EU Study Disputes Market’s Ability To Enforce Net Neutrality

    March 27, 2009
    WebProNews Staff

A study sponsored by Dailymotion, eBay, Skype, and Google and YouTube of European Internet users showed that 91 percent expect their ISPs not to block or limit their Internet service and that all legitimate websites and applications receive similar treatment.
The study was presented to the EU, which is considering major telecom reform. Because of market conditions unique to Europe, though, net neutrality concerns have not reached the pitch they have reached in the US.

The survey also highlights some interesting aspects of consumer behavior. For various reasons, only 7-15 percent would consider changing ISPs, especially if their current ISP is cheaper. This could also make sense if switching ISPs is considered a bit of a hassle. 

Though the vast majority expect their providers to be “dumb pipes,” as a former AT&T executive has objected to, a quarter would blame the website for blocked, delayed, or degraded service, not the ISP even if they know the ISP is behind it. The fact that they are reluctant to switch and that many, either out of ignorance of how the network works or because of an odd forgiveness could be viewed as incentive for ISPs to torpedo competing services.

Most of those who have recently switched ISPs said they did so to get access to more advanced services like downloading movies and making phone calls online. The sponsors of the study—who have obvious stakes in this issue (video services and voice services are especially in the ISP crosshairs)—interpret that as incentive to build faster networks and to innovate on them. This is an important distinction to make because the telecom industry has argued the opposite: if ISPs are not allowed to discriminate and charge tier pricing, there will be no incentive for network investment and innovation would be squashed. The study expressly refutes that. Demand for faster networks will drive both incentive and innovation.

Nigel Jackson
Nigel Jackson

“The study highlights the importance of consumer views and experiences in formulating policy on important topics such as access to online services and websites. Consumers clearly think that they should have access to all legitimate sites and services online. They do not want their access blocked or limited. However, most are unaware that their ISP may be restricting access to such services in any way,” said Nigel Jackson of Synovate, the company conducting the study.

Many European regulators are known to classify the net neutrality issue as an American problem, and they are only partly right. Regulation and government subsidies have prevented the duopoly problem facing most regions in the US, and competition in theory can prevent ISP abuse so long as the customer is aware of what is happening and is willing to switch. But other critics, citing this study in particular, worry that the current EU legislative approach relying on transparency may not be sufficient. If ISPs limit access to selected websites or degrade competing services, the market may not actually take action by choosing competition. 

However, the customer’s willingness to switch is as moot as the argument that such network tiering and discrimination business models are necessary. It’s a fine point that incentive to invest and innovate are still very present, but also what ISPs most often argue is based on 20th century distantly connected copper wire networks. Recent studies have shown that even copper wire can transmit tremendous amounts of information so long as the information doesn’t have far to travel. Regardless, the world is going fiber optic, which doesn’t carry these capacity issues.

What it boils down to is money and leverage. ISPs want to squeeze every last dime out of copper while they can, gradually working the public up to fiber. It’s a planned obsolescence business model. Then, once capacity issues are solved, with no added competition, with no toothy legislation or regulation to prevent them, it will be about manipulating competition online, especially in the IPTV and voice communication arenas. Five or ten years from now, unnecessary and anticompetitive chokepoints will be very valuable to the ISPs, and they’re banking on a largely ignorant or apathetic population with limited options, much like the current cable TV industry.