The French regulatory authority for electronic communications, ARCEP, published its first Internet quality of service (QoS) measurements for net neutrality purposes. The quality of service measurements are intended to make poor ISP performance more visible to consumers, regulators and upstream content providers. France, like most other countries in Europe, allows Internet access providers flexibility to shape traffic and offer managed services as long as ISPs are transparent about their policies and the quality of service of basic Internet access does not suffer. If the quality of service of Internet access drops, the ARCEP, like other regulatory authorities in Europe, has the ability to intervene and impose a minimum quality of service level.
The French competition authority and the Paris Court of Appeals also held that France Telecom is not required to grant free peering capacity if traffic loads are seriously imbalanced. The result is that Internet access providers in France have a fair amount of flexibility in dealing with their transit and peering partners, as well as in how they offer managed services.
The reason this flexibility exists is that in theory French consumers have a choice between three or four competing Internet access providers. The retail market for Internet access is competitive, and according to the European regulatory philosophy, a competitive market is the best form of regulation. In practice, of course, market failures can exist even in competitive markets. The ARCEP’s quality of service measurements attempt to address one market failure, which is lack of consumer information. If a video streaming service does not function well, the consumer does not always know why. There are many reasons why a video may not stream properly. One reason may be that the ISP has constrained its upstream transit and peering capacity. The ARCEP measurements are intended to shed light on the performance of each French Internet access provider for different kinds of applications: upload, download, peer-to-peer, and video streaming. The idea is that if consumers have reliable access to QoS measurements, they will switch provider if their own ISP offers poor service. Thus the market will self-regulate.
In practice, there may exist switching costs that make a change in ISP difficult. Switching costs may exist when the consumer also purchases television services from the Internet access provider, for example. Another reason why the market may not function correctly is if all access providers provide the same (poor) level of service. This kind of alignment among Internet access providers would not necessarily result from an illegal agreement. It could simply result from parallel behavior among members of an oligopoly. For this reason, the ARCEP and other regulatory authorities in Europe have backstop authority to impose minimum quality of service levels in justified cases. However, before imposing such measures, the regulatory authority must demonstrate to the European Commission that the measure is needed to address an actual quality of service problem. This is another reason why it’s essential for regulatory authorities to have reliable QoS measurement tools at their disposal.
Because QoS measurements can easily be challenged, the ARCEP was careful to create an institutional structure to oversee the development of objective QoS measurements. The institutional structure involves a committee that includes representatives of Internet access providers, consumers groups and independent technical experts.
A new legislative package proposed by European Commission would increase the level of net neutrality regulation in Europe. The so-called “Connected Continent” package would impose, and among other things, an outright prohibition of discrimination by ISPs. Currently only the Netherlands and Slovenia have a non-discrimination obligation in their national law. The Connected Continent package would also place constraints on ISPs’ ability to provide managed services. The Connected Continent legislative package is still in negotiation among the European Council, the Parliament and the Commission. It is likely to be adopted in 2015.
(ARCEP published on November 21, 2014 a video interview of Winston Maxwell in which he explains the difference between the net neutrality approaches in the US and in France.)