Depending on how the net neutrality regulation is implemented, it could have some serious adverse consequences, particularly for consumers, writes Robert Kenny.
Robert Kenny is an independent adviser and founding member of Communications Chambers, a consultancy specialising in telecoms, media and technology.
30 April, the European net neutrality regulation (EU 2015/2120) came into effect. Given the impassioned debate over net neutrality, you might think this would be a momentous occasion. In practice almost nothing will change – yet. This is because we don’t yet know how to interpret the regulation. Depending on how it is implemented, it could have some serious adverse consequences – particularly for consumers who were supposed to be the beneficiaries.
The regulation aims to ensure that ‘consumers have access to the online content and services they wish’ and that start-ups are ‘able to compete on an equal footing’. It seeks to secure these laudable but somewhat abstract objectives by imposing a range of technical requirements – on the treatment of traffic, on how much capacity to provide, on pricing and so on.
However, the language is so broad that it could easily become sweeping and blunt restrictions. BEREC, the European telecoms regulator group, has the difficult challenge of creating a single set of guidelines which meet the regulation’s objectives, while preserving as much of the Internet’s flexibility as they can.
Regarding the treatment of traffic, the regulation says that ISPs “shall treat all traffic equally”, with an exception for “reasonable” traffic management (a slippery word), based on “objectively different technical quality of service requirements”. Traffic management generally involves prioritising certain types of traffic which are particularly sensitive to delay or loss. This optimises the quality of experience of customers, which is essential as we increasingly rely on the Internet.
As demand ramps up (particularly on mobile networks) traffic management is going to need to become ever more sophisticated. Europe aspires to be a leader in ‘5G’ – the next generation of mobile. The UK’s 5G Innovation Centre suggests that 5G networks will optimise traffic flows based on “user and network context information such as where, when, why who and what is being requested”. This seems completely incompatible with traffic management limited to technical requirements. Thus strictly drafted net neutrality guidelines may hamper Europe’s 5G aspirations.
Not only is there the risk of missed opportunity, there also is downside risk. Some argue that as the Internet grows ever bigger and the nature of traffic changes, we are facing critical challenges in maintaining quality, which will require a fundamental rethink of how traffic management is done. It would be perverse if regulations designed to preserve the Internet actually precluded us from maintaining it and resulted in lower quality at a higher cost for consumers.
In addition to hampering traffic management, the requirement to treat traffic equally will block some value added services, such as parental controls (unless the guidelines include an exception). In the UK, citizens’ groups have campaigned strongly for such controls to be available, and it is hard to see why consumers should be deprived of this choice.
Another delicate area is ‘specialised services’. Evermore diverse traffic is now being put on the Internet – think consumer video, e-health applications and agricultural humidity monitors. But more diverse applications may need more diverse network performance. Some applications may be more demanding, others may (to secure a lower price) prefer lower quality. Specialised services meet these distinct demands.
In theory, the regulation allows for specialised services, but only if they are “necessary”. Here too is a minefield for the guidelines. Interpret “necessary” too strictly and you may paralyse innovation, preventing the development of the next European M2M platform or connected home solution, say. This may not be so bad for the most popular and well known social networks, search and content companies (who already optimise their own services via intensive investment in content delivery networks), but new markets and applications might never emerge, to the detriment of Europe’s quality of life and productivity.
There is also ambiguity over what “commercial practices” are permitted – encompassing any charging which is dependent on the content or service being accessed. One example is ‘zero-rating’, where consumers get free access to certain sites or services – particularly valuable to those consumers on limited mobile plans. Existing examples which guidelines may block include free access to Wikipedia, education and healthcare services. Also in the cross-hairs are offer bundles, such as T-Mobile’s BingeOn. BingeOn plans include unlimited video, resulting in lower charges and doubled video consumption, to the benefit of consumers – and likely video providers too.
Restrictions on “commercial practices” could discourage operators from proposing new models and provide regulators with a wide remit to determine acceptable pricing and bundles. Such decisions are challenging, since it is very difficult to predict the impact of untested new business models. Certainly some commercial practices could infringe basic principles of competition law, especially if a dominant company was involved – but competition law is already in place to address such cases.
The objectives of net neutrality – free-flowing information and unfettered innovation – are unimpeachable. But to date, threats to these have been largely theoretical (particularly in Europe, where fixed and mobile markets are more competitive than in the US), and the great majority of abuses have been remedied without the need for specific regulation. Thus the benefits of heavy regulation are uncertain. But the costs are likely to be real, particularly given the rapid changing, uncertain future of internet services. It’s as if we asked tennis players to wear plate mail to be on the safe side – it’s unlikely to do much for the quality of the game.
Europe risks tying itself in knots making one component of the ecosystem “neutral”, leaving its citizens looking longingly at “net liberal” countries, where customers have more choice and new business models are emerging.
The guidelines are due at the end August. As the rest of us sun ourselves on Europe’s beaches this summer, spare a thought for BEREC’s drafters, toiling away to craft language that is compatible with the regulation but targeted at the real risks of harm. If successful, we will see improving quality, more choice and more innovation. If they fail, they will have failed consumers, and jeopardised Europe’s digital future.