Net neutrality is a global debate. A number of countries have implemented laws or are in the process of doing so. Each country defines the issue differently and thus creates laws with different provisions. This creates a problem of international harmonization for the Internet, which is inherently global.
Rather than try to force countries to agree to uniform definitions and laws, a better way to go is to apply a governance model that embraces different values and perspectives from the outset. The multi-stakeholder model is already used for Internet governance issues and offers a preferable approach for net neutrality. Moreover, Nordic countries have already been using this model with success for more than five years; no net neutrality violations have been noted. Stakeholders meet and work out their differences so problems are avoided. Following is a review of the US and EU, and an argument as to why the Nordic model is superior.
The US is engaged in a fierce partisan battle over net neutrality, essentially pitting moderate Democrats who want to deliver a win in the Obama presidency against the extreme left, which wants government control not just of the last mile networks, but of all interconnection agreements and business relationships. Such a sweeping definition of net neutrality is so onerous that it threatens to derail the entire lawmaking process and would surely lead to years of litigation. One observer noted (0) that net neutrality would not even be an issue if not for two powerful lobby organizations and their wealthy funders.
The notion that users should be able to connect to lawful content, applications, services, and devices of their choice is not controversial. Nor is the idea of requiring transparency on packages and practices. Indeed, an Open Internet concept containing these principles along with rules against blocking and throttling is already supported by three of the largest operators. However, things become dicey when net neutrality morphs into governmental expropriation, price controls, and bans on business models and bundling.
The FCC is in the midst of a period of public comment in its attempt to rewrite the net neutrality rules, but it’s unlikely that they will present anything until after the November elections. Meanwhile, there is a counter-movement to examine whether it is even appropriate for the FCC to administer this issue. If in fact net neutrality is needed to protect consumers, then it may be more appropriate for the issue to be handled by the Federal Trade Commission (FTC), which has far more experience in this area.
In general, good regulation rests on intellectual agreement and empirical proof of market failure. This hardly characterizes the net neutrality debate. There is no academic consensus on the topic either: among 7,000 academic papers on net neutrality, the ten most cited disagree.
Moreover, the academic literature on the topic is highly theoretical. There is little to no empirical testing of some of the key academic assertions, including Lessing and Lemley’s “end-to-end principle” or Bandopay and Guo’s game theory model, which argues that net neutrality increases investment. As such, many argue that there is not sufficient evidence to create net neutrality rules when out of the billions of times that users have connected to the Internet in the last two decades, the FCC itself only lists four violations.
Across the pond in the European Union, the net neutrality debate has taken a different shape with strong restrictions on privacy and traffic management. The current policy proposal essentially prohibits traffic management on the public Internet. Such restrictions bring up difficult questions for operators, including how to manage mobile traffic when thousands of people are gathered at the same location, such as rock concerts or football games. Should emergency communications run slowly to ensure the smooth delivery of Instagram? What happens when Apple provides a software update to millions of phones, and it impinges on others’ video quality? The flexible and continous congestion management practices that allow a good experience for users are being traded for blind obedience to a religious principle of all traffic being equal.
Another problem is that it confines applications that need quality service to managed networks. This puts new and innovative services out of reach of subscribers who do not have access to a given managed network. Additionally it may increase the cost of innovation.
The most disappointing aspect of the EU’s approach is that it is proffered as part of the digital single market, yet net neutrality does not address the goals of this initiative: to lower unemployment, increase productivity, and exit the digital crisis.
The EU proposal is far from becoming law, however. It would still have to be approved by the Council of Ministers, where there is strong disagreement. Some national regulatory authorities have expressed concern because the proposed rule requires them to define and enforce minimum standards for the public Internet at the state level. Such a provision would only seem to exacerbate the differences between EU countries, perhaps strengthening the business advantages of some EU nations over others. A final decision is not expected until 2015.
Net neutrality rules are a difficult compromise between consumer protection and increased governmental control of the Internet, but the multi-stakeholder model strikes a balance. Norway’s model for net neutrality, established in February 2009, is the longest running regime of that type in the world. No violations of net neutrality have been documented under the model. Swedish regulators observed at a recent event (1) that the model is working, and ISPs are actually becoming more transparent.
The Nordic model preserves a role for the regulator to frame the discussion while at the same time encouraging participation by operators, content/application providers, and consumers. In this way, the regulator is less of a warden and more of a mediator. To be sure, the model (also practiced in Denmark and Sweden) builds upon a culture of consensus and participation in civil society in the Nordic region. The multi-stakeholders model is not specific to Nordic countries however, and can be employed for a range of Internet governance issues where many parties want to maintain sovereignty. While the broadband policies of the Nordic region differ markedly (Denmark has a market-led technology neutral approach, while Sweden has a state-owned fiber company and state-owned incumbent), the region has overall high adoption rates and high investment in broadband.
It should be noted that the FCC has experience with this approach to net neutrality through its Open Internet Access Committee (2). The committee consisted of some 30 delegates, including leading experts such as MIT’s David Clark and Harvard’s Jonathan Zittrain, along with a range of commercial, academic, and civil society representatives. In stark contrast to the sensational protests, the OAIC provided a serious, collaborative, and inclusive approach to net neutrality.
The multi-stakeholder governance model is preferable to legislation for a variety of reasons. It makes little sense to create laws on the Internet if they can’t be internationally harmonized. Because they inherently pick winners and losers, laws create an incentive for litigation. Thus net neutrality can never be secure; it will always be challenged by the damaged parties. The beauty of the multi-stakeholder process is that it is inclusive and flexible.
It is true that a multi-stakeholder model requires effort and participation, but it is less costly for society on the whole. Not only does society avoid regulatory errors, which impose costs on everyone, but a non-legislative approach also avoids the burdensome requirements of monitoring when regulators don’t even know what they should measure. Nor is the power of consumers to express their preferences dulled. Consumers have been successful in naming and shaming unsavory practices by operators, which is itself a powerful deterrent. A multi-stakeholder model is also preferable when evidence is limited and technological change is swift. The model gives technological solutions time to emerge.
It should be noted that each country has a slightly different approach. The Norwegian regulator is most supportive of regulation, though it is agreed that overly strict regulation is not conducive to the internet as a whole. The Swedish regulator focuses on transparency. In Denmark, the operators took the initiative to start and nurture the dialogue with the regulator and other stakeholders. However, the common tenet amongst the approaches is that competition is the most important safeguard for net neutrality.
Nordic regulators have agreed to cooperate on net neutrality. Should an EU law come to pass, it would supersede the enlightened approach taken by the Nordic countries. The better outcome would be to build on the efforts of the Nordic regulators, and make their model the global standard.