Differences in telecommunications regulation between the U.S. and the European Union are a key factor in viewing the network neutrality discussion from a European perspective.
Readers oF THIs will be familiar with the network neutrality debate currently occurring in the U.S. The February 2009 is-
magazine
sue featured a Point/Counterpoint column by Barbara van Schewick and David Farber, respectively arguing in favor of and against legislative intervention to secure network neutrality (page 31). Many readers might have wondered whether the European Union has also been engulfed in the debate. The answer is yes, but as is often the case the EU and the U.S. are starting from different situations and working within different policy frameworks.
“Network neutrality” has become a slogan of sorts, which covers a more complex reality than either side of the U.S. debate is willing to admit. The key development that prompted the debate everywhere were statements by certain broadband Internet service providers that they wanted to move away from the “best-efforts” model currently prevailing. Instead of deploying best efforts to convey all the packets they handle to their destination (with delay, jitter, and
so forth being distributed randomly), these ISPs would want to introduce differentiated quality of service (QoS) levels. Technically, ISPs would then need to inspect packets more intensively than they usually do in order to determine the QoS level with which to handle them.
In the EU as in the U.S., ISPs have two main reasons for desiring differentiated QoS. In the shorter term, it responds to perceived network management problems, in the wake of ex-
plosive Internet traffic growth with the rise of video-based applications, services, and content. For most ISPs today, a small fraction of their users (usually less than 10%) account for most of the use of their networks (usually around 80%). This imbalance is not reflected in the subscription rates, even though that small fraction of users generates network management problems that affect the quality of service provided to other users. Differentiated QoS—as a network management tool—would enable ISPs to correct some of that imbalance, since users (including application, service, and content providers) would then decide how much quality of service (priority) they want to purchase and their traffic would be treated accordingly. In economic terms, it is too early to tell whether such a development will increase welfare. In theory, tailoring QoS more closely to the preferences of each user is an improvement, but in practice the verdict will depend on the extent to which the users who opt for lower QoS offerings are properly compensated if—as is likely—they experience an inferior level of service.
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