Net Neutrality Regulation in the UK: More Transparency and Switching

Abstract

UK network neutrality policy is influenced both by its regulator, Ofcom, and its particular and unique network topology. In Section 1, I first explain the network topology, universal service, then introduce the regulator and explain why it has not taken on any disputes over net neutrality despite substantial user disquiet about throttling and blocking of content. The UK broadband market has relatively low competitive intensity with only one wholesale network for the majority of the population, and has experienced slower rollout to lower speeds than the United States, Korea or Netherlands. As a result, government and regulator concern has been to encourage investment in faster services by the former monopoly British Telecom (BT). Direct state aid for the former monopoly will amount to almost £1.5billion in 2013-2015. Problems of congestion have plagued the network since at least 2005, brought to the direct attention of Ofcom in person in 2006 by both ISP TalkTalk which admitted to consumer anger at its throttling of peer to peer content, and the state broadcaster British Broadcasting Corporation, whose peer to peer video streaming was throttled by BT.

The regulator and government response has been to insist that self-regulation could produce greater transparency to end-users, and regulation should be limited to the theoretical possibility to switch should blocking and throttling occur. Ofcom has so far responded with a combination of denial that there was a problem until 2006, an acceptance and willingness to deal with those problems that were shown to have emerged, regulation of customer switching problems between ISPs since 2006, and a light touch attempt to persuade ISPs to offer greater transparency to users. I examine these in turn in Section 2.1.

In Section 2.2, I explain the slow progress towards a Code of Practice for greater transparency under the auspices of the government-industry partnership, Broadband Stakeholder Group (BSG). ISPs had been persuaded by Ofcom to sign a code of conduct on advertising broadband speed and congestion in 2008, though this was inadequate and then replaced by the BSG Code from 2011-13. Continued government and Ofcom light-touch review of this self-regulation was critiqued by amongst others Sir Tim Berners-Lee. More recent concerns over standards relate to Quality of Service (QoS) and specialized services, which may also be shared in Korea. I explain the implications of definitions for QoS and bandwidth caps in Sections 3-4.

UK ‘transparency and switching’ policy has been maintained for almost a decade, supported by the European Commission’s wait-and-see approach up until 2008, and then again in 2010-12. It is now supplanted by the European Commission newly found and Parliament’s traditional insistence that net neutrality regulation be implemented. The ConnectedContinent proposal of 11 September 2013 would impose strict regulatory requirements on the UK, and makes the July 2013 UK government 'consultation paper' instantly obsolete. The UK can be expected to fiercely resist the Commission’s plans from within the Council of Ministers in 2014.

Keywords: transparency, switching, specialized services, Ofcom, traffic management

JEL Classification: H41, K00, K23, L13, L44, L96