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Network Neutrality: Challenges and Responses in the EU and in the US

pdf mise en ligne :12 05 2015 ( NEA say… n° 156 )

LIBRE CIRCULATION DES PERSONNES > Elargissement

The Centre for European Policy Studies (CEPS), invited on Tuesday May 5th to the seminar: ‘Network Neutrality: Challenges and Responses in the EU and in the US’. “ Given the fact that “in Europe, key aspects of net neutrality regulation remain controversial and general opinion still differs on all aspects of net neutrality, even on its definition”, the seminar, chaired by Colin Blackman (Director, Digital Forum Unit, CEPS), aimed to “compare the approach adopted in the US with the current debate in Europe.”

 

J. Scott Marcus (Independent Consultant):

 

How should we define Net Neutrality?

There is a bunch of different definitions and actually it is very hard to find a ‘one size fit all’ definition for net neutrality:

      -. Is it the ability of all Internet end-users to access and distribute information or run applications exercising their choices?

      -. Is it the absence of unreasonable discrimination on the part of network operators in transmitting Internet traffic?

      -. Is it the assurance that all traffic on the Internet is threaten equally, whatever its source, content or destination?

 

Network neutrality could be said to be at the heart of a web of crucial issues that appropriately concern European citizens. Indeed, net neutrality is the heart of a web of public concerns:

We distinguish between Direct and Indirect linkages:

Direct linkages to anti-competitive behaviour: innovation and investment, privacy and data protection, consumer awareness, empowerment, and protection, and freedom of expression.

Indirect linkages to network and information security: broadband policy, Internet governance, and more.

 

What matters when speaking about net-neutrality?

Technical Aspects: Quality of Experience (QoE)

The Quality of service (QoS) parameters and mechanisms are important to enable network operators to design, build and manage their networks, but they are not directly visible to end-users.

Crucial for the end-users, however is the quality that they personally experience during their use of a service.

These Quality of Experience (QoE) requirements are strongly dependent on the application. Some are sensitive to delay.

E-Mail has little sensitivity to packet loss and delay.

Real-time two way Voice over Internet Protocol (VoIP) tends to be highly sensitive- delays greater than some 150 msec cause problems.

Real-time two-way videoconferencing is similarly sensitive, and with greater bandwidth consumption.

One-way video may or may not be sensitive, depending on user expectations for how quickly the stream starts (zapping time).


Economic background of network neutrality

At least three distinctions:

Quality differentiation and price differentiation are well-understood practices. In the absence of anticompetitive discrimination, it generally benefits both, producers and consumers.

Another view: a two-sided market:

Internet can be thought as a two-sided platform, with network operators serving d a platform connecting providers of content with consumers. Disputes are only on how costs and profits should be divided between the network operators and the two or more sides of the market

Economic foreclosure: Foreclosure occurs when a firm that has market power in one segment attempts to project that market power into vertically related market segments where competition would otherwise lead to efficient outcomes.

 

What do the stakeholder think of this?

The European Commission conducted a public consultation on net neutrality at the end of 2012, with an eye to a legislative initiative in 2013.

 

The public consultation (2012-2013):

·      In the consultation citizens were troubled by most forms of traffic management but more by some forms than others.

·      A one page summary of the consultation appears in the Impact Assessment for the Telecommunication Single Market (TSM), but the Commission never published a comprehensive analysis of the results.

·      The 131 non-confidential textual stakeholders responses were publicly available, and generally thoughtful and of high quality, thus enabling me to complete the public consultation in abbreviated form based on a sample of responses

·     We gratefully acknowledge the Commission’s assistance in tabulating more than 400 multiple-choice (citizen) responses to the public consultation.

 

What did the consultation dealt with?

 

1)Current management practices in Europe.

2)   Appropriate versus inappropriate forms of traffic management.

3)   Opportunities and risks associated with new services.

4)   Deep packet inspection and its implications for pricacu and data protection.

5)   The risk of divergent policy interventions among the Member States.

6)   The path to be taken going forward.

 

 

Consultation results:

·      Most NRAs, ISPs, content providers and consumer’s advocates considered traffic management to be appropriate under suitable preconditions.

·      Consumer advocates and other civil society organisations appear deeply troubled by limitations on Voice over IP; but network operators view this differently

·      There was widespread agreement that for a network operator to prioritise its own traffic ahead of traffic for applications that compete with its own services is problematic.

 

European regulatory views:

The Body of European Regulators for Electronic Communications (BEREC) is committed to the open Internet and believes that the existing regulatory tools, when fully implemented, should enable NRSAs to address net-neutrality related concerns.

Berec in his annual report 2013 stated that very few NRAs have reported specific relevant net neutrality incidents. The prevailing approach among Nras is that possible deviations from net neutrality are dealt with on a case by case basis. There is a wide agreement among national regulators that the existing tools enable NRAs to address competition concerns related to net neutrality for the time being.

In the year 2012 instead on his consultation report, Berec stated that regulation should not be unnecessarily intrusive, since flexibility appears indispensable in such a fast-changing environment.

 

Regulation: EU

In the European framework, market power is a key concern. Regulation addresses last mile market power in the fixed network, both for the PSTN (public switched telephone network) and for the Internet, thus fostering competition.

Internet interconnection is generally unregulated to the extend that market power does not seem to be a concern.

During the year 2009, the regulatory framework was revisioned:

 

The ability of end users to access content, applications or services of their choice is now an explicit goal of European policy.

Providers of electronic communication services must inform end users of their practices in regard to traffic, management and provide end users with the right to change providers without penalty if they are dissatisfied with a change in these practices.

 

Differences btw the US and the EU

·      The US regulatory approach to network neutrality responds to different circumstances than those relevant to Europe.

