Net Neutrality is Dead. Long Live Net Neutrality

Net Neutrality‘Twas the month before Christmas, and all through the web, not a packet was stirring, except for free TiVo on Telecom and free YouTube on Orcon.

A while back, I wrote an impassioned post about net neutrality, why it matters, and why you should care. The truth is, net neutrality is already dead in New Zealand. Traffic is charged differently depending on where it is coming from and going to. We have zero-rated TiVo on-demand data, but only if you are on Telecom. If you’re on Orcon, you get free traffic to the O-zone, and more recently, free YouTube until February. The favouritism extends to mobile data: for $2.50 per month you get all-you-can-eat music download data on Vodafone’s MusicStation.

Orcon’s Duncan Blair commented on their YouTube offering:
[quote]YouTube is the single biggest site used by our customers (by data). As we all know Kiwi’s [sic] hate data caps. While we can’t remove them altogether we thought that giving customers free access to the biggest single site was a pretty good step in the right direction.[/quote]
It’s not all milk and honey and free data. Telecom makes no secret about heavy traffic shaping in their Big Time plan, making special mention of “file sharing”. Telecom (“there is no prioritisation of any traffic, its all treated the same”) and Vodafone (“nope, none of that. It’s all easy bits on the network”) deny that they shape any other traffic, but I’m wondering if it’s just that I’m asking the wrong question. Take a look at Orcon’s “service control” functionality, documented last year in a rather technical and in-depth post. It’s hard to imagine that the big guys don’t do something similar.

Like I stated earlier, the purest form of net neutrality – all packets and all destinations treated equally – is already long dead in New Zealand. ISPs are openly choosing favourites, either in the hope that it will land them extra customers (Orcon), or for revenue sharing opportunities (Telecom and Vodafone).

Is this a bad thing? It depends on how you look at it. In all cases – so far – what consumers are getting is improved or cheaper services, but only if you are in the right place at the right time. It’s hard to complain when you get free YouTube traffic, but it’s a little easier to complain if you have to switch ISPs to use TiVo. It does feel like ISPs are playing fast and loose with traffic for their own purposes.

Duncan Blair clarifies this approach, effectively saying that it’s not anti-neutrality until it’s bad for the customer:
[quote]I think the net neutrality debate in general is pretty vague, but where we see it becoming a problem would be if service providers essentially create a tiered internet. Some examples:

  • a provider was to deliberately degrading VoIP traffic in order to protect their traditional voice revenues.
  • a provider entirely blocking some protocol, and charge extra to get access to it.
  • a provider completely blocking access to a competitors site or product.

This is all totally icebox as long as it remains to the benefit of the consumer. But it’s also a barely discernible line between ‘it’s good for you’ and ‘it’s for your own good’. I can easily imagine the statement becoming “YouTube is the single biggest site used by our customers” … and it’s affecting our other traffic, so we need to charge extra for full-speed access.

At this stage I’m keeping my scepticism in check, and am hopeful that we’ll see more cost benefits from partnerships between ISPs and content providers. But mark my words: the moment this becomes a “for your own good” scenario, I’ll be the first one to the barricades.

How about you? Are you happy to have a non-neutral internet in New Zealand as long as it means cheaper data? Or should we be making noise about this before it turns nasty?


  1. I’d be happier if some of these deals weren’t exclusive, and they were permanent. Orcon giving free access to YouTube is great, but it’s only to the end of January. Is it really enough to make someone switch ISP? Much better if they made YouTube part of the O-Zone.

    Of course, the O-Zone isn’t permanent either. Orcon used to have a games server as part of O-Zone but dropped it a few months ago and don’t seem to have any plan to replace it.

    I’ve got no problem with Tivo doing a deal with Telecom as long as it isn’t exclusive. Surely it’s in Tivo’s best interest to add other ISPs? And if Telecom are in bed with Tivo does that mean they can’t have a threesome with Sky?

    The one thing I think ISPs should provide for free is access to upgrades like Microsoft’s patch Tuesday, WoW patches, etc. Buffering these in a local server would make sense for their international traffic as well – how many GBs of data are wasted every time Microsoft release a patch?

  2. Offering free YouTube traffic was much more about rewarding those people awesome enough to have chosen Orcon as a provider already than attracting new customers.

