How the tide turned so quickly on Net Neutrality

OECD policy analyst Rudolf van der Berg on the changing state of net neutrality today

An employee checking equipment at a data centre

An employee checking equipment at a Deutsche Telekom data centre in Biere, Germany. (Thomas Trutschel/Photothek/Getty)

Net neutrality has arguably never been as big as it is now. What started as an arcane ideal debated a few years ago by techno-academics has become an issue that a good portion of the general public understands.

Much of the credit goes to comedian John Oliver, who set the Internet on fire last year by explaining the nebulous concept in easy-to-understand terms on his show Last Week Tonight. Net neutrality, he said, is basically about cable companies trying to gouge consumers.

The effects of the segment were astounding. More than four million Americans wrote in to regulators in support of strong rules. Initially in favour of allowing cable companies to do whatever they wanted, the embattled Federal Communications Commission had to reverse course. Last month, the FCC indeed handed down strong protections against discrimination and favouritism in online content.

Net neutrality is becoming a hotly debated topic seemingly everywhere. Regulators in Canada recently took steps to strengthen discrimination prevention while the European Parliament continues to hammer out what form its rules will take.

I discussed the state of global net neutrality with Rudolf van der Berg, a policy analyst at the division for digital economy policy at the Paris-based Organization for Economic Co-operation and Development. Here’s that conversation.


Broadly speaking, what is the state of net neutrality rules across the OECD? 

Across the OECD there is no clear single position on the issue. There are three countries who have laws enacted by parliament that enforce net neutrality: Chile, Netherlands and Slovenia. There are a number of countries that have a set of formal rules: Canada, United States. There are countries with co-regulatory processes or other forms of private sector initiatives: Norway, Japan and United Kingdom. There are also countries with guidelines that give some ground rules what is considered acceptable behaviour by network operators, such as France and Korea.

The countries in the European Union can set minimum quality-of-service standards. Many EU states state that the minimum quality-of-service standard in principle gives them the authority to regulate if they conclude it is necessary. The EU is currently renegotiating this text, but it is not yet known what the outcome will be.

Some countries have rules that operators need to be open about their traffic management.There are countries that state that so far they have had no problems with net neutrality and so haven’t felt a need to regulate. Other countries have explicitly no policy apart from general competition law or sector regulation they believe could deal with any issue that may arise.

Have a majority of OECD members adopted rules or is it still a minority situation?

Specific rules that mention net neutrality or traffic prioritization and the like are still a minority, but it can be a matter of interpretation as to the application of more general regulation to do with competition issues by sector specific regulators or competition authorities.

Who would you say has the strongest rules, and who the weakest?

You could see the first question, but it can be a matter for interpretation. That is because even if a country does not have a specific law or regulation with the term net neutrality or traffic prioritization they may take decisions if needed from more general powers.

Is zero rating—i.e. internet providers discounting certain applications from usage caps—an increasing phenomenon, or is it relatively rare?

It has been implemented in many countries, but with different levels of success.

In Australia and New Zealand it was common for fixed broadband, and still is, because of a number of factors. First, as happened in Australia and New Zealand, if ISPs and content providers believe they can reduce costs by peering (i.e. not have to pay transit to exchange traffic) they can use this as a competitive tool to pass on zero-rated content to their customers, as opposed to those ISPs demanding transit payments to deliver traffic, which was particularly common when the countries could be reached only via one company, the incumbent operator.

But that is in markets with customers having a choice of multiple ISPs through options such as the unbundling of local access. Where an ISP is adjudged by a regulator to have monopoly power over final access to a customer a different view may be taken as has occurred in a number of recent decisions.

We see it in developing countries as a teaser to get some customers to use mobile data and to give access to publicly beneficial data (Wikipedia, government sites, health sites etc) and then there are countries where it is a commercial deal between mobile or fixed operators and certain content providers.

It does appear to be on the rise, but it is hard to say because we so far did not collect data on it and in our experience it tends to go hand in hand with lower data caps. In countries with relatively generous data caps or unlimited access to data or where speed is used for billing as opposed to the amount of data it is not an issue or becomes less important over time.

I’m guessing it’s more prevalent in wireless than in wired?

Yes, because in many countries fixed broadband is not capped. In countries where fixed broadband is capped, zero rating can also happen on fixed offers.

There seems to be disagreement across different countries as to whether zero rating is a violation of net neutrality. Can you explain why this is?

The primary reason is different regulatory environments and an assessment of whether there is effective competition such that consumers have choice. If there appears to be sufficient competition authorities are more lenient and there are both zero-rated and non-zero rated offers in the market.

As an example, my home country the Netherlands. Here, all three operators were selling bundles that consisted of 100, 200, 300 or 500 SMS/minutes. So if the customer sent an SMS he lost a minute as well from the bundle.

Much of the money was made on overage charges, which were often 25 cents per SMS or minute outside the bundle. Then cheap five- or 10-euro data plans and Blackberry plans became available. Every teen in the country converted to Blackberry and later to WhatsApp in no-time, paid the five euros for data and never went outside their bundle, because using SMS was seen as bad form.

This led to massive revenue loss for the operators. To compensate, KPN proposed that using WhatsApp and Blackberry Messenger would be an addition five or 10 euros on top of a subscription.

KPN’s proposal came six weeks before the parliamentary debate on the new telecom law. At that moment a light version of net neutrality was foreseen, with the operators having to report on the measures they took, but nothing would be outright forbidden.

However, after KPN had announced it, Vodafone and T-Mobile stated they thought KPN’s idea was excellent and they would do the same. In addition, KPN was challenged on the technical execution and it proudly announced it was going to use Deep Packet Inspection to record all the activity of users on the internet, so that the payment couldn’t be bypassed.

By that time all political parties in parliament had aligned themselves behind strong net neutrality rules. The main reason was that it was clear to all parties that normal competition rules wouldn’t be strong enough to counter this type of tacit co-operation between the operators.

The country has now seen a series of decisions and even fines outlawing blocking of VoIP on KPN VPN services and fines for zero-rating of content by Vodafone.