Network neutrality dead in the UK?

Ed Vaizey, the Secretary of State for Business, Innovation and Skills, has made comments in a speech which suggest that he favours abandonment of the neutrality (non-discrimination) principle in internet traffic management. The comments have, perhaps rightly, triggered an avalanche of vitriolic abuse.

It is worth setting out the Minister’s remarks in full:

The issues here are complex. People don’t even agree what is meant by net neutrality. It is a term which means different things to different people.

At the heart of this debate, however, is the extent to which traffic should be managed on the Internet, and more
specifically whether ISPs should ever have the right to favour one content provider over another, particularly for commercial reasons.

That seems a fair, if simplistic summary of the central issue. Vaizey went on to identify three principles that he thinks should ‘guide the debate’:

First, openness — Consumers should always have the ability to access any legal content or service. Content and service providers should have the ability to innovate and, most importantly, to reach end users.

Secondly, transparency — This is a fundamental principle … [P]roviders must present information about their
service, including the nature and extent of their traffic management policies and their impact on service quality in a
clear, visible and easy to understand form for all their customers.

And third, the ability to support investment and innovation — Creating the content and networks of the future requires investment. This means ISPs should be allowed to manage their networks to ensure a good customer service. It means allowing flexibility in business models. It means supporting competition. We are lucky to have such a competitive internet access market in the UK because that competition is an important tool in ensuring continued openness and choice. (emphasis added)

Again, no-one could really argue with an internet founded on openness, transparency and innovation — but is it really that simple? Once we move beyond the rhetoric, there is much to be concerned about here. The key lies in the phrase ‘flexibility in business models’. Vaizey continues: ‘We have got to continue to encourage the market to innovate and experiment with different business models and ways of providing consumers with what they want. This could include the evolution of a two-sided market where consumers and content providers could choose to pay for differing levels of quality of service.’

And there you have it: the two-tier internet, traffic discrimination, walled gardens — whatever you call it, it’s not neutral. Studies suggest this is bad for consumers and very bad for innovation (SSRN); others, of course, reach a different conclusion. The rest of the Minister’s remarks emphasise the need for transparency, competition and traffic management for ‘technical reasons’ (which is already widespread). In his view, strong facilities-based competition is sufficient to protection consumers from rent-seeking behaviour by non-neutral ISPs. Thus, it is said, regulatory intervention is unnecessary — perhaps even undesirable. Others disagree.

You can read the full text of the Minister’s speech here.