04 May 2015

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A comparison between European and US approaches to net neutrality

By Frode Sørensen, Senior Advisor at the Norwegian Communications Authority (Nkom)

Now that the FCC has published the US net neutrality rules, and the political institutions in EU are struggling to reach a compromise, it is interesting to compare the two approaches on the different sides of the Atlantic. At the same time, on 22 April the SMART Workshop with a net neutrality panel was organized in Barcelona, where these two approached was discussed between Scott Jordan (FCC) and Frode Sørensen (Nkom). This article presents a brief overview of some thoughts seen from the Norwegian side.

Norway and net neutrality

First, a quick introduction to Norway and Norwegian history related to Internet and net neutrality:

Norway has the longest running net neutrality regime in Europe

2009 Norwegian net neutrality guidelines were adopted based on a co-regulatory approach, with clear rules against blocking and throttling of applications (not to be compared to self-regulation which typically only covers transparency, while allowing throttling and blocking).

Norway was the first country outside US that was connected to the Internet

In 1973 Norway (NORSAR) established the first non-US node on ARPANET, the predecessor of the Internet. In the beginning, the connection was primarily used for seismic data exchange, subsequently giving access to additional Norwegian research institutions.

Norway has one of the oldest constitutions in the world which is still in use

There is a strong democratic tradition in Norway. Inspired by the US Declaration of Independence 1776 and the French revolution 1789, the Norwegian Constitution from 1814 was at the time considered one of the most liberal and radically democratic in the world.

This may be mere coincidence, and I will not speculate, although it is a fascinating constellation of historical facts. Anyway, Norwegians today are enjoying an open Internet!

European vs. US approaches

But Europe is a large continent with varying cultures, as well as different approaches to net neutrality. And how do Europe compare with US regarding approaches to net neutrality? There are several significant differences which I would like to address.

Can regulated local loop unbundling ensure net neutrality in Europe?

It has often been speculated whether local loop unbundling in Europe would lead to a significant difference in the need to regulate net neutrality. Unbundling stimulates the establishment of competing providers of Internet access services. This increases users’ possibility to choose a neutral Internet access service.

However, Internet access is not like every other service, since an Internet user is (of course) not communicating with himself. Users need to communicate with other users in the other end, and these users may not be switching to a neutral Internet access service.

Restrictions on Internet access services for some users fragments the Internet, the possibility for user-to-user communication becomes lower, and the size of the market for content and application providers becomes smaller. The network effect is reduced.

Significant level of restrictions of Internet access in the European market

An investigation of the actual level of restrictions on Internet access in the European market, conducted by BEREC in 2012, showed that every fifth fixed Internet connection and every third mobile Internet connection experienced blocking or throttling of applications.

It is interesting to read the analysis by van Schewick in The Atlantic in 2014: "Unlike Internet users in Europe, many of whom are on restricted Internet service plans that ban the use of specific applications on mobile networks, U.S. users have experienced the power of an open Internet—and they are not willing to give it up."

The amount of restrictions was one of the major reasons presented by the European Commission when they in September 2013 proposed a net neutrality regulation.

Europe, despite the European Union, still consists of many strong national states

Furthermore, different national approaches to net neutrality have developed over time. Norway has its co-regulatory approach, while the Netherlands and Slovenia have adopted net neutrality laws. Several member states were considering net neutrality rules before the European Commission proposed the regulation of net neutrality.

After the European Parliament in April 2014 strengthened the proposed net neutrality regulation, the national interests within the Council of EU has led to a significantly weaker proposal which is now negotiated in the trilogue meetings between the Commission, the Parliament and the Council in Brussels.

The most successful content and application providers (CAPs) are US-based

ISPs express worries about increasing power of CAPs, and many major successful CAPs are US-based. This may have led to an impression that there is a particular need to protect European ISPs against US CAPs. However, blocking and throttling of content and applications would not lead to any stimulation of European CAPs!

The ISPs have a gatekeeper role towards their subscribers. And the termination monopoly problems leading to sector specific regulation of traditional telecoms may revive in new fashions for providers of Internet access services due to the emergence of powerful deep packet inspection techniques. Therefore, net neutrality is important for innovation among European CAPs that can compete with US-based CAPs.

