It was 20 years ago that Columbia University law professor Tim Wu published his seminal “Network Neutrality, Broadband Discrimination” [pdf, 1.4MB].
The subject of network neutrality has been part of more than 250 posts on this site, examining how regulatory authorities have dealt with the concept (or not) through the past 2 decades.
Last October, I wrote about how the UK regulator, Ofcom, was proposing a more nuanced approach to its regulations given the evolution of broadband technologies and the marketplace.
A recent article by University of South Africa professor Petrus Potgieter asks if it is time to take a break from the concept. “Twenty years of ‘network neutrality’ – time for a break? Consumers have a long-term interest in cost recovery and value sharing”.
He observes that “[network neutrality regulation] appears to be largely an affliction of the northern hemisphere as the rugby nations of Australia, South Africa and New Zealand have absolutely no network neutrality regulation, little discussion of the topic and no discernible shortage of any online content or service. In much of Latin America, regulators have had to create exceptions for zero rating to ‘network neutrality’ regulation because of strong popular demand.”
Professor Potgieter talks about 3 phases of internet commercialization (to date).
It is worth reflecting on the differences between phase II and phase III. In phase II, the ISP delivers ad content for which the content provider charges the advertiser and which traffic is therefore not directly monetised by the ISP. However, this is nuisance traffic for the end-user and the websites carrying the advertising have an incentive not to overdo it, lest they lose ‘eyeballs’. Since the end-user pays only the ISP, the broadband provider monetises the full value of the traffic to the end-user. The fact that this traffic also has value for the content provider (and the advertiser) is of secondary importance.
We are now in phase III where the bulk of the traffic is of subscription content for which the end-user pays the content provider (for example, Netlix) directly. The ISP delivers traffic to the end-user, the value of which (to the end-user) it cannot fully capture since the end-user has already paid the content provider. Furthermore, the traffic volumes are enormous and growing at a crisp rate through (a) increased time spend in front of a networked screen and (b) steadily higher resolution/quality of content.
He argues that Phase III is characterized by relatively few, identifiable originators of traffic, making it natural for internet service providers to explore partnerships with the content providers. “The dogma of network neutrality makes both cost recovery and value sharing impossible. Although this is to the short-term benefit of content providers, it is detrimental in the medium term to the development of end-user broadband infrastructure.”
He suggests that a cost recovery debate, exemplified by the legal battle between Netflix and South Korea’s SK Broadband, might provide a catalyst for for a fresh look at restrictive net neutrality regulation.
The Potgieter article argues that network neutrality regulations ultimately harm consumers by restricting choice. Canada’s policy framework for net neutrality is among the most prescriptive and restrictive. Twenty years later, is it time to review whether the regulations are still “efficient and proportionate to their purpose”.