future to remain profi table in the face of skyrocketing bandwidth demands.
In 2012, Verizon initiated a legal challenge to the FCC’s network neutrality rules, claiming that these rules violate the company’s right to free speech. (Verizon characterizes the transmis-sion of data across its networks as “speech.”) Specifi cally, Verizon argued that the FCC over-stepped its authority and that its network neutrality rules are unconstitutional. Signifi cantly, the court that will hear this case is the same one that ruled in favor of Comcast.
Verizon may have a valid point. The FCC can regulate the physical infrastructure over which packets travel on the network. It is less clear, however, whether it can also regulate the actual service or content those packets deliver.
As of March 2013, the court was expected to wait until September before hearing argu-ments in the Verizon vs. the FCC case. This would delay a decision until the end of 2013 or early 2014. The battle over network neutrality continues.
Sources: S. Higginbotham, “Analyst: Verizon’s Network Neutrality Challenge May Have to Wait Until Fall,” GigaOM, March 25, 2013; J. Brodkin, “Time Warner, Net Neutrality Foes Cry Foul Over Netfl ix Super HD Demands,” Ars Technica, January 17, 2013;
M. Reardon, “Verizon to FCC: Free Speech Trumps Net Neutrality Rules,” CNET News, July 3, 2012; J. Hamilton, “AT&T Must Give Shareholders Net Neutrality Vote,” Bloomberg, February 14, 2012; W. Plank, “Confessions of an iPhone Data Hog,” The Wall Street Journal, January 27, 2012; J. Engebretson, “Verizon Confi rms It Will Appeal Newly Published Net Neutrality Rules Soon,” Connected Planet, September 27, 2011; E. Wyatt, “House Votes Against ‘Net Neutrality’,” The New York Times, April 8, 2011; L. Segall, “Verizon Challenges FCC Net Neutrality Rules,” CNN Money, January 21, 2011; K. Corbin, “Net Neutrality 2011: What Storms May Come,” Internet News, December 30, 2010; C. Albanesius, “What Do the FCC’s Net Neutrality Rules Mean for You?” PC Magazine, December 22, 2010; G. Gross, “FCC Approves Compromise Net Neutrality Rules,” Network World, December 21, 2010; P. Burrows, “Will Video Kill the Internet, Too?” Bloomberg BusinessWeek, December 6–12, 2010;
J. Nocera, “The Struggle for What We Already Have,” New York Times, September 4, 2010; C. Miller, “Web Plan Is Dividing Companies,” New York Times, August 11, 2010; A. Schatz and S. Ante, “FCC Web Rules Create Pushback,” Wall Street Journal, May 6, 2010; www.comcast.com, www.att.com, accessed March 13, 2013.
What We Learned from This Case
You need to know three fundamental points about network computing. First, computers do not work in isolation in modern organizations. Rather, they constantly exchange data with one another. Second, this exchange of data—facilitated by telecommunications technologies—
provides companies with a number of very signifi cant advantages. Third, this exchange can take place over any distance and over networks of any size.
Without networks, the computer on your desk would be merely another productivity-enhancement tool, just as the typewriter once was. The power of networks, however, turns your
176 CHAPTER 6 Telecommunications and Networking
computer into an amazingly effective tool for accessing information from thousands of sources, thereby making both you and your organization more productive. Regardless of the type of orga-nization (profi t/not-for-profi t, large/small, global/local) or industry (manufacturing, fi nancial services, healthcare), networks in general, and the Internet in particular, have transformed—
and will continue to transform—the way we do business.
Networks support new ways of doing business, from marketing to supply chain management to customer service to human resources management. In particular, the Internet and private intranets—networks located within a single organization—have an enormous impact on our lives, both professionally and personally. In fact, for all organizations regardless of their size, having an Internet strategy is no longer just a source of competitive advantage. Rather, it is necessary for survival, as you see in IT’s About Business 6.1.
Computer networks are essential to modern organizations, for many reasons. First, networked computer systems enable organizations to be more fl exible so they can adapt to rapidly changing business conditions. Second, networks enable companies to share hardware, computer applica-tions, and data across the organization and among different organizations. Third, networks make it possible for geographically dispersed employees and work groups to share documents, ideas, and creative insights. This sharing encourages teamwork, innovation, and more effi cient and effective interactions. In addition, networks are a critical link between businesses, their business partners, and their customers.
Clearly, networks are essential tools for modern businesses. But, why do you need to be familiar with networks? The simple fact is that if you operate your own business or work in a business, you cannot function without networks. You will need to communicate rapidly with your customers, business partners, suppliers, employees, and colleagues. Until about 1990, you would have used the postal service or the telephone system with voice or fax capa-bilities for business communication. Today, however, the pace of business is much faster—
almost real time. To keep up with this incredibly fast pace, you will need to use computers, e-mail, the Internet, cell phones, and mobile devices. Further, all of these technologies will be connected via networks to enable you to communicate, collaborate, and compete on a global scale.
Networking and the Internet are the foundations for commerce in the 21st century.
Recall that one important objective of this book is to help you become an informed user of information systems. A knowledge of networking is an essential component of modern business literacy.
You begin this chapter by learning what a computer network is and identifying the various types of networks. You then study network fundamentals and follow by turning your attention to the basics of the Internet and the World Wide Web. You conclude the chapter by seeing the many network applications available to individuals and organizations—that is, what networks help you do.
MIS
IT’s [about business]
Sometimes, using the right network can make all the difference.
What is the right network? The answer is, it depends. As an orga-nization grows, its network needs to change and evolve to meet its ever-changing needs. This is exactly the case with Studio G Architects, Inc., an architecture fi rm based in San José, California.
The fi rm began with only two employees, and they needed only two telephone lines to communicate with their customers. How-ever, as the business grew, Studio G needed a better communica-tion solucommunica-tion.
Solving the communication problem initially seemed simple. Just add more telephone lines, right? Not quite. Studio G did not want to
hire a receptionist, so they needed some type of networked phone system that could route calls and help customers reach the appro-priate contact. The only type of system capable of routing calls in this way is a private branch exchange (PBX). A PBX is a telephone exchange that serves a particular business or offi ce, as opposed to a telephone exchange operated by a telephone company that serves several businesses or the general public. A PBX makes con-nections among the internal telephones of a private organization and connects them to the public switched telephone network.
Studio G chose Cisco’s Small Business Unifi ed Communi-cations Series as their PBX provider. Cisco’s system provides
6.1 Studio G
177
SECTION 6.1 What Is a Computer Network?