EC Says It Will Regulate Net Neutrality Only if Proof of Persistent Problems Emerges

The essence of net neutrality and the issues underpinning the debate in Europe primarily concern how best to preserve the openness of the Internet and ensure that it can continue to provide high-quality services to all and allow innovation to flourish, while upholding fundamental rights, the EC document said. Most of the discussion centers around what constitutes reasonable traffic management, it said. It’s widely accepted that while network operators need some management to ensure the networks are used efficiently, degrading or blocking competing services runs against the Internet’s open character, it said. Another key element of the debate is how to give consumers clear, full information on possible service limitations or traffic management to allow them to make informed choices about providers, the EC said.

Blocking or slowing lawful traffic was a key issue raised during a public consultation and summit, the EC said. In addition, the Body of European Regulators for Electronic Communications, which surveyed its members last year, reported some concerns from users and content providers about speed limits on peer-to-peer file-sharing or streaming and blocking or charging extra for VoIP services in some mobile networks, it said.

Commentators brought up other potential problems, the EC said. Some worried that blocking, currently limited to VoIP, could be extended to other services such as TV broadcasting on the Internet, it said. Others said charging structures will favor major players who can afford to pay for prioritized data, and if different operators block or degrade different services, consumers could have trouble accessing the services of their choice through a single Internet subscription, the report said.

But “the Commission does not have evidence to conclude that these concerns are justified at this stage,” it said. It asked BEREC to look into several issues, including barriers to switching service providers, blocking, throttling and similar commercial practices, transparency, quality of service and competition issues relating to net neutrality such as discriminatory practices by a dominant player. The report also stressed that revised telecom rules, effective next month, should be given a chance to work before more measures are enacted.

If the investigation, due by year’s end, turns up evidence of problems, the EC will decide whether additional guidance on net neutrality is needed, it said. Persistent, serious problems could result in rules against unjustified traffic differentiation being slapped on all ISPs, regardless of market power, it said. That could include a ban on blocking lawful services, it said.

The report is “extremely disappointing” because it rules out any immediate actions against telecom operators who continually narrow access to the Internet, said French citizens’ advocacy group La Quadrature du Net. It accused Digital Agenda Commissioner Neelie Kroes of knuckling under to heavy pressure from the telecom lobby.

The EC statement contrasts unfavorably with a “courageous” report last week by the French Parliament denouncing the anti-competitive and dangerous behavior of operators, La Quadrature said. Saying users can vote with their feet if they don’t like what their ISPs are doing “doesn’t stand the test of reality,” because millions of users are restricted to one access provider because of geographic or commercial constraints, it said.

The statement also upset the European Consumers’ Organization, (BEUC) which said the EC missed a second chance to safeguard the neutral nature of the Internet. The fact-finding exercise “will confirm the obvious,” BEUC said: Net neutrality is endangered and significant time has already been lost. “'Wait and see’ has repeatedly failed as a strategy in European telecommunications policy,” said European Digital Rights Advocacy Coordinator Joe McNamee. By the time the EC realizes it has failed again, the damage to citizens and the online economy may be irreversible, he said.

But “politically, the ‘wait and see’ approach should not be considered as a passive position,” Internet regulation consultant Innocenzo Genna said. The EC knows what the concrete market problems are but is confident the telecom regulatory framework is sufficient to resolve them, he said. The EC doesn’t want to take further action before seeing if the rules work in practice, he said.

Meanwhile, the EC has asked the information and communication technology sector for proposals on how to boost investment in next-generation broadband networks and gauge the sustainability of current Internet ecosystems and any alternative business models. The industry group is expected to report at a July 13 CEO summit in Brussels, the EC said.

The discussion isn’t directly about net neutrality, but because it involves business models and how to monetize broadband and the Internet, if all stakeholders either agree or disagree on something, “the link with net neutrality issues will be evident,” Genna said. The EC’s cautious stance on net neutrality may be partly from a desire not to negatively influence the outcome of the dialogue, he said.

Asked if she expects the private sector to answer the questions raised in the report, Kroes said she’s optimistic. If she didn’t think device makers, content providers, operators and others could find new business models, she wouldn’t have convened the roundtable, she said at a press briefing.

The discussion between operators and content providers on new business models is the elephant in the room that’s absent from the European net neutrality debate, said Hogan Lovells telecom attorney Winston Maxwell, author of a book on net neutrality. The current philosophy of European regulators is that new business strategies should be allowed to emerge in “managed services” as long as they don’t harm the public Internet, he said in an interview.

The EC and FCC approaches to net neutrality are similar in the areas of consumer transparency and blocking, Maxwell said. The main difference is that the FCC has imposed rules against unreasonable discrimination and paid prioritization, he said. Deals between telecom companies and content providers may in many cases be deemed unreasonable because the FCC is more wary of upstream business models than the EC, said. Europeans, at least at this point, don’t want to regulate unless there’s a problem because they believe competition law can handle the situation, he said.

Industry and policymakers should “adopt an open and supportive approach to new business models that sustain investments in higher capacity networks,” said Luigi Gambardella, European Telecommunication Network Operators’ Association executive board chairman. In the highly competitive fixed and mobile broadband markets, any further regulation restricting traffic management and service differentiation would undermine Europe’s digital economy and hamper innovation, he said. “Great caution” is needed in regulating mobile Internet load management and commercial opportunities around excess bandwidth because it’s unclear where the technology is going, said Association for Competitive Technology President Jonathan Zuck.