Friday, December 30, 2016

📞 1899 :: Dec. 30 :: American Bell becomes AT&T

American Bell (MA) becomes AT&T (NY). Massachusetts' law restricted the financial structuring of American Bell; New York law was more progressive. In order to allow Bell to continue to grow, AT&T "acquired the assets of American Bell, and became the parent company of the Bell System," moving from Boston to NYC. AT&T had capitalization of $70m. See Cybertelecom.

Tuesday, December 27, 2016

⚖ Can You Legally Disclose Illegally Intercepted Communications to the Author of the Communication?

CRIMINAL LAW 101 EXAM (You have 1.5 hours)

QUESTION: Is it a violation of the Wiretap Act to disclose your own email to yourself?

(Stop laughing) (Seriously, you are being graded on this)

FACTS: "The action arises from the [PLAINTIFF and DEFENDANT]'s acrimonious divorce. DEFENDANT accused PLAINTIFF of serial infidelity, so in discovery PLAINTIFF asked DEFENDANT for all documents related to that accusation. DEFENDANT complied and produced copies of incriminating emails between PLAINTIFF and several other women..."

CAUSE OF ACTION: "PLAINTIFF alleges that DEFENDANT violated the Wiretap Act by surreptitiously placing an auto-forwarding 'rule' on his email accounts that automatically forwarded the messages on his email client to her. He also claims that DEFENDANT's divorce lawyer violated the Act by 'disclosing' the intercepted emails in response to his discovery request. The district judge dismissed the suit on the pleadings."

On this final exam, we concern ourselves only with the later action regarding disclosing of emails.

RULE: 18 USC s 511(1)(c) prohibits the disclosure of intercepted communications:
[A]ny person who- (c) intentionally discloses, or endeavors to disclose, to any other person the contents of any wire, oral, or electronic communication, knowing or having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of this subsection; . . . shall be punished as provided in subsection (4) or shall be subject to suit as provided in subsection (5).
ANALYSIS: Getting past whether this was in fact an interception, is it disclosure? Couple problems, as the court points out:
  • PLAINTIFF "already knew the contents of the intercepted emails."
  • PLAINTIFF "invited their disclosure by requesting them in discovery in the divorce action" - the court suggests that requesting your own emails in discovery is tantamount to "consent" for disclosure of those communications.
  • Then the Court pontificates, "to 'disclose' something means '[t]o make (something) known or public.'... [DEFENDANT's ATTORNEY] did not publicly disclose PLAINTIFF's emails, and their content was hardly unknown to PLAINTIFF. "
CONCLUSION: "[E]ven if the emails were unlawfully intercepted, [DEFENDANT's ATTORNEY] did not unlawfully disclose their content by producing them in response to PLAINTIFF's discovery request."

Nope, it aint a violation of the Wiretap Act to disclose the contents of a communication to the communicator of that communication.

NOTE: 18 USC 2511(1)(c) specifically states anyone who "intentionally discloses, or endeavors to disclose, to any other person the contents of any wire, oral, or electronic communication" has violated the Act. Here we have a play with three actors. We have the communicator, the interceptor, and the "other." PLAINTIFF is the communicator. DEFENDANT is the interceptor. For this tragedy to work, there needs to be one more person. There needs to be the "other" (and DEFENDANT's ATTORNEY counts in this play as DEFENDANT and does not count as "other."). Lacking the "other," the tragedy is incomplete and the cause of action fails.

Epstein v. Epstein, Court of Appeals, 7th Circuit 2016

Saturday, December 24, 2016

Holiday Greetings from Mark Twain

It is my heart-warm and world-embracing Christmas hope and aspiration that all of us, the high, the low, the rich, the poor, the admired, the despised, the loved, the hated, the civilized, the savage (every man and brother of us all throughout the whole earth), may eventually be gathered together in a heaven of everlasting rest and peace and bliss, except the inventor of the telephone. - Mark Twain (Twainquotes citing Caroline Harnsberger's Mark Twain at Your Fingertips ) 

Wednesday, December 21, 2016

⚖ Host of Facebook Group Immune from Liability for Third Party Content - But Would Host Be Liable if "Perpetuated" Content?!?

