Net neutrality: legal challenges and regulatory perspectives
First Panhellenic Congress: Personality, Press, Intellectual Property, Public Radio and Television, Electronic Communications, Personal Data
Ladies and gentlemen, First I would like to extend my thanks to the organisers from the Legal Library editing house for their kind invitation to this important event.
I understand that the audience, composed of young colleagues, is perhaps not fully aware of the complexity of the net neutrality debate. Let me then ask those falling in this category to raise their hands. Since I see this is true, I will try to address a complex issue in a very simple manner.
In the first part of my speech, I will briefly analyse the industrial and market implications of net neutrality. In the second part, I will address the legal and regulatory policy implications of net neutrality.
The industrial and market implications of net neutrality
I will try to share with you my practical experience on net neutrality that I gained as former national and European telecoms regulator, Chair of BEREC in 2013 and vice Chair in 2012 and 2011. Net neutrality is the principle according to which all Internet traffic should be treated equally by network operators independently from platform, user, terminal equipment, source and origin of the information transmitted. Data traffic explodes
According to statistics, data traffic over global telecommunications networks rises significantly every year. Google officials claim that in every minute more than 60 hours of user-generated video are uploaded on the company servers. This means that until I finish my speech more than 1000 hours of video will be added, with tremendous storage zetabyte capacity needed. You can imagine the data volume explosion every month or every year.
Social networks expand their global reach. For instance, Facebook users exceed the population of India and quickly approach the one of China. All social networks together claim around 2,5 billion users, namely almost a third of the earth 's population which amounts 7,3 billion people. All those users around the globe upload photos, exchange emails and communicate between themselves.
Tremendous data flow creates network congestion
This data flow creates huge traffic congestion to traditional network operators managing access, voice and data connectivity. Some popular YouTube videos cashed on the providers' servers like “Gangam style“ have exceeded 2,5 billion views worldwide. Congestion is an acute problem both in fixed but much more in mobile networks, since smartphones and tablets increasingly gain popularity as communications platforms.
As a result, telecommunications pipes need constant upgrades. Investment lifecycle becomes more and more limited and amortisation periods shorter. For instance, the technological transition from 2G to 3G in mobile technology took approximately 20 years, from to 3G to 4G less than 10 years and by 2020 we expect 5G to be widely available in some regions of the world.
The clash between traditional telcos and Over The Top players
To face such tremendous data flows, traditional network providers need to constantly invest in high speed infrastructure, fixed, such as fiber to the cabinet or fiber to the home and wireless, through the acquisition of costly radio spectrum. On top of their networks ride many application service providers and search engines such as Google, Skype, Apple, Whatsapp, the so-called Over The Top players.
Offering IP-based communication and social networking services , the latter challenge business models applied by communication providers while they deprive them from valuable communications revenues emanating from their core voice or data services business. Imagine, for instance, that you use Skype to make a call from Brussels to Athens free of charge or at a marginal cost, as compared to a long distance phone call via your mobile, which would have generated income for Cosmote, Vodafone or Wind in Greece. For this reason, on the one side, the traditional telecom providers complain to the EU for over-regulation vis a vis the unregulated OTTs which create conditions of unfair competition and revenue loss. On the other hand, OTTs claim they attract customers to the network providers since access to their services is the main reason for consumers to purchase a high speed subscription or a mobile data plan. Besides, they pay networks for the peering traffic generated through the use of their services.
Striking the right balance between conflicting interests
In this context, who is right and who is wrong? How can regulators best balance those conflicting interests?
It is true that if regulators allow paid traffic prioritisation delivered by content providers to end users at a guaranteed quality, this entails a dicrimination between small users and small websites.
For instance, students than can afford a cheap subscription package will have to be satisfied with a “best effort“ internet with no guaranteed quality as opposed to heavy professional users of specialised services (such as healthcare, high definition video, connected cars, or the internet of things) using dedicated communications channels with guaranteed quality. In this regard it is obvious that speed is critical for some applications, such as healthcare or high definition video and less critical for other services such as email communications.
From an operator perspective, lack of connection speed implies jitter, latency, “frozen images“ and overall bad quality of service. From a user perspective, you can imagine, for instance, Messi scoring a goal for Barcelona against Buffon of Juventus in two weeks a time and spectators been unable to view the goal in real time due to congestion problems! Another critical issue related to net neutrality is the accessibility of user-generated content due to lack of network capacity, which could be dedicated to large providers able to pay network operators more for guaranteed quality of service. Industry trends towards consolidation
Industry trend towards consolidation raises aditional concerns about net neutrality and division of users based on their ability to pay more. For instance, large content providers such as Netflix in the US could pay more to make accessible their services to their public against a higher subscription fee. If the 46,5 billion dollar merger between Comcast, who is the second largest broadband provider in the US, with Time Warner, who is the third largest broadband provider would be approved, the merged entity would control 4 out of 10 broadband subscriptions in the US market.