    As Parsley points out it is for a limited time, so unlikely to be a huge draw card for those not already with us. It is (we think) a pretty sweet deal still, so I am sure that there is likely to be some interest from new customers.

    I do think this is an interesting debate though, so thanks for raising it Ben. I look forward to hearing what your readers have to say.

    Duncan Blair
    Head of Brand and Communications

  3. I agree with Parsley – if these deals were non-exclusive, then we’d be closer to true neutrality. As it stands, I can see a future where power users have to run multiple ISP accounts to take advantage of all the offers.

    Kinda like kids having both Telecom and Vodafone mobiles to take advantage of free on-net SMS.

  4. I may be an Orcon customer, and plan to take full advantage of it, but I still don’t like it. Especially when I would (selfishly) much rather Orcon spent this money on finally upgrading the exchange in St Johns so I can get on the Orcon+ network again. Still delayed indefnitely is it Duncan?

    Like you I think it may be a slippery slope, especially when the ISPs start trotting out the tired old “oh the internet is just more expensive in little old NZ, so we have to do things differently” excuse for when the attitude behind this turns to shaping those pesky bandwidth heavy sites so its ‘fair’ for everyone else.

  5. Especially true for local content providers – I can understand international traffic costs , but domestic traffic costs are minimal, especially if the ISP has decent local peering policies, or if the ISPs allow local Content Delivery Networks to house nodes in their datacentres. Our 2 largest ISPs do not.

    Check out, chapter 2 panel discussion where Scott Bartlett talks about this.

  6. @Ian

    Domestic traffic costs are not minimal at all, they are almost as high per GB as international.

    The Telecom Wholesale ADSL plans that the majority of ISP’s resell do not include free unlimited national bandwidth, the backhaul from exchange/cabinet to the ISP handover is not free.

  7. Forgot to mention even on LLU plans (their own gear in the exchange) like Orcon+, Vodafone Red, Slingshot Next Big Thing (resold Vodafone Red) and TelstraClear Homeplan… the backhaul from the exchange to the ISP and the ISP handover costs real money.

  8. As long as its not exclusive I don’t care. Just give me some way to rent movies on demand for the same price as Video Ezy with no download fees and i will be a happy man. Surely TiVo can make more money off downloads if they increase their user base.

  9. Maybe they can do something that isn’t exclusive, like “If you use our preferred ISP you get $5 off the standard monthly rate”. I just think stipulating your Tivo / MySky / whatever only works with one ISP is crap marketing.

  10. I think that the claim that these deviations from net neutrality are ‘good for the customer’ misses the main justification for net neutrality.

    ISPs compete for our business, and if the price is too high for the level of service offered, customers will go to another ISP. Orcon realised it could afford more bandwidth, and saw an opportunity to provide more service for the same price to get / retain customers, and raise overall profits.

    Orcon could easily have become more competitive by raising their bandwidth caps, rather than excluding YouTube from the quota. The fact that they chose to compete the way they did means that Orcon users *missed out* on this raised bandwidth cap. This is subsidising YouTube access, at the expense of all other sites. If I wanted to start my own video sharing site, I would not be competing with YouTube on merit; if my site was superior, people would still visit YouTube because of the subsidy. This gives YouTube less motivation to compete on merit. With enough of these deals, the Internet will become a stagnant pool of propaganda from big companies, rather than a continuously developing resource for the benefit of all humanity.

    TL;DR: Orcon’s deal is bad for everyone.
    There is a Facebook group calling for net neutrality from Orcon:

  11. I’m not sure how I feel about the neutrality issue (obvs I’d like to get all the deals that other ISPs offer though). I just know that I doubt I’ll ever be back with Orcon.
    They deprioritise file sharing. I know it’s mostly illegal files being shared but I download a lot of TV that we don’t get here and I appreciate actually being able to do it at 300kbps instead of 1kbps.
    I don’t see the point of being with a provider that’s not going to let me choose how I use my data.

  12. I don't know if free local content should be regarded as a violation of net neutrality. It just seems rather sensible here in NZ given our limited international bandwidth. And yes it's nothing new — 15 years ago my (university) ISP had free traffic within NZ, only international traffic was charged for (and it was a bargain at $1.50/MB).

