Case for net neutrality regulation weakens

Home Insights Case for net neutrality regulation weakens

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Contributed by: Craig Shrive, Conrad Grimshaw and Felicity Ellis

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Published on: May 17, 2017


Case for net neutrality regulation weakens

The United States Federal Communications Commission (FCC) will soon commence a process to remove Obama-era net neutrality protections In a recent speech, Trump-appointed Commissioner Ajit Pai outlined a plan to change the classification of Internet Service Providers (ISPs) from "common carriers" (effectively public utilities providers) to "information service providers", thereby removing them from the strictest forms of regulation under the Telecommunications Act. The essential objective of net neutrality regulation is to require ISPs to treat all content equally. The Trump administration rejects regulating for net neutrality on the basis that it removes the incentives for ISPs to invest in the network and provide wider access to rural or low-income areas. On 18 May the FCC will vote on the adoption of a Notice of Proposed Rulemaking and begin the process of soliciting comments from the public.

In the meantime, on 1 May 2017, a Federal Appeals Court rejected a request from ISPs to review an earlier decision that upheld the current rules, partly because it did not want to find itself reviewing a set of rules that could be on the brink of repeal. USTelecom, the industry body that led the latest challenge, has indicated it is likely to appeal the decision to the Supreme Court; and if the Supreme Court rules that the FCC does not have the power to reclassify providers as "common carriers", then it will probably be Congress (and not the executive branch) that has the final say on whether the principles of net neutrality are pursued in the US. That is, if the FCC lacks the power to tinker with the classification of ISPs under the Telecommunications Act, any permanent changes to the status quo will have to come via legislation. While the current (Republican-controlled) Congress is unlikely to pass anything that involves stricter regulation of ISPs, it is possible that a Democratic majority (which could be in place as early as the 2018 midterms) might be more willing to act.   

If the United States does abandon net neutrality regulation, it would leave Europe at the forefront of regulation in this area. Regulation EU 2015/2020 was adopted on 25 November 2015 and prohibits the blocking, throttling and discrimination of internet traffic by ISPs. The Regulation provides for three exhaustive exceptions: compliance with legal obligations; integrity of the network; and congestion management in exceptional and temporary situations. The Body of European Regulators for Electronic Communications (BEREC) was tasked with the implementation of the Regulation, and has provided specific guidelines to National Regulatory Authorities to ensure that every European has equal access to open internet.

New Zealand is likely to maintain its approach of not regulating for net neutrality. The issue was raised as part of the Government's review of the Telecommunications Act 2001 and in September 2015, MBIE released a public discussion document, which noted that 'for the average end-user in New Zealand, net neutrality and traffic management have not yet been a cause for concern'. In a subsequent paper, MBIE noted that there appeared to be no appetite for regulation, but raised the question of whether the proposed Sky/Vodafone merger (since declined by the Commerce Commission) changed the landscape. The Government is yet to publicly state its formal position on net neutrality regulation.

This means that net neutrality regulation remains an open question in New Zealand. However, the prevailing view seems to be that the current framework is sufficient to protect consumers, and now that the FCC is set to remove net neutrality regulation, it is more difficult to argue that New Zealand is out of step with international developments on this issue.

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