The Proof of the Pudding is in the Eating: Net Neutrality in Practice, the Dutch Example
36 Pages Posted: 31 Mar 2014 Last revised: 26 Jul 2015
Date Written: August 2, 2014
The Netherlands is among the few countries that have put specific net neutrality standards in place. It was the first country to do so in the European Union. Contrary to the original European Union approach, which lacks a material implementation of net neutrality principles, the Dutch parliament decided to take a firmer position and introduced a quite detailed regimen on net neutrality. Providers of public electronic communications networks via which Internet access services are delivered and providers of Internet access services shall not hinder or slow down applications or services on the Internet. There is a limited group of exceptions to this rule. Hindering and slowing down Internet traffic is allowed a) to minimise the effects of congestion, whereby equal types of traffic must be treated equally, b) to preserve the integrity and security of the network and service of the provider in question or the end-user’s terminal, c) to restrict the transmission of unsolicited communication (spam) to end-users, provided that the end-users have given their prior consent for this to be done, and d) to implement a legislative provision or court order. Another very important net neutrality principle was based on incidents of blocked applications such as Skype and WhatsApp on the announcement by mobile operators that they would start charging for applications. The Dutch net neutrality article also forbids providers of Internet access services to charge for Internet access services dependent on the services and applications which are offered or used via these services.
The newly proposed European rules on net neutrality (as part of the new regulatory package) have borrowed heavily from the Dutch example. However, are the Dutch rules a success?
The no-blocking/no-charging restriction had an immediate effect on the market, in particular on the mobile one. Originally, the mobile providers intended to block or to charge for specific services (Skype, WhatsApp), but they had to abandon the idea due to the new net neutrality rules. This led to a new subscription structure, with a substantially increased emphasis on data traffic. Data bundles are priced more specifically, and existing packages with unlimited data access have been replaced by packages with a specific size (data caps) and specific speeds. In fact, voice is no longer a dominant factor in the pricing models.
But how did these changes affect the consumer? The no-blocking/no-charging rule more or less killed traditional texting (SMS), but it is too early to tell whether net neutrality has had an effect on the overall costs for mobile broadband. There are some indications that the overall price levels and options in the Dutch market are (still) in line with the prices in other European countries.
The new neutrality rules had no effect on the fixed market. Internet service providers on cabled networks have no history of blocking traffic. Only one incident with the slow-down of traffic was reported but turned out to be a ‘misunderstanding’. One should keep in mind that the Dutch fixed broadband market is very competitive with the incumbent operator offering high-speed DSL or fibre and the cable television network operators offering high-speed broadband via their coaxial networks. The Netherlands belongs to the top broadband countries in the world.
The regulator in charge – the Authority for Consumers and Markets – took a first decision on applying the new rules in a case where Internet access in trains was blocked for congestion reasons. In another case, a service similar to WhatsApp was inaccessible via wireless networks. In two cases, the Authority investigated the bundling of data packages with free services (i.e. a mobile subscription with ‘free’ access to Spotify). To deal with these cases, a new guideline has been drafted by the ministry involved. The consultation process on the guideline has recently ended.
The conclusion of the paper is that putting net neutrality into more material regulation is much more complicated than defining it in a more abstract sense. Putting the rules into practice is even more challenging. In our view, the Dutch example shows that if regulation is too detailed, the development of services might be hampered and might to some extent ridicule the true objectives of net neutrality. The focus should be on a dynamic and evolutionary approach, offering the opportunity to adapt interventions quickly, depending on the specifics of the case. In order to establish such a more flexible framework, the present provision needs to be amended.
Keywords: net neutrality, telecommunications, regulation, policy, Europe, the Netherlands
JEL Classification: K23, K29, K39, L13, L50, L51
Suggested Citation: Suggested Citation