Wednesday, May 14, 2014
Nico Van Eijk, Institute for Information Law (IViR, University of Amsterdam), has published The Proof of the Pudding is in the Eating: Moving Away from Ideology, Putting Net Neutrality in Practice. Here is the abstract.
The Netherlands is among the few countries that have put specific net neutrality standards in place. It was the first country to do so in the European Union. Contrary to the original European approach, which lacks a material implementation of net neutrality principles, the Dutch parliament decided to take a firmer position and introduced a quite detailed regime on net neutrality. Providers of public electronic communications networks via which Internet access services are delivered and providers of Internet access services shall not hinder or slow down applications or services on the Internet. There is a limited, but important group of exceptions to this rule. Hindering and slowing down Internet traffic is allowed: a. to minimize the effects of congestion, whereby equal types of traffic must be treated equally; b. to preserve the integrity and security of the network and service of the provider in question or the end-user’s terminal; c. to restrict the transmission of unsolicited communication (spam) to end-users, provided that the end-users have given their prior consent for this to be done; and d. to implement a legislative provision or court order. Another very important net neutrality principle was based on incidents of blocked applications such as Skype and on the announcement by mobile operators that they would start charging for applications. The Dutch net neutrality provision also forbids providers of internet access services to charge for internet access services dependent on the services and applications which are offered or used via these services.
The new proposed European rules on net neutrality (as part of the new regulatory package (to be adopted before this summer)) borrow much from the Dutch example. However, are the Dutch rules a success?
The no-blocking/no-charging restriction had an immediate effect on the market, in particular the mobile one. Originally, the mobile providers intended to block or to charge for specific services (Skype, WhatsApp), but they had to abandon the idea due to the new net neutrality rules. This led to a new subscription structure, with a substantially increased emphasis on data traffic. Data bundles are priced more specifically, and existing packages with unlimited data access have been replaced by packages with a specific size (data caps) and speeds. In fact, voice is no longer a dominant factor in the pricing models.
But how did these changes affect the consumer? The no-blocking/no-charging rule more or less killed traditional texting (SMS), but it is too early to tell whether net neutrality has had an effect on the overall costs for mobile broadband. However, a recent study seems to indicate that the overall price levels and options in the Dutch market are in line with the prices in other European countries. We might assume that voice income has been substituted by data income without having a substantial positive or negative effect on the monthly subscription fees.
The new neutrality rules had no effect on the fixed market. Internet service providers on cabled networks have no history of blocking traffic. Only one incident with the slow-down of traffic was reported but turned out to be a ‘misunderstanding’. One should keep in mind that the Dutch fixed broadband market is very competitive with the incumbent operator offering high-speed DSL or fiber and the CATV operators offering high-speed broadband.
The regulator in charge - the Authority for Consumers and Markets - took a first decision on applying the new rules. Passengers on most trains have free internet access. The service, called T-Mobile HotSpot in de trein, is provided by T-Mobile, based on a contract with the Dutch Railways. In order to get the signal into the moving trains, T-Mobile uses its 2G/3G mobile network. The architecture of this network is focused on voice services and on keeping them available under varying circumstances. The rest of the capacity is used for data traffic. Now, the data service (needed for internet access) fluctuates strongly on board, due to the rapid velocity of trains. To counter this, T-Mobile has decided to block all peer-to-peer and streaming services (YouTube, Netflix) and to slow down file transfer. Without these measures there would be congestion and a lack of capacity. Users, having to share the available connection and capacity, would not be able to use the connection in a practical manner.
In two other cases the Authority is investigating the bundling of data packages with free services (i.e. a mobile subscription with ‘free’ access to Spotifiy’). To deal with these cases new guidelines are being drafted by the ministry involved. These guidelines will be out for consultation in April and should enter into force before the summer. New case decisions are expected in June/July/August.
The paper will - in a critical way - examine the Dutch and the new European net neutrality rules, describe the effects on the mobile/fixed market and discuss the cases under investigation. As these case are some of first ones where regulators have been forced to take action in the context net neutrality, the paper will offer an unique added value and contribute to a more realistic approach.
Download the paper from SSRN at the link.