Net neutrality “victory” could see broadband price rises

Proposed European legislation to protect net neutrality could see broadband prices rise, experts have warned.

Yesterday, MEPs moved a tentative step towards guaranteeing equality for internet traffic – although the legislation has a tortuous process to navigate before it becomes a compulsory regulation in EU law.

The vote to proceed with a proposed “telecoms package” was seen as a victory for net neutrality advocates, because in theory the legislation would prevent ISPs from blocking or slowing certain traffic if a content provided refused to pay for access to an ISPs’ customers.

You can’t just wave a magic wand and change traffic management practices

Whether or not the package will have that effect remains to be seen, but it could have the unintended consequence of higher prices for consumers – either through their ISPs or through services such as Netflix, because someone has to pay for traffic.

“The one thing that will result is that end-user prices are going to rise, whether that’s business users of the web, or consumers using the internet,” said Chris Green, technology analyst at the Davies Murphy Group consultancy. “Broadband bills are going to go up, and service subscriptions are going to go up. The era of cheap, ubiquitous internet is over.

“In many European countries broadband pricing has been sliced for the last ten years, and roughly 60% of the market is loss-leading. That’s because you have the likes of Sky giving away unlimited connections and BT is doing similar deals and bundling sports TV. Broadband is not a profit generator in most cases.”

And if bills don’t go up, ISPs – worried about making a profit against a backdrop of soaring traffic – simply won’t invest in their networks. “The legislation is good news for people that don’t want separate higher quality lanes, but it could see the possibility that the ISPs will say that they can’t make money in that scenario and won’t invest as much, or they will have to stop spending so much on football rights,” said Chris Marsden, professor of Media Law at the University of Sussex.

ISP opposition

ISPs in the UK opposed proposals that would restrict how they manage traffic, claiming that under Ofcom’s Code of Conduct – which allows traffic management – they already agreed not to block services unless they were transparent about their actions.

“In the UK, BT along with other major ISPs, operate under a Code of Practice which lays out a clear, consistent and transparent set of net neutrality principles, treating all traffic consistently, regardless of its source, and being fully transparent about any types of traffic we may manage in order to minimise network congestion,” BT said in a statement.

If it came into law, the regulation would probably see ISPs asking content providers and broadcasters to install caching hardware in the network to minimise the impact of their services on bandwidth.

Grey area

Although the regulation effectively bans blocking services such as Skype, which might provide competition to a broadband provider’s own services, it does leave room for prioritised services.

According to the European Parliament, MEPs want clear rules to prevent ISPs from promoting some services at the expense of others.

But internet providers “would still be able to offer specialised services of higher quality, such as video-on-demand and business-critical data-intensive cloud applications, so long as these services are not supplied to the detriment of the availability or quality of internet access services offered to other companies or service suppliers”.

It’s a grey area that’s ripe for manipulation and could still see a two-tiered internet, albeit with the focus on top-end bundles being prioritised, rather than some content being penalised.

“The EU has handcuffed them and prevented them from setting their own charging limits or preventing them from charging at all to allow preferential traffic,” said Green.

“They are preventing ISPs from blocking people altogether, but there’s nothing to prevent them chucking people onto the slow lane, you shove it to the back of the queue, so it’s traffic shaping by proxy.”

Slow progress

Even if it is passed, it will be many years before the effect of such regulation will be known. “Until regulators come out with guidelines, which won’t be until after the regulation is passed, and that’s some time away, no-one can be sure what’s going to happen,” said Marsden.

“No matter what you write into the law, it still has to be implemented at the national level, and then by ISPs at the local level, so there will be a lot of changes – you can’t just wave a magic wand and change traffic-management practices.”

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