FACTS: "As is by now commonplace, Facebook groups are the soapbox for community organizers. In the present action, Plaintiff [pro se] alleges that one such group—the "Volusia County Moms" ("VCM")—mounted a public relations campaign to oust him from Port Orange. Specifically, on or about January 7, 2014, Plaintiff Howard Porter moved in with his uncle and father due to financial hardship. " On January 17, 2014, an anonymous post appeared on the VCM Facebook page stating that a registered sex offender had recently taken up residence across the street from Sugar Mill Elementary School... The ensuing Facebook discussion included comments addressing Plaintiff's criminal past. In particular, Defendant Nicole Sanchez commented that:
[Plaintiff] gave up some rights when he decided he wanted to do sexual acts on a [four] year old!! And thank God this was a set up and he got busted.[] Who knows what the pictures of his own son looked like or who he sold them too [sic]!!! Convicted sexual predators should not be allowed to be so close to a school with all these innocent children!!"
"As a result of the alleged 'false' statements made in the Sanchez Response and the attendant media coverage" Plaintiff sued for defamation. " In his defamation claims, Plaintiff singles out ... Jacqueline Bodner, the owner of the VCM office and Nicole Sanchez, the author of the Sanchez Response.

Defendant " Bodner seeks dismissal of the Complaint on the ground that she is immune from suit under the Communications Decency Act, 47 U.S.C § 230 "

RULE: "[T]he CDA grants immunity to a "provider or user of an interactive computer service" for "any information provided by another information content provider"—that is, information posted by someone else. See 47 U.S.C. § 230(c)"

ANALYSIS: "[B]ecause Sanchez, not Bodner, posted the Sanchez Response, the Court finds that the policy behind the CDA warrants blanketing Bodner with immunity under the CDA at least as to Plaintiff's defamation claim. See Almeida v. Amazon.com, Inc., 456 F.3d 1316, 1321 (11th Cir. 2006) (interpreting the CDA as having established "broad federal immunity"); see also Regions Bank v. Kaplan, No. 8:12-cv-1837-T-17MAP, 2013 WL 1193831, at *18 (M.D. Fla. Mar. 22, 2013) (stating that "[a] `provider' of an interactive computer service includes websites that host third-party generated content")."

CONCLUSION: Defendant Bodner Motion to Dismiss Granted

NOTE: Plaintiff attempts to defeat the § 230 immunity by arguing that "Bodner is not a passive host; instead she is a content provider due to her 'collaboration' with Defendants to further the Sanchez Response." The Court entertains this argument sufficiently to respond to and dispose of it. The Court states, "nothing in the Complaint can be read to ensnare Bodner in a scheme to perpetuate the Sanchez Response."

M'kay. This begs a big question. If Defendant Bodner did something to "perpetuate the Sanchez Response," would this abrogate the § 230 immunity? Fair Housing Council (9th Cir. 2008) establishes that, at the far end of the spectrum, where a defendant requires third parties to fill out fields on a form with answers that violate housing law, defendant has moved from host enjoying § 230 immunity to participant developing third parties' content. In this case, the Court recounts no authority for Plaintiff's argument nor does the Court cite authority when it disposes of said argument.

It makes one uneasy. "Perpetuating third party content" does not abrogate § 230 immunity. There is no caselaw that would support that. Sure, the Court is here giving a short answer to dispose of an argument. But the frontier of § 230 immunity is furiously contested. The frontier is identified as that land where defendant can be seen not just guiding a third-parties' hand, but forcing that hand into making statements as a condition for speaking. Playing the role of host, selecting content, promoting content, and dare say, "perpetuating" content, has not in and of itself given rise to liability.



