Has net neutrality been neutered at last?

Tony Poulos

Has net neutrality been neutered at last?

January 20, 2014
As featured on TM Forum's the Insider blog.

In a win for America's biggest telecoms operators, a court has struck down as unconstitutional a 'net neutrality' rule that barred broadband internet providers from managing and controlling traffic over their own networks.

The US appeals court ruled that the Federal Communications Commission (FCC) lacked the authority to impose the rule requiring high-speed internet firms to treat all web traffic equally. And why should they?

When telecom giant Verizon took its case to the court it generated a storm of controversy between those pro and against ‘net neutrality’ or an ‘open internet.’ It argued that the FCC lacked the authority to interfere with its business, and that Congress had never decided it and companies like it were regulated utilities or ‘common carriers.’ Only these are effectively barred from discriminating against different online services, a major point the 81 page ruling confirmed.

Only a year ago, those against ‘net neutrality’ claimed that it was designed to protect big technology companies like Google, Amazon and Netflix that had become successful because of the lack of internet regulation but that now wanted to protect their turf from new competitors.

Those in favor claimed it gave a handful of companies that dominate broadband the ability to control services and limit innovative online services. In a strange twist, each side also accused the other of adopting the position of totalitarian regimes such as Iran and China by favoring limitations on internet sites that people can view.

What all parties failed to observe was that the internet was doing just fine without any form of restriction or regulation. Why should broadband network operators, be they fixed and mobile, not be able to offer differentiated service to their customers? If they choose to charge different prices for different service levels then the customers will decide if they are willing to pay more for faster or higher quality connectivity.

In a market dominated by one or two major players then there may be a case for rules to prevent collusion and price-fixing, but in the US market there is still plenty of choice and there is nothing stopping a new player from rolling out their own network if they can justify the investment, just as Google has been experimenting with in some markets.

Unless there is one national broadband network operated by government or quasi-government bodies the concept of a an 'open internet’ will always be determined by the market itself. It would be inconceivable in any other retail sector to stop a supplier from offering different types of service with different price levels.

If you want a front row seat at the basketball you pay more for it. If you want the gold bundle from your cable TV supplier you pay more for it. If you want to drive on the super fast tollway instead of the national highway, you pay more for it. And if you want a Ferrari instead of a Fiat, you pay more for it. So why is the internet any different?

Who has deemed that the internet should be any different to any other service and be open to everyone at the highest speed possible at a set price? And for those that build, operate, and invest in networks to not be able to sell access to whomever they like?

The arguments in favour of ‘net neutrality’ are almost as emotive as those emanating from some quarters after the announcement of ‘sponsored data’ plans by AT&T in the U.S. that enable certain mobile traffic to avoid being counted toward a subscriber’s data cap and paid for by suppliers of the content or apps.

Maybe countries like the Netherlands will need to review their urgency at implementing ‘net neutrality’ legislation after the latest US decision. One wonders if there has been any analytical review done comparing internet service and customer satisfaction in markets with and without regulation.

One thing is for certain, if regulators see any abuse of the 'open internet' they will be quick to fire up the ‘net neutrality’ battle once again, but probably not before disgruntled customers move their allegiance to a more favorable operator. After all, isn’t that the essence of any free market, capitalist economy?
 

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Tony Poulos

 

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