Net Neutrality 'Lite': Regulatory Responses to Broadband Internet Discrimination

Abstract

In European debate, the Net Neutrality issue has been dismissed by many as an American problem caused by the abandonment of Local Loop Unbundling (LLU) regulation for broadband competition in the local access network. Competition within a single wholesale network was introduced, for instance, in certain Western European nations under the 'Telecoms Framework' reforms of 2002. The telecoms framework consists of five Directives implemented in member states in 2003 and reviewed on a process that began in 2006 and may conclude in 2009. The European Commission has proposed adding interoperability and minimal service quality requirements to the interconnection requirements in its review of the Regulatory Framework. This assumes that competition in the local loop or last mile to the end-user subscriber provides a choice of platform, and therefore rigorous telecoms competition regulation resolves the issue in Europe, and more especially the UK, the main subject of the regulatory analysis in Section 5.

That may not be the whole story, however. This paper considers whether ISPs are motivated to require content providers to pay for superior service via lower levels of service for the same price (e.g., blocking or throttling content) or higher price for higher Quality of Service (QoS). It may be that abusive discrimination can take place even where an ISP does not have dominance. I consider market developments and policy responses in the UK, Europe and the United States, conclusions, and regulatory recommendations. In Section 2, I briefly introduce the types of 'negative' discrimination that may occur, issues of QoS, user-generated and/or distributed content, and broadband supply and investment in the following sections. In Section 3, I consider 'positive' Net Neutrality in detail - essentially the blocking or throttling of certain traffic streams by ISPs. In Section 4, I consider the regulatory challenges in dealing with 'lite' net neutrality issues, and in Section 5/6 with the specific European and UK responses. Finally I consider the potential for this debate to develop in the course of 2009, towards a form of Net Neutrality 'lite'.

Keywords: Network neutrality, telecommunications law, communications policy, European communications law

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