Porter v. City of Port Orange, Dist. Court, MD Florida 2016

Tuesday, December 20, 2016

⚖ Silver v Quora, 10th Cir. Nov. 23, 2016 :: Plaintiff Cause of Action for Defamation Against Quora Dismissed Pursuant to 47 USC 230(c)

FACTS: "Silver is an investment banker, venture capitalist, and author of 33 books on entrepreneurship and finance who resides in New Mexico."

"Quora operates a question-and-answer website at www.quora.com that allows registered users to ask and answer questions on any topic."

"This lawsuit stems from a question on the website that solicited feedback on Silver: “Has anyone worked with or heard of David Silver at Santa Fe Capital?”... Silver claims two false, disparaging posts in response to this question damaged his reputation and caused him to lose potential clients and book publishers: 
  • On September 7, 2012, Tessa Salton responded, “Your instincts are correct. He is not licensed or accredited any longer. A fraud.” Id. Her post included a link to an article in The Chicago Tribune, which reports on a $23 million damages award against Silver in an investment case. Id. 
  • On October 16, 2013, Neil MacAskill responded, “You are better off buying lottery tickets. One of our checks to him supposedly got lost so we sent him another. Then he cashed both and never did a thing for us. Said he built a business development plan but never delivered it. Save your money.” Id.
"Silver filed this lawsuit, which asserts a state-law claim for libel and defamation and seeks millions of dollars in compensatory and punitive damages"

RULE:  "Section 230 “creates a federal immunity to any state law cause of action that would hold computer service providers liable for information originating with a third party.” Ben Ezra, Weinstein, & Co. v. Am. Online Inc., 206 F.3d 980, 984-85 (10th Cir. 2000). It does so through the interplay of two key provisions. Under § 230(c)(1), “[n]o provider . . . of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” 47 U.S.C. § 230(c)(1). And under § 230(e)(3), “[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.” Id. § 230(e)(3)."

ANALYSIS: "[T]he CDA bars Silver’s libel and defamation claims against Quora. ... 'The prototypical service qualifying for this statutory immunity' [is] 'an online messaging board (or bulletin board) on which Internet subscribers post comments and respond to comments posted by others.' Quora fits squarely within this prototype."

Silver v Quora, 10th Cir. Nov. 23, 2016 

See also QUORA GETS EASY SECTION 230 WIN IN TENTH CIRCUIT–SILVER V. QUORA November 28, 2016 · by Eric Goldman Technology & Marketing Law Blog (Goldman has a screen capture of the Quora discussion)

Monday, December 19, 2016

You Cant Tell Your Customers to 'Shut Up' Anymore :: Consumer Review Fairness Act Signed into Law

Bad idea: Set up a business and provide poor goods or services; receive bad reviews online for your poor goods or services.

Worse idea: Instead of treating your customers' feedback as free expert advice and listening to their suggestions on how to improve your business, sue your customers - experience the Streisand Effect - resulting in increased media coverage highlighting your lousy goods, service, and treatment of customers.  Ensure that negatives reviews of your business get the widest exposure possible.

Worser Idea:  Attempt to solve this problem by telling your customers to shut-up. Insert a gag-clause in your terms of service so that it is a breach of contract for your customers to provide negative reviews of your service.

Jennifer Kulas Palmer testified before Congress about her negative experience with online business KlearGear.com.  According to Palmer, in 2008 her husband ordered about $20 worth of Christmas gifts from KlearGear.  When it did not arrive, they attempted to reach out to the company, but to no avail.  Like so many consumers who have had a bad experience, they wrote a negative online review.  Three years later, Palmer heard from KlearGear, claiming that Palmer had violated their Terms of Sale and that Palmer owed KlearGear $3500. Attorneys from Public Citizen represented the Palmers and filed a successful lawsuit against KlearGear. See Chris Morran, “KlearGear.com Ordered To Pay $306K To Couple Who Wrote Negative Review,” Consumerist, June 26, 2014; KlearGear must pay $306,750 to couple that left negative review Lawyer: CYRUS FARIVAR - 6/25/2014 Ars Technica; Jon Brodkin, It will soon be illegal to punish customers who criticize businesses online Ars Technica 11/29/2016.

