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Wednesday, 30 March 2011

Net neutrality vs regulation - the lesser evil?

Committee room 19 saw a very useful debate on  "Open Internet". The session wasn't listed as Net Neutrality, which is kind of ironic as I do think we need a wider debate on open competition on the internet - yet last night's session focussed on the traditional network neutrality issues of traffic shaping, blocking and premium preferential streaming capability.

The session of the Digital Economy All-party Parliamentary Group (#deappg) was chaired by Eric Joyce MP and the panellists were:
  • Jean-Jaques Sahel, Director Government
  • Affairs, Skype.
  • James Heath, Controller for Policy, The BBC
  • Kip Meek, Senior Public Policy Adviser, Everything Everywhere
  • Robert Hammond, Head of Postal and Digital Communications, Consumer Focus
  • Rob Reid, Which?
  • Dominique Lazanski, The Tax Payer’s Alliance
  • Jim Killock, The Open Rights Group
All panellists agreed with the aim of preventing carriers exploiting their privileged position as a trusted communications service provider for monopolistic purposes, but there was a range of views on interpretation of this general aim.

On one side Kip Meek, advisor to mobile provider Everything Everywhere (T-mobile UK + Orange UK merger), didn't seem overly-concerned by the list of potentially monopolistic mobile ISP practices reeled off to audience applause by Skype's Jean-Jacques Sahel; chiefly blocking VOIP, p2p, streaming, tethering, etc.

At the other end of the spectrum, adding to Jean-Jacques' impassioned appeal, Consumer Focus and Which? outlined the consumer issues.  Transparency and ease of switching ISP were listed as crucial safeguards against potentially dodgy practices by ISPs, the rationale being with consumers in the driving seat that the best interests of the consumer should be serviced by the open market of ISPs.

Slightly aside, Kip Meek didn't see any problems with the current switching regime, whereas audience questions highlighted the problem with contract lock-ins.

I wanted to shout out some of the technical barriers too: there's no migration plan for cable customers, except paying to reconnect a BT line (where available)!  Also there are reports that some customers have been left without internet for extended periods when switching providers (particularly when moving from an "unbundled" provider back to BT backhaul or to another unbundled provider).

On the issue of regulation an interesting point: what was the lesser evil? Legislation, now, in the absence of a clear and well-defined problem, might restrict innovation in the ISP market.

We don't yet know that all non-neutral practices are "bad".  Some clearly are, eg. blocking a rival provider's website, yet some, such as preferential streaming services, might turn out to be not so bad after all.  The test will be whether these practices inhibit competition by raising cost barriers to new entrants, or prove counter-intuitive to theorists adamant that the only way forward is a big fat pipe.

In some respects the internet built itself in the absence of regulation.  It remains today a mishmash of interconnected autonomous networks. Some pioneers of the internet are now arguing for regulation to keep carriers neutral, despite no evidence yet that any business or individual is suffering at the hands of anti-competitive practices by ISPs.

But network neutrality makes sense not only for competition reasons but also as it encourages good network engineering principles.  As soon as ISPs start integrating content delivery with their pipes we're left with a muddle that could raise reliability, security and data protection issues.  I'm thinking Phorm (nudge at Kip).

I'm genuinely torn.  I like the principles of network neutrality; they make good sense.  However, over-regulation can be illiberal, increase red tape and further bloat the size of government.

Legislate too soon and we may end up with a red flag act for the digital age. Leave the market to itself and we may kill competition for digital services such as streaming video or VOIP.

Audience Monopoly

As I raised in the Q&A, neutral networks is only one part of the competition equation.  It's all very well in principle having a neutral infrastructure that allows anyone to start their own net venture, but in reality the biggest hurdle facing new entrants going to be building an audience, and in this respect there are wider competition questions.

In my post Audience Monopoly  I look beyond neutral networks to emerging dominant portal services such as Facebook, which last November accounted for a staggering 25% of all US traffic.  These services already own the user space.  They're where people head when they first go online, and often stay for the duration of their session.

Add search engines into the mix: search-engine neutrality - preventing anti-competitive ranking.  A low ranking could kill a business - or even swing an election. If regulation is ever needed we're facing is a trans-jurisdictional nightmare similar to the regulatory issues I discussed in Elastic Jurisdiction.

I want to see an Open Internet where competition thrives.  Dominant players must not be allowed to prevent regrowth and regeneration in the market by raising artificial barriers to entry or acting out of self-interest.

I don't think regulation or legislation is needed - for now at least.  But I would like to see the wider questions raised - promoting open-market competition with technologies that transcend national boundaries - get some early exposure so governments aren't playing catch-up if and when problems start to manifest.

@JamesFirth

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