International Network Neutrality – by “Christopher M”

Of course, the network neutrality policy debate in the US deals with a very particular set of players and circumstances. Amongst other factors, we have to consider the current structure of competition between Internet service providers, the ability of existing market conditions and regulatory avenues to address concerns over neutrality, and the precedence for new legislation on the issue.

Naturally, each of these factors differs significantly across national boundaries. For example, we see that even the dominance of various high-speed Internet technologies (DSL vs. cable vs. fiber-optic) varies widely between countries at similar stages of technological development and even in close geographic proximity. This simple difference largely affects the competing interests an ISP might face and thus the actions that might warrant regulation in the name of neutrality (are ISP’s also phone companies and thus interested in limiting VoIP traffic, or are they cable TV companies and thus interested in video content?)

Broadband Connections by Type (2007) – Review of Network Economics (Vol.8, Issue 1 – March 2009)

However, when considering the pros and cons of various regulatory (or anti-regulatory) schemes, it’s still important to examine what strategies have been employed to address concerns over net neutrality in other countries. Examining past case law and loose economic precedence simply can’t provide the practical analysis necessary to fully understand this issue.

That said, I had very little luck finding countries where network neutrality has been dealt with effectively. If anything, international policies tend to be inconsistent, even contradictory, and many countries are still stuck in the same policy limbo as the US. Since no clear solution can be agreed upon, yet practical problems arising from ISP content control or anti-competitive activity have been very limited, like the US, governments around the world seem hesitant to act. Google and Verizon received quite a bit of flack for neglecting to address network neutrality in the wireless sphere in light of “the competitive and still-developing nature of wireless broadband services.” Although allegations would point to ulterior motives behind this statement, perhaps the message is still helpful. Until broadband technology (wired and wireless alike) stabilizes and real problems from content blocking and prioritization begin to arise in greater number, it may be difficult for any country to reasonably decide whether or not to protect network neutrality and how to manage any regulation addressing the subject.

Nevertheless, I’ve included some notes on the state of net neutrality policy in two countries below. If one thing is consistent about these policies, it is that they are constantly being reworked or changed all together. Let me know if anything I’ve reported is now out of date (or just plain wrong) and I’ll do my best to make any necessary updates.

South Korea:

Lauded as perhaps the worlds most connected nation (very high broadband penetration and average connections speeds 10-40x times that of US broadband), South Korea has always been considered a model for Internet policy makers around the world. However, its net neutrality policies are mediocre at best.

The government claims to fully support network neutrality, which Korea’s ambassador to the US recently endorsed in a speech, explaining that it, “can encourage competition, protect consumers and foster growth in services and applications.” And in fact, South Korea has done a lot to encourage the policy, if not through direct regulation. First, as part of the 800 million dollar “Korea Information Infrastructure plan,” the government invested strategically in the development of a variety of broadband technologies, including DSL and fiber optic networks.  As seen in the figure above, these technologies now compete fairly equally for control of Korea’s broadband market, an achievement that the government believes discourages monopolistic behavior amongst ISP’s. Its difficult for network companies to discriminate against certain content without risking the loss of their consumer base, which can easily switch to alternative broadband providers.

Additionally, Korea forcibly decoupled telecom network companies from ISPs when broadband networks were first created (network infrastructure companies could only lease bandwidth to independent internet providers). Although this policy is no longer in place, its legacy ensures that there is still ample ISP competition within single networks. Additionally, the country still considers network companies “common carriers” so they have not been able to discontinue bandwidth leasing.

However, several South Korean policies have directly contradicted its commitment to promoting competition and thus network neutrality. First, in an obvious move to protect South Korean VoIP providers, the government has established a policy of blocking traffic from any VoIP carrier that is not federally licensed. Skype and Vonage are included in the companies that have been blocked under this anticompetitive policy. Furthermore, in 2006 several cable broadband providers blocked traffic from HanaTv, a new Internet video-on-demand service, claiming that it used too much traffic. However, many claimed that the speed of most Korean networks could easily handle the traffic and the block was motivated by a desire to prevent HanaTv from competing with cable television offerings. Although the Korean government eventually forced ISPs to renegotiate bandwidth contracts with HanaTv, it hesitated to act and did not condemn the anticompetitive action outright, which some say shows a lack of commitment to network neutrality when large corporate interests are at stake.

Germany is interesting in that it has been slow to adopt policies to promote network neutrality; even while the European Union and most of is neighboring countries support the issue. This largely stems from a desire to promote continued infrastructure development and innovation – a consideration that is also important to the US network neutrality debate.

Almost all German broadband is serviced through DSL, a result of the joint monopoly Deutsche Telekom used to hold over both cable and telephone networks. With little incentive to upgrade in a non-competitive market, the cable network remains extremely outdated and its usefulness for broadband is limited. Although DT’s monopoly has since been regulated, no new market entrants are large enough to make substantial infrastructure contributions to Germany’s cable network. As a result, the government has, in a sense, turned back to monopoly.

In 2006, a law was passed to temporarily wave all decoupling regulations on DTs newly developed fiber-optic network, with the hope of providing the company with increased incentive to expand this key DSL alternative. Although this deregulation certainly raised concern amongst net neutrality advocates, who warn that a lack of intra-network competition prevents natural market policing of content blocking and prioritization, it is hard to argue that it was not at least temporarily beneficial in promoting the expansion of broadband internet. DT’s investment plan was directly contingent on the government’s decision to deregulate and no other companies where prepared to make any significant infrastructure investment under decoupling.

The law was eventually overturned in 2009 by the European courts – a step inline with increasing EU concern over network neutrality. Like South Korea, the EU has trended towards the promotion of ISP competition and away from direct regulation in the hope that market solutions will arise to deal with most net neutrality concerns.

Nevertheless, Germany showed continued hesitance to adopt network neutrality as national policy in a recent article published by parliament, raising concerns that technology is shifting too rapidly to make concrete policies and that net neutrality might stifle innovation and infrastructure expansion. Interesting, T-Mobile, which is owned by Deutsch Telekom, recently blocked Skype traffic in Germany to reduce mobile competition, so the countries stance on the issue should be tested once again in the near future.

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