If there was any doubt that this type of thing is a bad idea, in this year of divided and partisan politics, Congress unanimously voted to end attempts to silence customer reviews. The Consumer Review Fairness Act was signed into law by President Obama on December 14th.

According to the new law, 'form contracts' (those terms of service or standard forms shoved in front of customers to sign without ability to negotiate individual terms) are void if they prohibit customer reviews.  Any such gag provisions are unlawful and are subject to enforcement by the Federal Trade Commission or the states. The Federal Trade Commission will be publishing best practices on how to comply with the Consumer Review Fairness Act.

All of this comes about in the context of the Good Samaritan provisions of the Communications Decency Act, 47 USC 230(c), which says that an online services are not liable for the third party content.  This means that Yelp, TripAdvisor, Amazon, Google, and all the other review sites can encourage people to provide reviews of goods and services - without those online services becoming liable for those reviews. 47 USC 230(c) legally set the foundation for the interactive web where many third parties contribute without the host becoming liable for every utterance.

The Consumer Review Fairness Act establishes that you cannot tell consumers to shut up - it does not, however, protect consumers from liability for what they say.  Businesses can, for example, still seek redress for defamatory reviews. Consumers can review but they may still be held responsible for their words.   



Sen. Thune's Statement During Senate Hearing
"Zero Stars: How Gagging Honest Reviews Harms Consumers and the Economy."


⚖ Pagan v. Google, DNH 2016 :: Defamation Cause of Action Dismissed per 47 USC 230(c)

FACTS: "Pagan's complaint names "Google Corporation" as the defendant and asserts that Google defamed him by publishing false information regarding his criminal record. Specifically, he states that Google published false information labeling him as a convicted sex offender for three counts of rape in New Hampshire. Pagan asserts that the information is incorrect, and he attributes the error to a communication problem in the New Hampshire courts."

RULE: "Google is afforded immunity under the Communications Decency Act of 1996 ("CDA"), 47 U.S.C. § 230, for the publication of defamatory content prepared or posted by others. O'Kroley v. Fastcase, Inc., 831 F.3d 352, 354-55 (6th Cir. 2016). The CDA provides that "[n]o cause of action may be brought" and "no liability may be imposed under any State or local law," 47 U.S.C. § 230(e)(3), for any claim that would treat a provider of an "interactive computer service" as the "publisher or speaker of any information provided" by someone else, 47 U.S.C. § 230(c)(1). See O'Kroley, 831 F.3d at 354-55 (claims against Google for third party content properly dismissed under CDA); Klayman v. Zuckerberg, 753 F.3d 1354, 1357 (D.C. Cir. 2014) (claims against Facebook properly dismissed under CDA)."

CONCLUSION: "[B]ased on the facts alleged in the complaint[, Google is] immune from plaintiff's defamation claims under the CDA, and, accordingly, those defamation claims should be dismissed."

Pagan v. GOOGLE CORPORATION, Dist. Court, D. New Hampshire 2016

1913 :: Dec. 19 :: AT&T's Kingsbury Commitment and the end of telephone competition

At the turn of the 20th Century, Alexander Graham Bell's telephone patents had expired and competition had entered the market place.  Independent telephone companies raced to establish themselves in markets as of yet unserved by AT&T  Other markets saw the advent of  "dual service," with multiple, but incompatible, telephone services. Businesses might have multiple phones on their desks in order to reach different customers on different networks. 

AT&T faced competition. And to AT&T, competition was inefficient.  AT&T President Theodore Vail proclaimed that there should be "One policy, one service: Universal Service." Vail could solve the problem of a telephone market where different phones could not talk to each other by establishing AT&T as the government sanctioned monopoly. 

