Net Neutrality in EU after 2 Years: Why operators keep losing the battle against Internet regulation

The EU’s net neutrality law has been in place for more than two years, and the European Commission has scheduled to review its implementation in 2019. Policymakers promised that the law would bring more innovation and protect end user rights, but it appears that the law is doing the opposite. The EU cannot point to new innovation as a result of the law, the law is being used by European regulators to restrict internet products and services that consumers want, and the dominant Silicon Valley platforms have increased their market share in EU. Moreover, the investment gap in EU has widened, and the region is 2 years behind the US and Asia on the rollout of 5G.

Strand Consult describes these and other developments in its report, Net Neutrality in EU after 2 Years: Why operators keep losing the battle against internet regulation. We has again collected, translated, and summarized 29 reports from the national telecom regulatory authorities into a single document. This new report has more than 450 pages of information. In early December 2018, the Body of European Regulators for Electronic Communications (BEREC) released its opinion on its implement of the EU net neutrality law. Unsurprisingly and uncritically, BEREC declared its implementation correct, but it failed to mention the many problems it created for operators, including more than half a dozen regulatory investigations attempting to create the appearance of violations of net neutrality, thereby justifying its heavy-handed approach.

Lacking real problems or bad actors to expose, BEREC needs to invent a reason to extend its regulation of the internet and to make the public interested. Rather than merely implementing the law, BEREC re-interprets to law to realize its preferred vision of the internet. Even though BEREC’s pronouncements are non-binding, the agency exerts peer-pressure on national telecom regulators to align to a common pro-regulatory view and exploits the law’s reporting requirement to force the toughest interpretations.

Strand Consult’s report Neutrality in EU after 2 Years: Why operators keep losing the battle against internet regulation investigates each country in depth and provides an overall summary on the law’s implementation both quantitatively and qualitatively. Here are some of the key takeaways from the reports to BEREC and the themes analyzed by Strand Consult.

1. BEREC’s Regulatory Methodology. BEREC’s goal is to create a de facto regulatory regime of speed measurement to preference certain kinds of technologies and methods over others, a clear violation of the EU law’s provision for technological neutrality.

2. Bogus measurement. BEREC promotes gratuitous and egregious monitoring of network speeds and traffic management practices with bogus crowdsourced measuring tools. The goal is to create user generated complaints on missed speed targets which are then automatically forwarded to regulators so that operators can be penalized accordingly. BEREC admits that crowdsourced apps for network quality measurement are inaccurate, but it prefers their “convenience” over scientifically verifiable methods.

3. Zero rating. The report describes which nations and regulatory authorities want to criminalize zero rating even though the EU law allows it and which regulators have been taken to court. Increasingly they prosecute the practice under the traffic management category rather than commercial practices because they don’t want to perform the time-consuming economic assessments. Looking at economics tends to favor the operators, so regulators are reluctant to do so.

4. Security. Operators efforts to protect users and secure their networks is being increasingly hindered by net neutrality rules.

5. Privacy. The invasive nature of monitoring of networks and BEREC’s desire to implement always-on surveillance amounts to an invasion of users’ privacy and violation of provisions 8, 9, and 10 of the European Convention on Human Rights.

6. Penalties. How the stated penalties for net neutrality violation differ wildly across countries, from thousands to millions of euros for an infraction, which itself seems to violate EU competition standards.

7. Speed fallacies. The report exposes the false assumptions of EU policymakers that internet speeds will increase linearly indefinitely, regardless of whether users want to buy higher speeds or whether applications need them. The regulators’ focus on speed deprives consumers the ability to select and contract for their preferred features such as flexible pricing, service quality, safety, durability, and so on. This amounts to a regulatory takings of consumer and producer welfare without compensation.

8. BEREC’s preferred group of stakeholders are the set of advocacy organizations AccessNow, EDRi, ISOC, and BEUC. All but BEUC are funded by Google. BEREC claims that these groups represent the voice of the “consumer.” The relevant stakeholder group is in fact the customers of ISPs, but BEREC does not acknowledge the heterogeneity this group. Instead it merely professes to know what customers want. Sadly, the voice of Google pulls more weight with BEREC than actual European consumers.

9. Propaganda. The report describes how BEREC commissions marketing materials such as videos, brochures, events, and software to influence the debate to its favor. After grandstanding on the record-breaking response of activist-generated comments to its public consultation in 2016 and 2018, BEREC now claims it has to popularize its policy on net neutrality because most Europeans have never heard of the issue.

10. Bureaucracy. The report exposes the regulatory redundancies, bureaucratic overlap, and legislative overkill created through the new regime on net neutrality, creating a colossal waste of administrative resources. Depending on the country, multiple regulatory agencies survey broadband networks in addition to the telecom regulator. 

11. Desperate EU gamble for popularity.  The European Commission and Parliament made a gamble to regulate net neutrality and roaming in the same legislation, on the desperate hope that the EU could translate Europeans love of the internet and mobile communications into love of EU government. The EU claims that the reason for the legislation was to protect and guarantee the engine of Internet innovation, but the regime fails on both fronts. The privacy of users is being violated by the restriction of low-priced, innovative products, invasive measurement, and rules which make it difficult to implement security features on networks. As for innovation, there are little to no examples of new European developments since the legislation. If anything, the EU continues to fall behind the US and East Asia in internet innovation.

12. The report includes a chapter on evidence-based policy and a checklist for good regulation to demonstrate just how far the EU regime misses the mark for best practices.

13. The report describes why the operators keep losing the battle against net neutrality regulation in EU.

Strand Consult houses a number of the world’s leading experts on net neutrality and is the leading provider of empirical analysis and international comparisons on this issue. 

The report Net Neutrality in EU after 2 Years: Why operators are losing the battle against Internet regulation was written by Strand Consult’s internet policy team, a group composed of economic and regulatory experts, recognized internationally for their research contributions. Buy this report so that you can get the real story behind BEREC’s efforts to regulate the internet.

Order the report.