·      The Overall US regulatory approach is partly a cause and partly a response to a very different marketplace.

·      Real consumer choice of an alternative broadband supplier in the US is limited to the point where the threat of consumers switching is no longer felt to constrain the behaviour of network operators.

·     The radical US deregulation of 2002-2005 left the US-FCC with the minimal ability to regulate broadband services; as a result, the US debate has been dominated by issues of legal sustainability rather than by policy goals.

·      The US regulatory approach to network neutrality responds to different circumstances than those relevant to Europe.

·      The overall US regulatory approach is partly a cause and partly a response to a very different marketplace.

·      Real consumer choice of an alternative broadband supplier in the US is limited to the point where the threat of consumers switching is no longer felt to constrain the behaviour of network operators.

·      The radical US deregulation of 2002-2005 left the US FCC with minimal ability to regulate broadband services; as a result, the US debate has been dominated by issues of legal sustainability rather than by policy goals

 

Regulation US:

Telecommunication services are subject to numerous regulatory obligations; information services are subject to few explicit obligations.

Information services were felt not to be subject to market power, so long as basic services were available on a non-discriminatory basis. It was this distinction that historically enabled the FCC to avoid regulating the Internet core.

During the George W. Bush years, the FCC classified broadband access when bundled with Internet service to be an information service (ignoring last mile market power concerns).

Weakened of lifted precompetitive remedies, thus reversing the growth of retail competition for DSL lines.

Lifted non-discrimination obligations.

 

The FCC’s Report and Order of March 12th 2015, goes somewhat further than the 2010 Order (the one which had been overturned by the courts).

NO Blocking: (ISPs) shall not block lawful content applications, services, or non-harmful devices, subject to reasonable network management.

No throttling: (ISPs) shall not impair or degrade lawful Internet traffic on the basis of Internet content, application, or service, or just use of a non-harmful device, subject to reasonable network management.

 

Europe: The Telecoms Single Market Regulation

A messy discussion of the Telecom Single Market (TSM) in Europe was kicked off by a weakly conceptualised European Commission proposal in September 2013.

In April 2014 instead, the European Parliament, just before elections, passed a stripped down version.

Network neutrality was small but important part of the original legislative proposal, but together with mobile roaming is the only portion that appears to have survived the subsequent legislative process.

Commission’s net neutrality concerns focused on inconsistent legislation in the Member States (Netherland, Slovenia), not necessarily on any need for different or stricter legislation.

 

Aspects to consider:

1)   Does the legislative or regulatory instrument used strike the right balance in preventing harmful divergence, while providing appropriate flexibility?

2)   Does it strike the right balance in preventing harmful differentiation, while permitting non-harmful differentiation?

3)   Does it enable prioritisation of services that legitimately need it, potentially including real time voice and videoconferencing over the public Internet, mission critical services (including public protection and disaster relief (PPDR), and transport, and health?

 

Andrea Renda Senior Research Fellow:

 

There is no need to state that the devil is in the detail.

Recently, EU policymakers seem to have become obsessed by the concept of ‘neutrality’ when discussing future digital policy. I see a mounting debate in Europe concerning the extension of neutrality; whatever the neutrality is understood to be (cloud, or other services).

The situation we are facing nowadays at the European level is a situation of pure fragmentation. After 12 years of debate we are still struggling on many points and the progress made was very slow. The first proposed Telecom Packages in the years 2007 and 2009 could be seen as the first steps towards a harmonization of the internal market, and the creation of a Single Digital Market, but they were never implemented. 

Member states in the meanwhile took the lead on this manner, imposing national regulations concerning net neutrality.

Concerning the EU-US debate on net neutrality, it is not clear what is emerging.

The only thing they have at the US level and we don’t have at the EU level is a decision. Indeed there is something strange at the EU level but also at the transatlantic level. We need to be carefully and not rushing, the higher risk is that we end up with totally different regulations on both the sides.

 

One thing that emerges clearly from the FCC rule is the urgency to try to establish a bright line view. The ultimate outcome, indeed, is most importantly depended by the other rules that are already there.

 

Why did we want neutrality in the first place?

 

·      Anonymity of the users: nobody wants it anymore today. Only Anonymous is still in this position. The anonymity of the end users is not a fee on the table anymore.

·      Competition and fair business practices: there might be a problem as market power can emerge at all layers of the internet protection, and thus potentially a large IT giant could exploit superior bargaining strength vis-à-vis ISPs.

·      Innovation: Is innovation slowing down? Are new ideas, products facing more barriers to entry the market?

·     User choice and Openness: End users are not protected against restrictions to content availability and application discrimination applied by platforms located at higher layers.
Openness is thought to be intended as a means, not an end. It would be a mistake to believe that once net neutrality is mandated, the internet would become open, let alone neutral

·      Freedom of expression/Pluralism: Very discussed over the past five/six years. Neutrality at all layers is the wrong answer to this problem, which though is very important. Just try to consider if a neutral search engine foster media pluralism? Personally I don’t think this could work. We need a specific media policy to ensure pluralism, advocating neutrality rules!

 

If we are looking for Net neutrality because of the reasons listed above, we are on the wrong track. In my opinion the reason why we might consider Net Neutrality, as the best option is because it minimizes the implementation cost and regulatory errors.

Moreover when dealing with the next attempt of regulation, we should probably look more at the things from a consumer perspective, what this means is that consumers don’t always want 100% neutrality everywhere, there are other areas that are more important for end users. I’m convinced that we have to look at the whole net neutrality issues also from a more social point of view.

 

Concluding let me state that:

- Yes! there is a way to implement these rules.

- The European Commission should take courage and give a hint to the implementation of these rules.

- We need to think a lot before translating our considerations, into actions. 

P. Zingerle