In order to solve the problem of the independents, AT&T leveraged an asset that the independents lacked: it's long distance network linking together the local Bell Operating Companies.  AT&T benefited from Network Effect.  Subscribers to the Bell networks could reach all the other subscribers to the Bell networks over the AT&T interconnected long distance network.  The subscribers to the independent telephone networks could not. 


The independent networks asked to interconnect with the AT&T network.  AT&T refused. AT&T also, through its affiliation with J.P. Morgan, squeezed the Independents' access to financial capital. And also refused to sell superior Western Electric (which AT&T owned) equipment to its rivals.

The position of the independent networks became untenable. The independent telephone companies would crumble, either going out of business or selling out to AT&T.

Progressive era regulators grew wary of AT&T's anticompetitive strategy and filed suit in 1912. Rumors were also brewing in Congress about the possibility of nationalizing AT&T (something that would happen several years later during World War I).

In 1913, AT&T settled the antitrust actions with the Kingsbury Commitment in which AT&T agreed to interconnect its long distance network (not its local Bell Operating Companies) with independent telephone companies, stop acquiring independent telephone companies, and divest itself of Western Union.

At this point the damage to the competitive market had already been done and many crumbling independent telephone companies would have prefered it if AT&T had been permitted to buy them out.  AT&T's strategy of establishing itself as the monopoly telephone network was well under way.   By 1921, AT&T had achieved its strategy and competitive independent telephone providers dissolved from the market.


Friday, December 09, 2016

Origins of Settlement Free Peering

Internet culture stood as an antithesis to Bell telephone culture. In the early 1960s, Paul Baran, who was concerned about the vulnerability of U.S. communications, advocated that the Department of Defense migrate to a distributed packet-switched network that could survive failure and still get a “Go; No-Go” command to the field. Bell-trained DOD engineers dismissed packet-switched communications as an idea that could not possibly work. In 1971, Larry Roberts, having successfully demonstrated the viability of his packet-switched network experiment, attempted to give ARPANET to AT&T; AT&T was not interested. In the meantime, AT&T had refused to sell private lines to nascent data networks, refused to allow foreign devices (i.e., modems) to their network, and refused to interconnect their network with nascent rivals. Those seeking telecommunications services in order to build computer networks became frustrated, and serious question arose concerning whether AT&T’s telecommunications services would meet the needs of growing computer networks

Thus emerged a cultural rivalry between Nethead and Bellhead cultures. In the eyes of the Netheads, Bellheads were about perpetuating a century-old communications network monopoly that followed a command-and-control model of central operation which stunted innovation, while Netheads were all about innovation, building a network that fostered the cool things transpiring at the end. Netheads wanted nothing of the Bellhead model. [Greenstein 2015 at 38 ("most had an almost visceral dislike for" Ma Bell)] [Mayo (quoting Bob Taylor, "Working with AT&T would be like working with Cro-Magnon man. I asked them if they wanted to be early members so they could learn technology as we went along. They said no. I said, Well, why not? And they said, Because packet switching won’t work. They were adamant.").] 

