Net neutrality: to regulate or not to regulate

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• Net neutrality: to regulate or not to regulate
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This article was featured in Tech Bytes, our technology law newsletter.

Many suggest that ISPs should observe "net neutrality" and carry services such as video streaming and music downloads without discrimination. In reality though, ISPs make choices about how their network capacity is used. They limit domestic users' downloads and may impose measures to limit certain services. ISPs could in fact do the opposite and prioritise some traffic, perhaps video streaming from chosen partners. Content providers are generally against this approach, perhaps fearing they will need to pay for network capacity, a cost presently borne by their users. The question of whether ISPs should be able to regulate network capacity for specific content is at the centre of the net neutrality debate.

The regulatory approach to net neutrality within the EU so far has been light-touch.  The European Commission's stance has been to wait and see whether effective competition and consumer choice, underpinned by clear information and the ability for consumers to switch provider, is sufficient to ensure an open internet. That approach may change, depending on the outcome of a fact-finding investigation by BEREC (the Body of European Regulators for Electronic Communications) due to be published by the end of this year.

The European Commission asked BEREC, in April 2011, to look into practices that affect net neutrality following earlier findings that operators were not affording equal treatment to data across their networks.  Among the discriminatory practices causing concern were instances of P2P file-sharing or streaming services being throttled, as well as mobile providers blocking or charging extra for the provision of competing telephony services, such as VoIP.  The Commission has said that it will consider introducing guidance or more stringent measures, depending on the extent of the problem. 

The absence of a harmonised EU approach to net neutrality leaves room for individual Member States to take different approaches.  Take for example, proposed changes to telecoms laws in the Netherlands which, if they come into force, will prohibit ISPs from differentiating between internet traffic and set boundaries around permitted use of traffic management measures.  In contrast, Ofcom's approach to net neutrality, set out in a statement issued on 24 November 2011, chimes with the Commission in its reliance on effective competition.  Ofcom's aim is for open internet principles to co-exist with managed services, as long as managed services do not put such a squeeze on network capacity that service standards on the open internet fall to unacceptable levels.  If that were to happen, the regulator would consider exercising its powers to impose minimum service standards. 

Meanwhile, in the US, and after a protracted process of legal challenges and political machinations, the Federal Communications Commission's Open Internet Rules took effect on 20 November 2011.  The rules apply in full to fixed broadband providers, with a "lite" version for mobile broadband providers; a distinction that has already drawn a legal challenge from consumer group Free Press. The FCC will also have to defend a claim from Verizon that, in asserting jurisdiction over internet access services, the regulator is acting outside of its authority.  Verizon's claim will be heard in the US Court of Appeals, District of Columbia. The same court ruled in April 2010 that the FCC did not have authority to censure Comcast for blocking P2P sites in violation of the FCC’s then net neutrality policy.

The EU debate is perhaps lagging behind that in the US, but EU regulators are waking up to the question of whether internet connectivity is a vital utility like water or electricity, requiring further regulation to ensure fair access for all. We can expect more from Europe on regulation of the internet and a developing approach on net neutrality.