European telecoms have shown major success in mobile communications

The European Telecommunications Standards Institute (ETSI) developed the GSM mobile telephony system, which became widespread over the world. Furthermore, its successor the 3G-system UMTS, standardized by 3GPP, has also taken over as a prevailing technology for the previous US-dominated 3GPP2 standards, while evolving into LTE (“4G”).

US on the other hand, have a stronger tradition in IP technology, being “the cradle” of the Internet. This may have led to a better position in the communication technology development where IP has become “the winner”, as well as a better understanding of how to adapt to this new paradigm which is replacing traditional telecommunications.

How come US citizens show such enthusiasm in protecting net neutrality?

What is the reason for the incredible strong engagement of the US population in the public net neutrality discourse? There seems to be a more relaxed attitude to net neutrality in Europe, although there are some strong advocates on this side of the Atlantic as well.

Can this be understood in the context of the First Amendment to the US Constitution and the strong position of freedom of speech in the US society? Is the “Internet freedom” simply highly valued by US citizens as a prolongation of this well-established constitutional principle?

Fundamental elements of net neutrality regulation

How does this difference in background between Europe and US influence the proposed net neutrality regulations on the different continents? This may be difficult to prove, but the differences in the regulations are anyway interesting to investigate.

Application-agnosticism

Equal treatment of traffic from different applications, so-called application-agnosticism, is the essence of net neutrality, and therefore it should be expected that this is safeguarded in such regulation. Non-blocking and non-throttling are obvious characteristics of both proposed regulations reflecting this.

The rules from FCC are even clearer and add non-prioritization to these characteristics. Regarding the European proposed rules, during the legislative process in the Council, application-agnosticism was waived by the introduction of a provision to “equally treat equivalent types of traffic”, seemingly allowingclasses of traffic on the Internet!

Reasonable traffic management

Net neutrality is of course not regulated to give obstacles to efficient operation of networks or protection of citizens, even though stakeholders sometimes present such travesty. To accommodate such measures, reasonable traffic management is allowed. A typical example is preservation of network integrity and security.

The proposed European rules have fairly well designed exceptions for reasonable traffic management. However, the exception for handling of network congestion may be too broad, since it does not prescribe that the exception should only be granted when application-agnostic methods are not usable. Traffic overload can in many cases be fully handled my application-agnostic methods.

Specialised services (non-Internet access services)

Specialised services, also referred to as “non-Internet access services”, provide extensive exceptions from net neutrality. Therefore there must be clear rules regarding which services that can be approved as specialised services. First, the traffic from such services must be isolated from the traffic on the Internet, and second, specialised services must not be provided at the expense of Internet access services.

Regarding the former, the proposed European rules remain unclear, while the US rules say that “these services use some form of network management to isolate the capacity used by these services from that used by broadband Internet access services”. Regarding the latter, the European rules say that sufficient capacity shall be available so that “the availability and quality of internet access services for other end-users are not impaired in a material manner”, a wording actually allowing degradation of the quality of the Internet access service!

Specialised services use built-in QoS mechanisms, and don’t need protection against Internet access services. It is the other way round, Internet access services need protection against specialised services!

Zero-rating and price discrimination

Recently, there has been much attention to data caps and zero-rating, in particular for mobile Internet access services. Simple data caps can be application-agnostic and would then not lead to concerns regarding net neutrality. However, in case of exempting particular applications from the cap, so-called zero-rating, would obviously not be application-agnostic.

In the legislative net neutrality initiatives on both sides of the Atlantic, this question is not resolved yet. However, the US net neutrality rules seem to acknowledge that this will need particular regulatory attention, and indications are given that such matters will be scrutinized on a case-by-case basis.

In Europe, a few national initiatives have tackled the issue. In the Netherlands and in Slovenia, the regulators have taken concrete decisions against zero-rating based on the national laws. In Norway as well, it has been clarified that zero-rating would be regarded as a breach of the national net neutrality guidelines. However, the legislative process at the European level, has not resolved this issue yet.

Summing up, net neutrality has been an important regulatory question in Nkom’s work for many years, and it is interesting to see how the relevance of net neutrality has grown in Europe lately. But the public debate never reached the same temperature as in the US, while FCC has taken a clear position to strengthen net neutrality through its new rules. The question remains, will Europe take a strong stance to net neutrality and achieve similar safeguards for an open Internet, or will we be lagging behind the US?

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