In the 1980s, Netheads had to resolve how to interconnect networks. Netheads wanted to interconnect ARPANET with an NSF sponsored CSNET, but what should be the terms and who should pay whom? One model before them was the byzantine Bell accounting scheme which one engineer described as so complicated it was akin to drinking coffee one molecule at a time; a marvelous feat of engineering if not utterly pointless. [Moore 1999] [Jacobson 1999 (discussing how Internet culture is different than BellHead culture and the implications for the future of the internet)] [Kleinrock 1994 at 67 (bemoaning the additional cost and complexity of accounting necessary for usage-based pricing); [MacKie-Mason 1993 at 14 (describing the cost of phone company style billing and accounting as applied to the packet-switched Internet as “astronomical”).] Netheads' incentive was to grow network effect and continue innovation at the ends. To achieve that incentive, they wanted the lowest possible barriers to the expansion of the network. The solution was settlement-free interconnection, devoid of complicated Bell accounting. A paper by Lyman Chapman and Chris Owens describes how the arrangement came to be:
In modern terms, we would say that the customers of one ISP (ARPAnet) could not communicate with the customers of another ISP (CSNet), because no mechanism existed to reconcile the different Acceptable Use Policies of the two networks. This disconnect persisted as both sides assumed that any agreement to exchange traffic would necessarily involve the settlement of administrative, financial, contractual, and a host of other issues, the bureaucratic complexity of which daunted even the most fervent advocates of interconnection—until the CSNet managers came up with the idea that we now call “peering,” or interconnection without explicit accounting or settlement. A landmark agreement between NSF and ARPA allowed NSF grantees and affiliated industry research labs access to ARPAnet, as long as no commercial traffic flowed through ARPAnet.
[Chapin 2005 at 9] [Norton Chap. 8]

NSF followed CSNET's example for interconnection settlements; interconnections between NSFNET and regional networks was on a settlement-free basis.  [MacKie-Mason 1993 at 18 (“The full costs of NSFNET have been paid by NSF, IBM, MCI and the State of Michigan”).]

Commercial networks emerged in the early 1990s, but they could not exchange traffic through the academic NSFNET. On the one hand, Advanced Network Services(ANS), the contractor that operated the NSFNET, established a commercial backbone service and offered to sell interconnection to nascent commercial networks. ANS had all of the NSFNET clients as end-users including regional networks and academic networks; ANS as the largest network could leverage network effect. But the other commercial networks were not interested in paying ANS for the right to access end-users or helping ANS become the AT&T-monopoly of the Internet. Instead they established the Commercial Internet eXchange (CIX) and exchanged traffic on a settlement-free basis. For these early commercial networks, connectivity was paramount and growth of access services was king. [Brock, Economics of Interconnection at ii ("Commercial Internet service providers agreed that interchange of traffic among them was of mutual benefit and that each should accept traffic from the other without settlements payments or interconnection charges. The CIX members therefore agreed to exchange traffic on a "sender keep all" basis in which each provider charges it own customers for originating traffic and agrees to terminate traffic for other providers without charge.").] First UUNETPSINET, and CERFNET joined CIX. Then Sprint joined. Soon most of the Internet could be reached through CIX. Connectivity grew network-effect which grew the value of the access service that these commercial networks were selling to end-users. CIX become the model of commercial interconnection, while ANS became isolated. [Greenstein 2015 at 81 ("Just a little less than a year later, CIX essentially had everyone except ANS. By the time Boucher held his hearing, ANS had become isolated, substantially eroding their negotiating leverage with others. By June 1992 ANS's settlement proposals no longer appeared viable. In a very public surrender of its strategy, it agreed to interconnect with the CIX on a seemingly short-term basis and retained the right to leave on a moment's notice.)] [Noam 2001 at 63 (""Soon the relative use by the commercial and nonprofit sectors kept shifting, and the power over interconnection moved to the former. By 1993, approximately 80 percent of all Internet sites could be accessed outside the NSFNET structure. CIX blocked ANS traffic from routing through the CIX router, thus depriving ANS users of connectivity to CIX members. Humbled, ANS joined CIX in 1994"")] [Srinagesh at 143 ("In October 1993, CIX, apparently without warning, blocked ANS traffic from transiting the CIX router. At this point, ANS (through its subsidiary CO-RE) joined the CIX and full connectivity was restored.")]. In 1994, ANS' assets were sold off to AOL. [History, Advanced Network Services (2004)] [Salus 1995 at 200]  

In the late 1990s, academic and government networks focused on research, development, and innovation, not commercial competition; they followed settlement-free peering as a simple accounting scheme for interconnection. Commercial backbone providers adopted settlement-free peering as a means of rapidly growing their business plans.

