Cisco predicts global internet traffic will increase at a compound annual growth rate of 21 per cent a year between now and 2018, with mobile data traffic rising tenfold over the same period. In response, internet service providers (ISPs), whose network infrastructure is struggling to handle this data explosion, argue that they should be allowed to take a more flexible approach to traffic in order to prevent a slowdown. 

At present all data on the internet is supposed to be transmitted on the same networks, at the same speed, regardless of its origin, content or recipient. Put simply, ISPs should treat a simple e-mail in the same way as a video stream. Now they want the option to block certain heavy-traffic services unless users pay a surcharge. They are also in favour of so-called ‘Quality-of-Service’ (QoS) features in which content providers can pay higher fees in return for privileged access to their infrastructure. 

If successful this could have huge ramifications for providers of video-streaming and eHealth services – and for connected cars and ‘industry 4.0’ – which depend on consistent data transmission. But the plans are opposed by supporters of net neutrality, who believe any such measures will stifle innovation since start-up content providers will be unable to afford priority access. 

Net neutrality in the US

The US Federal Communications Commission (FCC) has been struggling to decide whether it should allow a more flexible approach to data transmission. In 2008 and 2010 it imposed net-neutrality regulations on fixed and mobile broadband providers, banning them from unreasonably blocking access to certain content and from unreasonably discriminating between content providers when transmitting network traffic. At the same time the FCC exempted cable companies from several of these obligations. These regulations have since been quashed by the US courts, so the FCC has released a new net neutrality framework by way of a ‘notice for proposed rulemaking’, which was open for public comments until September 2014. The commission is now reviewing the comments and will adopt the new framework in the following months. 

The proposal includes a ‘no-blocking rule’ which sets out minimum standards of access that fixed and mobile broadband companies must give to content providers and consumers. Any reduction of service quality below the minimum standard would be deemed unlawful blocking. The proposal does not explicitly address QoS features, but instead stipulates that fixed broadband providers must refrain from ‘engaging in commercially unreasonable practices’. Since the text contains a relatively vague standard, the term ‘commercial reasonableness’ could be the basis for a rather strict net neutrality regime. However it could also result in a more flexible approach, for example by allowing the sale of QoS features on a case-by-case basis as long as they are not ‘commercially unreasonable’.

Net neutrality in the EU

EU directives on the liberalisation of the telecoms sector endorse in principle regulations to preserve net neutrality. But at the same time they leave it open to member states if and how they implement the rules. As a result many countries have no legislation on net neutrality – and those that do are pursuing different approaches. 

At the start of the year the European Parliament voted in favour of a ‘Single Market Regulation’ which is being discussed by member states in the Council of the EU. The pending regulation promotes the concept of net neutrality by prohibiting data discrimination or restrictions. At the same time it allows ISPs to offer faster transmission speeds to certain types of content deemed ‘specialised services’, but does not determine what falls within the definition. 

The proposal sets out that specialised services shall not result in a reduction of a minimum quality of internet access. ISPs will, however, be allowed to deviate from the concept of net neutrality by applying ‘traffic management measures’. Again there is uncertainty because it is not clear what will amount to legal traffic management measures, and what will be deemed an illegal circumvention of the concept of net neutrality. 

If these conflicts are not resolved at EU level it is likely that regulators in member states will have to interpret the scope of the regulation. As a result it is not yet clear which net neutrality approach will eventually proliferate. 

The effect of competition law

It should also be noted that the concept of net neutrality is affected by EU competition law. Particular agreements and market practices between ISPs and content providers might be seen as a distortion of competition, for example if only certain providers benefit from privileged network access or if data transmission speed is slowed deliberately.