Actualizado el 17/12/2024
Actualizado el 17/12/2024
'Net neutrality': still a long way from clarityEscrito por Nico Flores el 24/04/2014 a las 19:09:191740
(Manager) Recent developments on both sides of the Atlantic have given fresh impetus to an old debate: the commercial relationship that should exist between online players and Internet service providers (ISPs). The debate looks set to continue for the foreseeable future, with much at stake and heated arguments. The basic questions are, appropriately, the object of public debate, but their resolution depends on more obscure details on which much work remains to be done. Recent developments have caused controversy
The following are just three major developments from the past few months.
* In the USA, in January an appeals court ruled that the Federal Communications Commission (FCC) lacks the authority to require ISPs to observe its now-defunct ‘Open Internet Order’, which banned ISPs from blocking online providers or discriminating between them when prioritising traffic.
* Also in the USA, in February Netflix and Comcast signed an agreement whereby the two companies will interconnect directly to each other, and Netflix will be provided with enough bandwidth to ensure that its customers get a good quality of experience, following several months of reports of poor download speeds. The commercial details have not been disclosed, but it is widely assumed that Netflix is paying Comcast for this.
* In early April, the European Parliament approved in the first reading a set of ‘net neutrality’ provisions that, if enacted, will ban ISPs from blocking or discriminating among content providers. The new rules also restrict the types of ‘specialised services’ that ISPs can offer to businesses needing to reach consumers with quality-of-service technologies, such as live TV, telemedicine or teleconferencing, and require that these be kept separate from the Internet at a technical level.
The debate is far from over. In the USA, the Comcast/Netflix deal generated a public war of words between both sides about who should pay for network upgrades and whether ISPs’ interconnection agreements should be subject to regulation. Meanwhile in Europe, the ink had barely dried on the new proposed regulation text before telecoms association ETNO had called for the new provisions to be revised by the Council of Ministers later this year, arguing that the new rules undermine investment and innovation in networks. Given how much is at stake, and the public debate largely focused on rights, we can expect the controversy to continue for the foreseeable future.
Many of the key questions about net neutrality remain open
Based on our work in this area, we can make three observations about what lies ahead.
The meaning of ‘net neutrality’ is all about the details: The concept of an ‘open Internet’ elicits near-universal support in principle from citizens, regulators and ISPs, but what it means in practice is far from universally clear – and much depends on this. For example, what (if anything) does a ban on ‘discrimination’ in retail Internet access services imply for ISPs’ wholesale interconnection arrangements, or for their provision of ‘specialised services’? The answers to these questions will have a direct impact on ISPs’ business models and ultimately on the future evolution of the telecoms value chain.
The need for regulation to deliver net neutrality is still in debate: Opponents of net neutrality often argue that the Internet is likely to remain sufficiently ‘neutral’ without the need for regulatory intervention. The argument is that operators will be ‘disciplined’ by their subscribers, who can ‘vote with their feet’ and switch providers if their ISP visibly discriminated against key online services (arguably, this might apply more in Europe than in the USA, given the different levels of competition in retail broadband service). However, this is only speculation; in an alternative scenario, the Internet might evolve to a model similar to pay TV, in which carriage negotiations lead to confidential commercial agreements between the parties, occasional ‘blackouts’ and a different set of content offerings available through each operator. We simply do not know, because this is an empirical question. Whether through formal legislation or regulation, through merger conditions imposed on large operators, or through less-formal statements of policy or intent, policy makers and regulators have exercised at least a degree of public intervention on net neutrality throughout much of the Internet’s commercial history.
The aims of net neutrality per se are also disputed: Before asking whether intervention is needed in order to ‘protect net neutrality’, regulators and policy makers need to ask whether net neutrality is worth protecting, and if so, why. Rhetorically unappealing as it may be, ‘discrimination’ is essential to a wide variety of business models across the economy in which players can freely choose with whom to transact, and on what terms. Some forms of ‘discrimination’ are standard practice for online players – for example, the question of which apps are available in the various connected TV platforms is often a matter of private negotiations – and yet this is rarely considered to be a problem. Barring issues of market power, the case against discrimination is not automatic. An ability to discriminate by ISPs may be a driver of innovation in the telecoms sector even if it is true that – as its proponents argue – net neutrality can drive innovation in the online sector, or facilitate media plurality. Many of the key questions relate to industrial and cultural policy; they lack right or wrong answers but rather call for difficult trade-offs that are ultimately political – and that different countries may approach in different ways.
Nico Flores (Analysys Mason).
During the past few years we have been working with policy makers, regulators and industry stakeholders on these and other related questions. The development of the networks, services and commercial relationships means that the full constellation of issues and their relationships is only gradually coming into view, and it may be some time before the analysis reaches the level of sophistication that today exists in other areas of telecoms. In the meantime, it will be a period of intense debate for policy experts, and of unavoidable uncertainty for industry players and investors. For more information please contact Nico.Flores@analsysysmason.com
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