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Two Giant Economies Provide Experiment to “Free and Unfettered” Internet

On both sides of the argument and the ocean, believers state with conviction that their way is the right way

In my previous blog I contrasted the latest net neutrality developments in the EU with the situation in the U.S. Neither decision will settle the argument and the two camps will continue to debate the topic for the foreseeable future. On both sides of the argument and the ocean, believers state with conviction that their way is the right way, leading to a healthier Internet industry and benefits for all.

One camp takes the view that Internet openness and neutrality means that telecom service providers should not be restricted from managing Internet traffic and, if they feel it is appropriate, to charge more to third-party ISPs and content providers for premium service. Only in this way, it is argued, will bit-carriers be able to earn the revenues they need to invest in network growth and quality improvements that will benefit us all.

An opposing view of openness and neutrality is that users of the Internet (that is content providers and the users who access and pay for that content) should be able to expect that their traffic will be given pretty much the same treatment as other users' traffic. If you want to send (or receive) more bits, then you can expect to pay more money for bandwidth, but once en route, all bits should be given equal treatment. Only in this way, it is argued, will bit-carriers be discouraged from under-investing in the network in order to create an artificial capacity shortfall.

On each side of the argument there is a long list of other debating points, most of which signal doom for the future of civilization as we know it if the right path isn't chosen.

Generally I avoid taking sides on this topic, although I tend to have an aversion to heavy-handed regulation. I have also pointed out that prophesies of doom are perhaps overstated, missing the point that businesses and business models can adapt, sometimes in unpredictable ways. For example, enabling carriers to charge for favoring some traffic over others could have a more complex result than just increasing the revenues of the carriers and adding to the costs of the users. It changes the bit-carrying business model in such a way that it might encourage new entrants to the market, and some of those new bit-carrying entrants could potentially be those same content providers who are liable to suffer from the extra costs.

Three years ago, the European Union legislators, without much conviction, decided to swing somewhat in the direction of the bit-carriers, when they decided against introducing legislation to protect net neutrality. At that time they decided that carrier transparency might be sufficient: carriers could enter into any arrangements they like, providing they revealed what they are doing. This decision was similar to the decision of the United States Court of Appeals in January 2014.

Now three years after their initial decision, and presumably after much soul-searching deliberation, the European legislators have moved somewhat in the opposite direction by announcing in April 2014 that they plan to pass legislation that aims to preserve aspects of net neutrality.

What's changed? Well, it's not that their economic advisors have definitively established that there is one right way here. The arguments are still raging, and still just as confused. But note that there's a European election looming. Politicians may not be any more skilled than the rest of us in predicting with accuracy the effects of this legislation one way or the other, in terms of its realistic economic impact on the industry and on the public good. But they can count votes, and it was clear that the lines were being drawn between just the telcos on one side and on the other, most of the Internet content and services industry plus a host of consumer advocates. Perhaps the telcos might have been in a better lobbying position if they hadn't moved so slowly in implementing their own reforms to mobile roaming charges, which have been a gold mine for the carriers in Europe for years, and a constant source of customer complaints. But they didn't, so the legislators plan to hit the telcos with a double whammy, because at the same time they also announced their intention to eliminate international roaming fees by 2016, consistent with their aim to create a genuine single market for wireless services to replace the current fragmented and customer-hostile market.

The decisive vote on these two important matters will not take place until October 2014, so there's still time for attitudes to change. But it might be rather useful for the industry to have two giant testing grounds so we can assess the actual results that emerge from these two different approaches to a "Free and Unfettered" Internet. So far all the foretelling has been based on speculation, some better-informed than others. A period of, say, five years with two giant economies testing out these apparently contradictory philosophies in parallel would be one grand experiment, that would, at least provide us with something to measure. Not that I think it would end the debate. The opinions of politicians and lobbyists alike are substantially immune to evidence, but they are not immune to the democratic pressures of voters. However voters need and deserve more than the partial and loud arguments of those with vested interests, and so this experiment might be just what we all need, on both sides of the Atlantic.

More Stories By Esmeralda Swartz

Esmeralda Swartz is CMO of MetraTech, now part of Ericsson. She has spent 15 years as a marketing, product management, and business development technology executive bringing disruptive technologies and companies to market. Esmeralda is responsible for go-to-market strategy and execution, product marketing, product management, business development and partner programs. Prior to MetraTech, Esmeralda was co-founder, Vice President of Marketing and Business Development at Lightwolf Technologies, a big data management startup. She was previously co-founder and Senior Vice President of Marketing and Business Development of Soapstone Networks, a developer of OSS software, now part of Extreme Networks (Nasdaq:EXTR). At Avici Systems (Nasdaq:AVCI), Esmeralda was Vice President of Marketing for the networking pioneer from startup through its successful IPO. Early in her career, she was a Director at IDC, where she led the network consulting practice and worked with startup and leading software and hardware companies, and Wall Street clients on product and market strategies. Esmeralda holds a Bachelor of Science with a concentration in Marketing and International Business from Northeastern University.

You can view her other blogs at www.metratech.com/blog.

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