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UK net neutrality regulation failing all stakeholders

Leading analyst releases study showing net neutrality regulation is failing consumers, innovators and investors, calling for evidence-based broadband policy

Like dot-coms, grunge music and fears about Y2K, net neutrality debates seem to belong to another era, but according to a stinging report from Strand Consult, current UK net neutrality regulation is failing consumers, innovators, and investors alike, and it’s time for broadband internet policy that improves consumer welfare, internet innovation and network investment for the country.

On occasion over the past couple of years, executives from the UK’s leading telecoms and communications providers have made speeches whereby the issue of net neutrality has reared its head. In September 2021, Vodafone UK CEO Ahmed Essam called for a redefinition of net neutrality given the state of both the fixed and mobile broadband market at that time compared with when the first regulations were drafted.

“When net neutrality was started, it wasn’t with 5G use cases in mind, and it limits the use of technology … and how can you deliver services? I think you need to enable the service provider to differentiate [a] service without discrimination,” he said. “And what’s making the trade-off is not taken into account as per the definition today, because it’s not taking the use cases into consideration.”

Such use cases very much include streaming video, and a massive surge in the use of the likes of Netflix and BBC iPlayer – especially Amazon Prime Video when showing Premier League football matches – has seen UK comms networks buckle under the strain.

In December 2021, BT Consumer division chief executive Marc Allera noted that on 2 December of that year, the company’s network had seen its highest peak in terms of traffic, with 25.5Tbps flowing over its fixed network. That was about 12% higher than the previous peak set in December 2020, driven by the popularity of midweek Premier League fixtures, with six games simultaneously streaming online.

Despite these all-time highs, Allera insisted BT had invested to ensure its networks can cope with this demand, but warned that as that demand grows further this decade, the firm could see potential problems down the line. It is therefore taking a stance on the need to review the rules governing the approach to net neutrality.

Allera’s argument was that the current net neutrality rules were first introduced earlier this century, and were designed to prevent any discrimination of traffic. Currently, he said, there has never been more need for a “fair, transparent and open internet”, and the principles established to deliver that are no longer working for everyone in the ecosystem.

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Strand Consult said it published its report as UK telecom regulator Ofcom has conducted a proceeding on the efficacy of its net neutrality policy for more than a year.

In its latest analysis on net neutrality, Strand Consult insisted much is said and written about net neutrality, but many claims are devoid of facts. Noting that European countries have had regulation for some years, it stressed that few telecom regulators have actually performed or published cost-benefit analyses or impact assessments of the regulation.

Moreover, Strand said policymakers find it hard to certify or quantify the level and/or degree to which the regulation can fulfil its stated goals for end user rights and innovation. Fundamentally, Strand Consult said its study shows net neutrality regulation is failing consumers, innovators and investors. It adds that current UK broadband policy can do better, and Strand Consult applauds Ofcom for taking an important step.

Financial shortfall

Strand Consult calculates that the European Union faces a €300bn shortfall to achieve connectivity goals, and states bluntly that net neutrality has stifled internet innovation. It stresses that no leading 5G nation has hard regulation, meaning South Korea, Japan, China and the US have rushed ahead on 5G investment and roll-out.

It added that people and enterprises in these countries innovate and adopt 5G-enabled services in social care, creative industries, advanced manufacturing, transport, climate solutions and other domains. Europeans are missing out on this valuable 5G innovation, in part because of misguided net neutrality regulation.

In a call to action, the study warned that net neutrality regulation harms consumers by limiting the range and type of broadband offers, making them less accessible and relevant, and forcing consumers to value data uniformly. It said countries with hard net neutrality regulation have experienced a decline in local content development and apps while established platform giants have grown larger and more powerful globally.

Current net neutrality regulation, said the analyst, hindered broadband providers’ ability to engage in welfare- and efficiency-enhancing practices which can improve broadband for the financially vulnerable.

Strand insisted that regulators don’t need net neutrality regulation to police broadband and that competition law and transparency rules can effectively protect consumers. It advised policymakers to pursue evidence-based broadband policy which objectively delivers consumer welfare, network investment and internet innovation.

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