Access networks, which needed to provide full Internet service to their customers, interconnected with and paid transit to commercial backbone providers. Controversy swirled during the late 1990s as the commercial backbones matured their business plans, converting smaller networks that were dependant on the backbone networks' services from settlement-free peers into paying transit customers. Appeals for intervention reached the FCC, which declined to intercede, finding the Internet backbone market competitive.

1968 :: Douglas Engelbart :: The Mother of All Demos

"The Mother of All Demos is a name given retrospectively to Douglas Engelbart's December 9, 1968, demonstration of experimental computer technologies that are now commonplace. The live demonstration featured the introduction of the computer mouse, video conferencing, teleconferencing, hypertext, word processing, hypermedia, object addressing and dynamic file linking, bootstrapping, and a collaborative real-time editor."

Tuesday, December 06, 2016

📽 Silicon Flatirons :: Privacy :: Lorrie Cranor Keynote

Historic Evolution of Internet Interconnection

In the beginning was ARPANET. ARPANET was an end-to-end packet-switched network. ARPANET was The Network, thus interconnection was not a tremendous concern. 

ARPANET’s success begat ALOHANET, SATNET, PRNET and other packet switched networks. It was clear that ARPANET's network protocol would have to be revised in order to facilitate interconnection. In 1972, Vint Cerf and Bob Kahn released A Protocol for Packet Network Interconnection. The design objective of the Internet was to enable interconnection between otherwise incompatible networks, promoting the research and innovation occurring at the edges, and leveraging "network effect." IP made interconnection easy and coordination unnecessary. According to Bob Kahn,
The idea of the Internet was that you would have multiple networks all under autonomous control. By putting this box in the middle, which we eventually called a gateway, it would allow for the federation of arbitrary numbers of networks without the need for any change made to any particular network. So if BBN had one network and AT&T had another, it would be possible to just plug the two together with a [gateway] box in the middle, and they wouldn't have to do anything to make that work other than to agree to let their networks be plugged in.
[SEGALLER, NERDS 2.0.1: A BRIEF HISTORY OF THE INTERNET at 111]

The Internet reflected a culture where connectivity was paramount. With each interconnection of an additional network, the value of the Internet grew. [Carpenter, Architectural Principles of the Internet, IETF RFC 1958,  Sec. 2.1  ("the goal is connectivity, the tool is the Internet Protocol, and the intelligence is end to end rather than hidden in the network. The current exponential growth of the network seems to show that connectivity is its own reward.")] [THE INTERNET'S COMING OF AGE, COMPUTER SCIENCE AND TELECOMMUNICATIONS BOARD, NATIONAL RESEARCH COUNCIL 35 (2001) ("the value placed on connectivity as its own reward favors gateways and interconnections over restrictions on connectivity")] [REALIZING THE INFORMATION FUTURE: THE INTERNET AND BEYOND, COMPUTER SCIENCE AND TELECOMMUNICATIONS BOARD, NATIONAL RESEARCH COUNCIL 3 (1994) (setting forth vision for Open Data Networks, stating in first principle that network should "permit[] universal connectivity.")] [David Clark, A Cloudy Crystal Ball: Visions of the Future, Presentation at the IETF, Slide 4 (July 1992) ("Our best success was not computing, but hooking people together").]

In 1985, the National Science Foundation concluded that the Internet was good, and sought to expand its reach to the greater academic community. Instead of providing the entire end-to-end network, NSF elected to supply a crucial piece: the first dedicated nationwide Internet backbone. The NSFNET interconnected with regional networks, and the regional networks interconnected with local networks. In so doing, NSFNET offered long-distance transit as well as traffic exchange between networks.