    Orcon are obviously able to offer zero-rated YouTube because they now have a local cache. (And they don't need to worry about people using international bandwith by watching non-cached videos — they load so slowly they are unwatchable.)

    As for their "O Zone", well as far as I can see the only point to that is TVNZ OnDemand. The other sites are niche or low bandwidth anyway. And to bring this back to something that should be ringing neutrality alarm bells: why is TVNZ in the O Zone, but TV3 is not? Could it be because Orcon is indirectly owned by an organisation that also owns TVNZ? Maybe the real reason is not that juicy, but it's still not a good look.

  13. @parsley
    Let’s say that all ISPs in New Zealand had a deal with TiVo and YouTube to allow free access to those sites (is that what you mean by ‘not exclusive’?) on a permanent basis. This would help TiVo and YouTube with their business, and if there was no consumer backlash, and TiVo and YouTube paid the ISPs for the privilege, it would be a good thing for the ISPs.

    But it would be a terrible thing for the New Zealand public. At least in theory, the ISP industry is highly competitive, and the price to consumers approaches the costs to the ISP to supply the service. Allowing free access to certain sites pushes up these costs (or perhaps means that prices don’t go down, or bandwidth caps don’t go up, when technological improvements would make this an option for ISPs). So the consumer isn’t really getting the access for ‘free’, they are paying for it through their subscription, and if it wasn’t for the deal, they would pay less to access other sites.

    This places the chosen sites – YouTube and TiVo, at a competitive advantage to other sites (they are basically being subsidised). This in turn makes it much harder – and perhaps impossible – for a new player to compete with YouTube and TiVo. This means that YouTube and TiVo could start charging customers for the service. They could start censoring what goes on their sites even more than they already do. They could stop innovating (at least in ways which benefit the NZ customers), knowing that no one can compete with them.

    This will mean that the Internet will be stuck in the past – it will never progress, because it has become captive to the corporate interests.

    The best solution is for consumers to reject all net neutrality violations by changing to an ISP which doesn’t engage in such practices. If this still doesn’t work, then it is time to lobby the government to mandate net neutrality.

  14. Andrew :
    Let’s say that all ISPs in New Zealand had a deal with TiVo and YouTube to allow free access to those sites (is that what you mean by ‘not exclusive’?) on a permanent basis.

    Not quite. I meant exclusive in the sense that the Tivo deal is exclusive to Telecom because if you’re with another ISP you can’t connect at all. Not very well explained, I agree. I probably should have said it was an exclusive monopoly.

    I can see what you’re getting at, but I think for a new player to compete with YouTube would be incredibly difficult anyway. There are plenty of alternatives (Vimeo, Metacafe, etc) so they don’t have a monopoly yet, but having a blank cheque from Google is probably their greatest competitive advantage.

    NZ traffic is relatively tiny compared to the rest of the online world, so even if every NZ ISP offered free access to YouTube it would make very little difference to them or their competitors. I can see how your argument would work for NZ-specific sites but I don’t think there’s an example at the moment. Orcon provides free access to George FM but I’m not going to listen to them exclusively just because they’re free (I’m a bFM man myself).

  15. Really good article, well done.

    It’s all fairly outrageous, I can’t believe that this is even an issue since my own starter generation felt at the
    beginning that all the internet should just naturaly always remain a neutral and fair place for people to visit.

    Duncan and others may like to consider the many other obvious things that would bad for customers, oops are
    actualy already bad for customers. Like those big boys not allowing you to see where certain programs are
    available/downloadable from, in desire of you all finding only their own software first.

    Shame on all businesses for undermining the full value of the internet.

    We all want completely different things from the internet.

    ‘ . . . don’t fence me in . . . ‘

    Jeff Phillips.

    1. Bloody interesting. I wonder what deals they have done to allow them to zero-rate traffic on those systems?

      1. Snap has Google/Youtube cache servers hosted in their network (Telecom, Telstraclear and Orcon do also)

        Facebook, AppleTV and iTunes all heavily use Akamai, most ISP’s have Akamai cache servers in their network so it’s a safe bet Snap does (or have a route to Telecom’s or Telstrclears).

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