Should you trust Sir Tim Berners-Lee on net neutrality?
Strand Consult eagerly awaits action from the Juncker team, particularly Andrus Ansip, VP for the Digital Single Market. In our earlier research note, we observed that Ansip in his confirmation speech reiterated the goals first described by Neelie Kroes, but were ultimately not delivered. Kroes lost political capital on net neutrality, and Ansip does not want to make the same mistake. He has come out with in support for the notion even though it contradicts his libertarian roots.
Politicians engage in feel-good, look-good populist rhetoric about net neutrality where emotions substitute for facts, but it’s a slippery slope. As has been revealed on numerous occasions, most recently this week in the US with the FCC rejecting two Congressional bills that would enshrine net neutrality in favor of regulating the industry under the monopoly era framework of Title II, net neutrality is probably a Trojan horse for continued regulation of the telecom industry with the ultimate goal to turn private networks into public utilities.
Recently Ansip launched a blog in which he states his hope that many guest writers will compose articles. His first guest is Sir Tim Berners-Lee who writes that net neutrality is critical for Europe’s future. We understand why Ansip wants to align with Sir Tim Berners-Lee; not only did he invent the World Wide Web, he is European. Given that so many Europeans defect to the US to take advantage of its innovation ecosystem, the number of superstar innovators based in the EU is limited.
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10 reasons not to trust BEREC on net neutrality. The EU process to create Open Internet guidelines lacks transparency, independence and credibility. See video of debate hosted by Slovenian telecom regulator which operators are suing over zero rating.
The Body of European Regulators for Electronic Communications (BEREC) is collecting feedback on its proposed net neutrality guidelines through July 18. While BEREC may claim that it is taking public input, the truth is that the de facto guidelines were made long before the public consultation started. The consultation process is just a formality to make it look like BEREC listens to the people. Substantive change to the guidelines is unlikely, so the only way to undo BEREC’s illegality is to bring attention to its secret processes.
The rules adopted by the European Parliament and subsequent agreement by the European Commission and Council represent an important compromise not to unduly hamper freedom and innovation. At the time of the Parliamentary vote in October last year, amendments crafted by Google-sponsored net neutrality advocate Barbara van Schewick were rejected. However those provisions made their way into the BEREC interpretation through a series of closed door meetings. This represents not only an violation of the EU law, but a circumvention of the democratic process.
At the launch of the guidelines on June 6, BEREC Chair Willem Eschweiler pronounced, “We are not making new rules.” This is reminiscent of the Federal Communication Commission (FCC) Chair Tom Wheeler announcing his effort with the line, “We are not regulating the Internet”. The truth is in the contradiction. The real story is the opposite of what is said.
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Why did BEREC invite Google’s top net neutrality lobbyist to write the telecom rules?
The process to write the implementation guidelines of EU’s Open Internet rules is led by a self-proclaimed net neutrality activist from a non-EU telecom regulator with the help of Google’s top de facto lobbyist from Silicon Valley.
The EU Director General for Competition or DG Comp has floundered for years to bring antitrust action against Google. In spite of half a dozen investigations over the last decade, no meaningful remedies have been exacted on the company. Nearing its 20th birthday, Google enjoys a monopoly not just in search and mobile operating systems, but significant market power in video, comparison shopping, web browsers, web analytics, maps, and email. But the EU only has itself to blame for Google’s monopolies in the these markets. Given the European Commission’s schizophrenic approach to telecom, Google is rational to create and take advantage of fiscal and regulatory arbitrage. While one branch of EU government attempts antitrust enforcement against Google, another strengthens the company’s power through Open Internet rulemaking, a policy that restricts how European providers and startups can compete against Google and serve European end users.
Competition itself would provide better discipline than antitrust enforcement, if EU officials allowed market forces to work. What sounds like a good idea on the surface - neutrality or openness - is actually a subterfuge on competition and a form of regulatory distortion. Hard rules on net neutrality mean that companies cannot engage in differentiation in price, service, or marketing, preventing any company from launching a competitive service to Google. Naturally, the company that garners the lion’s share of the world’s internet traffic wants neutrality because it cements the status quo. Unsuprisingly Google has been a key supporter of the policy and funds a cadre of activists. For Google, the payoff is clear: Its market share is high around the world, and even higher in those countries with net neutrality rules, as independent analytics tools show.
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Net neutrality: Feelings may be justified in the debate, but there is no excuse not to follow an evidence-based approach to regulation
A complex debate
There is no doubt that the net neutrality debate is complicated. Each country considering net neutrality rules has its own definition—from notions that all traffic should move at the same speed across a network to rules that enshrine modular internet architecture to other definitions. In a number of countries, calls for net neutrality have been coupled with arguments for freedom of speech, freedom from censorship, and respect of privacy.
There is no doubt that these human rights are important, but whether these rights are being violated by operators’ traffic management practices is another matter. Making any net neutrality rule should be based on sound, verifiable evidence of consumer harm. Strand Consult has studied this issue in depth in various countries and has produced a report titled Understanding Net Neutrality and Stakeholders’ Arguments. This research note provides some background on how the debate has evolved in the US and the Netherlands, two countries with net neutrality rules.
What is good regulation
The 10th Anniversary Edition of the Telecom Regulations Handbook published in 2011 for the world community of telecom regulators, observes, ”Regulation has potentially high costs. The regulatory process is inherently time consuming to administer and requires considerable expenditure of resources. In addition, regulation can have unintended consequences which may be detrimental to customers and the ‘public interest’. No matter how capable and well intentioned regulators are, they will never be able to produce outcomes as efficient as a well-functioning market. . . Where regulation is necessary, regulatory forbearance is the key to good outcomes. . . In other words, the concept of regulatory forbearance rests on the goal of a gradual removal of ex ante regulation and an accompanying increase in the use of general ex poste competition regulation. ”
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The moment of truth – a portrait of the fight for hard net neutrality regulation by Save The Internet and other internet activists
The report “The moment of truth – a portrait of the fight for hard net neutrality regulation by Save The Internet and other internet activists” also shows how activists working in concert with European telecom regulators succeeded to circumvent the EU’s democratic process. While the three branches of EU government may have officially agreed on a set of rules intended to balance stakeholders' interests, the BEREC guidelines introduce new terms and provisions not found in the legislation, effectively creating new rules.
Given the deep disappointment among Europeans with the EU, Brussels is desperate to make any seemingly consumer-friendly policy. It proffers net neutrality rules as a way to “guarantee the Internet as an engine of innovation” even though it has no empirical evidence for this claim. EU governments spend approximately €150 billion annually on innovation and growth policies but have no systematic way to determine whether these policies work. Unwittingly while Brussels may see net neutrality as a short term win, it only adds to the continued resentment of Europeans who see the EU bureaucracy as disconnected, ineffective, and unaccountable in their decisions. The report also shows why telecom operators have failed for their lack of compelling thought leadership and coalition building.
Contact us to get your free copy of the report “The moment of truth – a portrait of the fight for hard net neutrality regulation by Save The Internet and other internet activists”. Strand Consult wants to share its knowledge with you. We believe that the press and especially telecoms regulators fail to see the actors and issue critically and are uninterested in empirical evidence in policymaking.
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