OpenFlow, Net Neutrality and the New Economics of Networking

When the U.S. Federal Communications Commission issued regulations late last year on “net neutrality," many thought that the debate over rules for an “open Internet" had at last reached an end. In fact, the FCC decision turned out to be the opening shot in the battle’s newest round.

Within weeks, broadband providers filed suit in federal court challenging the FCC’s authority over net neutrality, and in a separate act a Congressional committee launched legislative action to repeal the rules. On the opposite side, net neutrality advocates vowed to fight back.

The irony is that before too long, technology may well resolve the controversy, overshadowing a years-long policy squabble, and perhaps even the need for such rules.

For those unfamiliar with net neutrality, a brief recap is in order. The new regulations are designed to prevent large broadband providers from blocking access to lawful content, services, applications or devices, and from discriminating against traffic on their network. Advocates of net neutrality argue that without the rules large broadband providers hold the power to restrict access to the Internet, create artificial scarcity for Internet resources and eliminate competition. 

On the other side of the debate, leading broadband providers contend that no one has ever found evidence of the transgressions the rules are meant to prevent – not in the 15 years since the debate began. Service providers say that Internet users have long enjoyed unrestricted access to the lawful content of their choice without the need for government intervention.

In the end, this is an argument about money. Broadband providers, contending with a geometric expansion of traffic driven by video and other high bandwidth services, are concerned about capacity and the cost of new infrastructure to support growing broadband demand.  But when providers propose tiered billing for actual usage, net neutrality advocates descry the move as an effort to place “toll booths on the Internet."

Perhaps there is a middle ground, as hinted by Peter Thiel, co-founder of Paypal and the angel investor who funded Facebook. In a recent interview in The National Journal,[1] Thiel underscores that the Internet is still young, growing and ever-changing. “The model where Internet companies have enormous power that they abuse in various ways depends on a view of the Internet as a fundamentally static thing where nothing changes much. That might become an issue at a point where it’s an extremely mature industry, but that’s not the way most people think of it now."

Another way of putting it – as we’ve seen in the Internet’s rapid progression from the early days of NSFnet to the World Wide Web and today’s social media and wireless Web apps, technology constantly transforms the Web, perhaps faster than policymakers can make rules to govern it.

One such transformation is under way now.  It’s called OpenFlow, a major networking development that promises to completely overhaul Internet network architecture – driving down costs for broadband providers and data centers.

If the change sounds radical, it is – and it’s happening for good reason. According to researchers at Stanford University and the University of California at Berkeley, the web is not the perfectly efficient engine many assume it is. Broadband providers contend with an annual 40% - 50% rise in IP traffic, increasing the need to invest in new Internet infrastructure. However, neither current end user rates nor annual improvements in operational efficiency are sufficient to offset the higher costs of managing all that IP traffic growth. Simply put, continuing to operate the Internet using the current architecture is not financially tenable.

To resolve this dilemma, Stanford’s Professor Nick McKeown and colleagues have developed new interfaces to support a totally different architecture for the Internet. The new architecture is based on a centralized network-wide operating system that simplifies management and drastically cuts hardware requirements and costs. In the new Internet that results, highly-efficient and centrally-controlled software defined networks (SDNs) will replace the vertically integrated networks in common use today. End result: vastly improved operational efficiency and savings. According to McKeown, this restructuring is inevitable, and will lead to a “rapid evolution of the Internet that has not happened since its creation."

Perhaps because OpenFlow arose in academia, discussion of this technology breakthrough has not yet crossed over into the broad national policy debate on net neutrality. But given that both topics are so closely related to the economics of the Internet, their intersection may be inevitable.

In the Internet community, life moves quickly. On March 22, a group of tech and telecom giants –  Google, Microsoft, Facebook, Yahoo, Verizon and Deutsche Telekom – teamed to form the Open Network Foundation for the express purpose of advancing the OpenFlow standard.

“OpenFlow really has the potential to be a very important shift in how people look at networks," said Urs Hoelzle, Senior Vice President of Engineering at Google, and the president and chairman of the ONF. “It can help make complicated networks simpler. Software-Defined Networking will allow networks to evolve and improve more quickly than they can today."

It is just possible, as technology so often does, that this important advance will make today’s haggling over net neutrality a distant memory, as well. When the goal is to guarantee unimpeded Internet access at an affordable price while ensuring a fair profit for service providers, what better mechanism than the application of Moore’s law to the realm of networking.

Morag Lucey is Global Senior Vice President of Marketing and Product Management for Convergys’ Smart Revenue Solutions for the telecoms, cable, satellite, broadband, and utilities markets.  Convergys solutions can help service providers meet the billing and customer care needs of the retail, enterprise, and wholesale sectors.