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UK Ponders Net Neutrality, Overstating Broadband Competition

The recent declaration from the UK’s minister for communications that the Internet should be tiered, thereby allowing ISPs to charge for prioritised traffic (either rated by speed delivered or by content provider) is a knee-jerk response to network strain masking as a necessary network management tool, and is a potential threat to the concept of net neutrality. The issue of network capacity has been with us for many years, and developments in the mobile data sector make it clear that capacity constraints are appearing on mobile networks as well, long before the anticipated launch of LTE-based services in the UK in 2013.

An early indicator of a popular service straining fixed-line networks was provided by the BBC’s very popular iPlayer, soon to become international. The service was a focus of telco ire since users consumed enormous bandwidth. Telcos responded by demanding, more in hope than expectation, that the BBC and, by the same token, Google and other companies like them, should pay a form of rent in recognition of the bandwidth demands on their infrastructure which their services generated. The BBC, conscious of these accusations, is developing a system to show users, by colour code, how efficiently the latters’ ISPs are handling the service to them. By using adaptive bitrate streaming technologies, the BBC hopes to help reduce network congestion.

Yet the government assumes that as long as there is sufficient competition among ISPs, and that consumers are clear about the service given them, there is no need to have net neutrality regulations. The difficulty with this reasoning comes down the way the broadband market has developed, both in the UK and elsewhere in Europe. In the UK alone there are more than 500 ISPs with access to nearly all households. Yet despite the competition engendered by LLU, market forces, the economies of scale and the cost of furnishing sites with equipment has led to considerable consolidation within the sector, with the result that about 75% of all subscriber lines are provisioned by a triopoly of BT, Carphone Warehouse and Virgin Media.

Ofcom’s position is partly fence-sitting: it wants ISPs to be transparent to customers about traffic management, and is edging towards allowing them to work out their management protocols by themselves, without introducing a standard system or minimum service. It assumes that consumers will simply decamp to another provider if the service received is poor—if their ISP discriminates against particular traffic because they have struck commercial deals with certain content providers—but in most areas outside a number of urban zones with congested exchanges there are generally no other ISPs available for consumers to turn to.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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