Commercial networks concluded that the Internet was good. Commercial traffic, however, could not be exchanged across NSFNET. Therefore, the early commercial networks established the Commercial Internet eXchange (CIX) and exchanged traffic on a settlement-free basis. For these early commercial networks, connectivity was paramount and growth of access services was king. [Brock, Economics of Interconnection at ii ("Commercial Internet service providers agreed that interchange of traffic among them was of mutual benefit and that each should accept traffic from the other without settlements payments or interconnection charges. The CIX members therefore agreed to exchange traffic on a "sender keep all" basis in which each provider charges it own customers for originating traffic and agrees to terminate traffic for other providers without charge.").]

The US Government concluded that the Internet was good, and sought to make it available to all. NSF was tasked with privatizing the Internet. In order to be successful, NSF had to establish a means for emerging commercial networks to exchange traffic. Following the CIX model, NSF built four Internet exchange points, known as NAPs, in Washington, D.C., New York, Chicago, and San Jose. [National Science Foundation Solicitation 93-52, Solicitation for Network Access Point Manager, Routing Arbiter, Regional Network Providers, and Very High Speed Backbone Network Services Provider for NSFNET and NREN Program (May 6, 1993) (setting forth NSF's plan for privatizing NSFNET).] [GREENSTEIN, HOW THE INTERNET BECAME COMMERCIAL at 82 (NAPs were modeled on CIX and "helped the commercial Internet operate as a competitive market after the NSFNET shut down.").]


In 1995, NSF decommissioned the NSFNET and the commercial Internet was born in its image. There were Tier 1 backbone networks (WANs) that provided nationwide or global service, Tier 2 networks (MANs, Metro) that provided regional service, and Tier 3 networks (LANs, Local) that provided access service. Traffic from one end-user to another end-user would travel up the topology from Tier 3 networks to be exchanged at the Tier 1 level, and then travel back down. Within networks was robust capacity moving traffic. [See David Young, Why is Netflix Buffering? Dispelling the Congestion Myth, VERIZON PUBLIC POLICY BLOG (July 10, 2014) (diagramming Verizon network with backbone, metro and local networks)] Between networks was interconnection where capacity could be constrained. Interconnection capacity constituted an aggregation of all traffic from the different end-users, services, and firms to which a network provider offered service. It could become a traffic pinch-point. In order to avoid congestion, interconnection partners would have to cooperate. [See KLEINROCK, REALIZING THE INFORMATION FUTURE: THE INTERNET AND BEYOND at 183 ("Because the network is not implemented as one monolithic entity but is made of parts implemented by different operators, each of these entities must be separately concerned with achieving good loading of its links, avoiding congestion, and making a profit. The issue of sharing and congestion arises particularly at the point of connection between providers. At this point, the offered traffic represents the aggregation of many individual users, and thus cost-effective sharing of the link can be assumed. However, if congestion occurs, one must eventually push back on original sources. Options include pricing and technical controls on congestion; there may be other mechanisms for shaping consumer behavior as well.”)]

Early academic and government networks focused on research, development, and innovation, not commercial competition; they developed a simple accounting scheme for interconnection: settlement-free peering. Early commercial backbone providers adopted settlement-free peering as a means of rapidly growing their business plans. Access networks, which needed to provide full Internet service to their customers, interconnected with and paid transit to commercial backbone providers.

The Internet interconnection market would then undergo seismic evolution. By 2010, large access providers had reestablished a strong position in the network ecosystem, and leveraged network effect and interconnection to implement strategic goals. Broadband Internet access service providers were able to reverse the flow of interconnection settlement fees, going from transit customers to gatekeepers, charging paid peering for access to their end-users. The interconnection market had departed from the characteristics of the early commercial Internet, where backbone networks were king and the market was hyper-competitive, and returned to traditional consolidated network market economics.  [See generally WU, THE MASTER SWITCH: THE RISE AND FALL OF INFORMATION EMPIRES (discussing how communications markets go through cycles of innovation and disruption, competition, and then consolidation and market power).]