introduced on single-firm platforms in the EU. More likely than not, significant coordination—through consortia/alli-ances, industrywide standardization or both—will be needed.

It is against that background that EU policymakers are considering whether to intervene. Their toolkit is different from that of their counterparts in the U.S. The EU regulatory framework for electronic communications ( telecommunications) is formulated as a set of policy objectives, which national regulatory agencies implement with the help of instruments defined at the European level. Regulation must be based on sound economic analysis (as opposed to technology or history), and it is meant to be used only when it provides added value over the application of competition law. The regulatory framework is intended to be robust and sustainable without constant legislative intervention. In a sense, the discussion of network neutrality is a good test of these principles. So far, the dominant view is that the various issues raised by the introduction of differentiated QoS can largely be dealt with using existing legislation.

Indeed, many of the concrete difficulties experienced so far fall under EU competition law. For instance, in the U.S., the FCC inquired into the practices of Madison River—an ADSL provider that blocked access to voice over IP providers competing with its telephone service; and of Comcast— the large cable provider that blocked peer-to-peer traffic potentially competing with its cable TV service. In the EU, if an incumbent or any other ISP with enough market power to be found dominant engaged in a similar practice, it would most likely run afoul of Article 82 EC, which prohibits abuses of such dominant position (conduct that undermines competition by excluding competitors from the market).

Similarly, a dominant ISP would likely breach Article 82 EC if it attempted to create a walled garden or gated community whereby its own or affiliated content, applications, or services would be favored over those of competitors. If competition law were found not to have enough bite, then the regulatory regime specifically concerned with dominant operators (oper-

the regulatory
debate surrounding
the introduction
of differentiated
QoS and network
neutrality in
europe is not over
by any means.

ators with significant market power or SMP) could be made applicable to the market for the transmission of content over the Internet. National regulatory agencies would then have the power to impose access and nondiscrimination obligations, in line with the EC regulatory framework.

Furthermore, if all ISPs were to engage in blocking to such an extent that the Internet became “patchy” and its ability to deliver benefits to society was impaired, the current regulatory framework also offers a possibility to intervene to restore interconnectivity. Yet any intervention on this point would need to be very finely tuned: introducing differentiated QoS to improve network management implies that some users will choose not to purchase the top level of service, without them being in any way blocked from accessing what they desire.

In the end, even if the introduction of differentiated QoS entails some risks in addition to the benefits it could bring, it is too early to tell, and at this moment the case against differentiated QoS is not solid enough to warrant specific legislative intervention to impose network neutrality in the EU. The most important open issue for now is that subscribers know which QoS level they are getting from their ISP. Unfortunately, this is not always explained properly by ISPs.

As it turned out, the network neutrality debate hit Europe just as the EU lawmakers were conducting a general review of telecommunications regulation. The European Commission carried out the review and in 2007

submitted legislative proposals to the Council (made up of Member State governments) and the European Parliament for enactment. The Commission proposed to introduce a general principle that end users should be able to access and distribute any lawful content and use any lawful applications and/or services of their choice and to require ISPs to inform their users of any limitations imposed on that right. It also reserved for itself the right to develop minimum QoS requirements to be imposed on ISPs, if necessary.

In first reading, the European Parliament brought these proposals much further by framing the issue as a matter of fundamental rights and entrusting national regulatory agencies directly with the ability to introduce minimum QoS requirements. Yet the Member States, meeting in the Council, are much more prudent, and at the time this column was written, their view appears likely to prevail when the legislative process ends later in 2009. Contrary to the Commission and the Parliament, the Member States do not want at this time to enshrine any principle that users should have access to content, applications, and services of their choice. They would, however, require ISPs to inform users of traffic management policies and QoS levels. Finally, they would follow the Parliament in empowering national regulatory agencies to introduce minimum QoS requirements.

The regulatory debate surrounding the introduction of differentiated QoS and network neutrality in Europe is not over by any means. Legislative intervention for the time being is likely to be limited to strengthening transparency toward consumers, with the threat of minimal QoS requirements if the evolution took a turn for the worse. For the rest, the current regulatory framework will undoubtedly be used to deal with problems as they arise in specific cases. The next legislative review, probably in 2012, will then take stock of developments and lead to more definitive and informed legislative proposals if needed.

Pierre Larouche ( [e-mail]) is professor of Competition law and the director of the tilburg law and economics Center (tileC) at tilburg university, the netherlands.

Copyright held by author.