Net Neutrality Not a Serious Issue Outside America

By Paul Budde
Paul Budde

Most countries, don't have to fear internet quality problems in the same way as would be possible in the USA.

The US competition watchdog has little power to hold telcos accountable to the nature of their broadband services. Back in 1996 broadband was classified as a content service and not a telecom service.

So, for example, if a telco wants to provide preferred access to Google, it can sell them a superior broadband services which could create a two speed internet service one for those who pay the premium — their services will get priority and higher speed — and those service providers who don't pay and could be relegated to the slow speed internet lane.

Because of the lack of regulatory protection concerning broadband, the US — under President Obama and the FCC Chief Tom Wheeler — created a bandage solution in the form of net neutrality, aimed to protect consumers against telcos exploiting this 'content' situation — these protections have been removed.

The incumbents were against Net Neutrality as that would stop them from exploiting the generous content status that they have, which allows them to stop any serious retail broadband competition as they don't have to make broadband capacity available on a wholesale basis.

The situation in all of the other developed economies is totally different. Broadband is part of the telecoms regulatory regime, and this has created a well-functioning competitive retail market, in Australia for example with over 50 providers.

Competition, not bandage solutions such as Net Neutrality, is the solution to the American problem. If there is sufficient competition, the incumbents can't misuse their dominant position that has the potential to create a two-tier broadband system. Furthermore, net neutrality is rather a blunt tool; one would like to allow providers to create the best possible broadband configuration for the services that they want to develop. Net neutrality rules would make that more difficult.

Even if in more competitive markets, incumbents were able to create a two-tiered access system, and if such a service is deemed to be anti-competitive, the regulator can step in and say and stop them.

As broadband is now again outside the protection of the US regulator (FCC), the big telcos can, if they want, exploit the fast lane/slow lane internet system.

It is clear that under President Trump there is little interest to provide the regulator with the powers to intervene in such situations.

For many years there has been a serious "conflict of interest" within US politics whereby the three major incumbent telcos (who call themselves ISPs) are giving senators and congressmen an incentive to protect their interests. Over $100 million is annually spent on lobbying. The politicians are given this money for community projects etc. Voting against the interest of the incumbents will see an end to such handouts.

While it is important for all countries to keep a close eye on anti-competitive behavior, because of much better functioning competitive markets, it is highly unlikely that such misuse of market power is possible anywhere outside America (in developed economies).

One of the reasons incumbents used to get rid of regulations is that it hampers competition. Being one of the least regulated telecoms markets in the world, the country has dropped on the international broadband ladder. From being in the top three or five, twenty years ago, they now feature around position 15 (depending on what is measured by whom). So that argument doesn't cut it. On the other side, countries, where broadband is treated as telecoms, in at least 15 cases are providing a better broadband service than the ones available in the USA.

The financial market in the USA has reacted subdued to the announcement because telecoms regulations are such a hot political potato, they don't see the current ruling as a final solution. It is highly likely that under a next Administration, new regulations will be introduced and this uncertainty is not stimulating the much-needed investments required in the American telecoms market.


Related topics: Access Providers, Broadband, Net Neutrality, Policy & Regulation, Telecom


Net Neutrality is hardly a blunt tool. Samit Madan  –  Dec 18, 2017 10:32 AM PDT

Net Neutrality is hardly a blunt tool. It's an essential requirement of a free and open internet.

Anyone against it is just playing into the hands of the ISPs & broadband providers who would love to start charging websites differential pricing for faster speed connections.

They've been charging you for each channel you want to subscribe to on your cable / dish tv, they want to do the same for the internet.

Broadband providers haven't innovated or invested in the services and content that they now want to charge website / app publishers for, that's the real story.

And that hoary chestnut about broadband providers not being able to spend on infrastructure because they can't charge sites is complete eyewash, the consumer is paying for the bandwidth already, that in itself should be enough to foster competition. 

It's like the water company charging users for consuming water based on the usage - different prices for bath water, different for drinking water, but at the end of the day it's all the same water!

A lack of net neutrality creates an immense problem for startups and small business. Since they can't afford to pay for speedier access, they never get to compete with the incumbents on an even playing field. Not that competing with Google or Facebook is even possible today given their size, but an innovative service could lead on certain aspects.

Net neutrality isn't a bandage solution created under Obama & Wheeler, it was a codification of the ethos the entire internet was founded on. Here's what the guys who did create the internet have to say about it -