What Internet Service Providers (ISPs) can and cannot do to diversify and differentiate services lies at the core of the debate over neutrality in network operation. In prior generations ISPs had little incentive or technological capability to deviate from plain vanilla best efforts routing for content providers and from a single standard bit rate offered on “all you can eat” terms for consumer access to the World Wide Web. The next generation Internet has the technological capability and ISPs have the commercial motivation to offer “better than best efforts” routing and premium services for both content providers and consumers seeking higher quality of service and more reliable traffic delivery.

However the potential exists for carriers, operating the major networks used to switch and route bitstreams, to go beyond satisfying diverse requirements of content provider and end users. Network neutrality advocates worry that major ISPs have both the wherewithal and incentive to bifurcate the Internet into one medium increasingly prone to congestion and declining reliability and one offering superior performance and potential competitive advantages to users able and willing to pay, or affiliated with an ISP operating a major bitstream transmission network such as AT&T, Verizon and Comcast. Opponents refuse to see a current or prospective problem and worry that network neutrality requirements legitimize common carrier regulation of the Internet, a regulatory regime heretofore limited to telecommunications services operating in a less than fully competitive environment.

This paper will examine the network neutrality debate with an eye toward refuting and dismissing the many false and misleading claims and concentrating on the real problems occasioned by the Internet’s third evolution. The paper accepts as necessary and proper many types of price and quality of service discrimination. However the paper identifies other types of discrimination, which operators can obscure, that constitute unlawful and anticompetitive trade practices.

The paper identifies best practices in lawful discrimination that should satisfy most network neutrality goals without creating disincentives that might dissuade ISPs from building the infrastructure needed for Internet 3.0 services. The paper concludes that legitimate concerns about unlawful network discrimination warrant the presence of a referee to remedy abuses before irreparable marketplace competitive harm occurs and well before a court of law could act. The paper recommends that the FCC require ISPs to submit network usage reports that the Commission could use to determine the causes of congestion and other types of service disruption.