Such concretration of market power in the hands of specific large providers would represent an imminent threat for competition with smaller providers both on the delivery and content market and could lead to the domination of the internet by "bottleneck" providers.
Let me now move to the second part of my speech which focuses on the legal and regulatory policy implications of net neutrality. The legal and regulatory policy implications of net neutrality
In the US, two important appeal cases opposed large operators like Comcast in 2010 and Verizon in 2014 with the Federal Communications Commission (FCC) imposing on them open internet rules and forbidding throttling of BitTorrent files exchange. On two occasions, the Court of appeals annulled the FCC interent order on procedural grounds, since the court considered the FCC had no authority to apply the Communications Act 1996 on the Internet.
Without entering into details, the main question was, from a US law perspective, whether broadband internet access was a telecommunications service, whether common carrier regulation could apply, or an information service, where different rules should apply. Finally, in February 2015, the FCC made in my view a political choice by opting to reclassify broadband under the Utility regulation of Title II of the Telecommunications Act 1996.
This rule making approach practically means that no discrimination is allowed and all internet traffic should be treated equally. The big US cable and broadband operators started filing lawsuits to annul those rules even before April 2015, when those rules would be enacted. It remains to be seen whether they would stand after their judicial scrutiny or after the forthcoming presidential elections.
Net neutrality in Europe – The role of BEREC
In Europe, net neutrality has been a prominent area of interest for the Body of European Regulators for Electronic Communications that I had the honour to recently chair. Since 2010 BEREC has published a number of important documents on key topics related to net neutrality such as various reports on best practices to facilitate switching, guidelines on quality of service, consumer views on monitoring quality of Internet access services in the context of net neutrality and so on.
All those reports providing guidance for regulators to assess net neutrality cases are accessible via the BEREC website berec.europa.eu. BEREC's results showed that there is an undeniable problem regarding open Internet in Europe and it was necessary to take immediate action.
To be objective, we have to consider that classes of differently priced services already exist in transport by train, where passengers may choose between first and second class, or in airplanes, where different ticket rates apply for economy, business and first class. Similar differentiations exist for postal services with normal and speedy delivery of mail. Although this could be true for the internet as well, it seems to me that the debate on net neutrality has been highly politicised to the extent that internet has become a powerful tool that requires a regulatory treatment guaranteeing transparency and avoidance of undue discrimination between users or services.
In 2014 it seemed that European Parliament would allow open internet and that Europe would have more pro-consumer rules than in the US. Today this picture has changed. The Latvian rotating presidency, perhaps under the lobby of the large providers such as Deutsche Telekom, Telefonica, Telecom Italia and other incumbents, has presented a layered approach on the internet allowing for a fast internet lane with guaranteed speed and a normal and less efficient one.
However, under the proposal, nobody in Europe should be left under internet poverty with extremely slow speeds. It remains to see the final form of the rules to be adopted in the next months, as a result of the trialogue between Commission, EU Presidency and Parliament, in consultation with the EU Member States. A similar policy shift seems to have occurred for roaming in Europe which will not be abolished by 2016, as initially scheduled, but more likely will be replaced by a “fair use“ policy.
In Greece, net neutrality matters might theoretically appear if, for instance, OTE, the incumbent operator which controls both the wholesale and the retail market, but is also trading content via subscriber-based OTE TV, would favour via privileged VDSL access, its own pay- TV services to the detriment of competitive subscription service “Nova“, offered by Forthnet. Such a practice, if manifested, would entail the EETT intervention as a Competition Authority.
In conclusion, I believe it is crucial to maintain the Open Internet as a key tool for free speech, education, communication and participatory democracy. Any service levels and any paid traffic prioritisation, if finally imposed, should by no means artificially lead to undue discrimination of users. Exclusivity contracts between large network operator and content providers should not lead to the fragmentation of the internet. Net neutrality remains part of a global debate that I recommend you to follow. In this regard, I will have the opportunity to join as a speaker an International Conference to be held in Rio de Janeiro, on 8 June, in order to debate the applicability conditions of net neutrality aspects of Brazil's the Internet Bill of Rights. Similar laws have been enacted in the Netherlands, in Slovenia, in Chile and are in the pipeline in several European countries.
Thank you for your attention and I am looking forward a lively debate.