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.
However we believe that Sir Berners-Lee’s motivation to support net neutrality is not entirely virtuous. As in detailed in an article by Watchdog.org, Berners-Lee is a both a board member and beneficiary of the Ford Foundation which has poured $46 million into net neutrality activism around the globe in recent years. Apparently it’s a small price to pay for the world’s 2nd largest foundation to protect its tech-heavy investment portfolio with large holdings of stock in companies such as Google, Amazon, and Microsoft, companies which stand to gain from net neutrality regulations. These are also the companies EU authorities are targeting for tax evasion and monopolistic practices. We predict that the EU attempting to pursue parallel tracks of simultaneously rewarding and punishing these companies is bound to collide.
In any case, Sir Berners-Lee has made an extraordinary achievement, and we should celebrate him for it. But it doesn’t mean that he should manipulate the facts or portray net neutrality as holy religion. Human rights, innovation, and progress are very important, but they have little to do with net neutrality, which is just a clever way to privilege one set of companies over another.
Openness on the web is not under threat. Europeans consume more data than ever on increasingly faster broadband speeds. The fact of the matter is that the Tim Berners-Lee’s World Wide Web which was the killer app on the Internet is now being supplanted by mobile applications and streaming video. Companies that designed their offerings for an Internet dominated by the web, fear losing out as users switch to different platforms.
The academic literature on net neutrality, some 7000 articles, is largely theoretical. The authors of the most cited articles disagree about whether rules are even needed. Though there are articles based on game theory models that favor net neutrality, their authors largely agree about the ambiguity of the results. These models have not been tested with real data, and they have difficulty to reflect the complex reality of today’s internet ecosystem.
EU authorities should be commended for taking the necessary steps to investigate the need for net neutrality, but their official reports do not provide support for more rulemaking. EU competition authorities found no evidence of violations on content or interconnection networks. The Body of European Regulators for Electronic Communications (BEREC) noted in its latest report, “For the time being, the situation appears to be mostly satisfactory and problems are relatively rare.“ The EU Parliament’s own report concludes that “Preventative measures for threats that may or may not appear risk doing more harm than good.”
We can observe that net neutrality is already delivering unintended consequences in the Netherlands. The law was supposed to unleash a flowering of Dutch content, but instead it creates the “Netflix effect”; Dutch networks are now clogged by a single American player. When Netflix launched in the country, its traffic ballooned from zero to 20 percent of all downstream network capacity almost overnight with just a few subscribers. Imagine what happens when Netflix reaches its goal to grow subscribership to one-third of all households. Literally the entire network will be taken up by its video streams.
By hijacking the language of net neutrality, Netflix hopes to win price controls on interconnection (and fiats to require operators to place its servers in their facilities) to solidify its market position against other video upstarts. Netflix has lobbied the FCC hard and got its wish: the definition of broadband was changed to suit its desire and interconnection is now part of net neutrality, something that was never regulated before. Indeed net neutrality originally defined was only about last mile access, but Tim Wu’s brilliant concept is an empty vessel that lends itself to unlimited rebranding for the crise du jour.
Europeans engage with many kinds of online firms, access networks, search engines, social networks, app stores, websites and so on. All have the ability to behave in discriminatory ways. A true neutrality regime would demand non-discrimination rules on all digital technologies with the same protections for consumers across the board. To make antidiscrimination rules against just one type of firm is discrimination in itself.
Net neutrality activists like to claim that the Internet is better and different than other technologies and is therefore subject to special protections, even if it means equating free speech and human rights to their favored technology.
The fact remains that two-thirds of the world’s population is not online today. For these people, primarily in the poorest parts of Africa, Latin America, and Asia, freedom of speech is still about basic access to radio, TV, and print. But analog technologies are not cool for most net neutrality advocates, so they ignore these media where the greater part of the world’s free speech violations occur. Few of these activists said anything about the recent atrocity against the Charlie Hebdo magazine in Paris.
What net neutrality advocates do instead is lobby against zero rating, a business model that helps truly impoverished people access the Internet with their mobile phone. Programs like Facebook’s Internet.org allow grandmothers in India to message with their grandchildren in the UK. Banning the ability to communicate with loved ones is cruel.
Europeans already have strong Internet protections under existing telecom laws, and telecom regulators already have the power to enforce and punish discriminatory activities. In lieu of making redundant laws, the Nordic countries maintain a multi-stakeholder dialogue on net neutrality. This has kept violations away for more than five years. On top of that, the process involves a variety of stakeholders, building community in a collaborative way.
Is net neutrality is critical for Europe's future? There is no empirical evidence linking net neutrality to economic growth. The far greater issue is the digital skills gap. Almost 40 percent of Europeans don’t have the skills they need to participate in the digital economy, and there are one million vacancies on the continent as a result.
It’s understandable to desire protections in the digital society, but a packet is not a person. Efforts should be focused to empower people, not micromanage networks. The most effective way to ensure human rights is to ensure quality education and employment opportunities for all Europeans. The jobs of the future require the skills to innovate differentiated services in the Internet of Things and on smart networks like 5G, not the dumb networks desired by net neutrality.
As an engineer Sir Berners-Lee should appreciate the need and freedom to innovate dynamic systems such as the Internet. Net neutrality is conservative argument to keep things the same. With more than a decade of recession, most Europeans want things to improve.
Strand Consult has spent significant time and resources to to understand the net neutrality debate in various countries. The valuable knowledge is gathered in Understanding Net Neutrality and Stakeholders' Arguments. This report will ensure that Strand Consult’s customers are prepared to engage in this high stakes debate.
To purchase this invaluable report and participate in a workshop with Strand Consult, contact Strand Consult