ISPs and Content Providers Respond to Ofcom’s UK Net Neutrality Review

Ofcom has published some of the first responses from UK broadband ISPs and internet content providers to their new review of Net Neutrality rules, which were designed to ensure no serious blocking or slowing of access to legal websites or other online services by ISPs and mobile operators. Suffice to say, vested interests split the pack.

Commentators on this issue sometimes forget that, back in 2011/12, the United Kingdom was actually one of the first countries within Europe to adopt a self-regulatory approach toward protection of the open internet (here). Indeed, those rules also provided part of the foundation for the EU’s own Directive in 2016 (here), which was later adopted into UK law.

In short, the regulation essentially means that providers cannot impose excessive restrictions against internet traffic and should treat almost all of it equally (i.e. they generally shouldn’t favour specific services, such as by blocking or slowing access). However, there are some exceptions to this, such as for when providers need to impose general traffic management, court ordered blocks or for security measures (e.g. anti-virus/spam filtering).

The rules also help to stop ISPs from favouring content sources based on who pays them the most money, which might in turn lead to a degraded experience for other users (e.g. slowing the quality of Netflix or YouTube). This typically helps to ensure that excessive access controls over content don’t result in a walled garden style internet experience.

However, some of the big ISPs have never fully given up on their desire for a relaxation of the rules, which was underlined earlier this year by BT’s predictable call for greater freedom (here). On the flip side, content providers – stretching from the BBC to Netflix – remain strongly supportive of the existing rules and are opposed to any weakening of those protections, which might shift more costs from ISPs on to their shoulders.

In short, the first responses to Ofcom’s new review, which opened in September 2021 (details), tend to reflect the historically predictable divide of vested interests between the two camps (internet content vs access providers). The regulator will no doubt find it tricky to navigate a path through such opposing viewpoints.

On top of that they’ll also need to remember the most important group of all, consumers, and the risk of creating more complications for them when choosing future packages. Today’s market is already absurdly complex, particularly with so many new alternative networks, all with varying different levels of service and coverage.

Responses to Ofcom’s Net Neutrality Review

Firstly, it’s important to reflect that the scope of Ofcom’s review is actually limited in that it is intended to inform their work in monitoring and ensuring compliance with the current Net Neutrality rules, and the operation of current guidance on complying with the existing rules. However, any changes to the core rules themselves would be a matter for UK Government and, ultimately, Parliament.

Below is a quick summary of some of the first and most interesting responses to Ofcom’s review, which helps to reflect the different, albeit often quite predictable, opinions that exist. The regulator currently expects to publish their initial findings from this review during Spring 2022. We can only hope that they continue to strike the right balance and don’t erode vital consumer protections.

BBC

The BBC’s view is, perhaps unsurprisingly, that the existing principles have resulted in “flexible rules that remain fit-for-purpose” and they’re “cautious of the risks raised by recent calls for a relaxation of the rules.” But they also warn that alternative systems have been proposed, which they fear would encourage ISPs to charge online services for fast-tracked delivery to internet users.

Extract from the BBC’s Response

“This could mean that users are no longer able to access all services at the same levels of speed or quality as today. If online service providers (e.g. the BBC, ITV, Netflix, gaming companies etc) are charged a fee by ISPs – many companies will pass the increased cost on to consumers meaning UK customers facing higher prices. The BBC would however have to divert licence fee income away from British content investment, to pay ISPs for access to audiences.

…

While use of the internet is growing and will continue to do so, the consequent investments that all parties involved will need to make to facilitate this does not warrant a change to the net neutrality rules. Instead, we would encourage that traffic spikes are tackled by exploring what can be done within the rules, which already allow for flexible traffic management. Further, all parties should be encouraged to work more collaboratively to manage traffic loads, given their aligned interests in delivering content and services effectively to internet users.”

We should point out that, one way or another, any increased costs from service delivery – be that on the side of the ISP or the content provider – will generally end up being passed on to consumers. The ever-rising consumption of data is one of the reasons why both ISPs and content providers raise their prices every year, to help cover the related costs.

BT

The national telecom giant has already made no secret of their desire for the rules to be changed because, they claim, “there are very good reasons to enable preferential access to certain platforms” (good for BT, perhaps, albeit possibly less so for content providers and consumers). But they’ve not previously spelt out precisely what kind of “adjusted” rules they want to see and we’re of the view that the current approach helps to keep things fair.

Sadly, BT’s response, much like a few others today, is full of vaguely defined words like “innovation” – masking the detail of what they’d actually like to do. At the same time, they appear to rehash many of the arguments from 2011, when it’s easy to forget that consumer internet traffic was already starting to be dominated by online video traffic.

In other areas they appear to suggest that customers themselves want more control over traffic, which might be true in some respects, but we’re unclear on the merits of BT’s specific argument here – as opposed, perhaps, to the ISP just delivering a good quality of service, in general.

Extract from BT’s Response

The market is also moving towards more personalisation. Connectivity is central to our customers lives, but not all customers have the same needs. Increasingly, they want unique experiences targeted at their individual preferences/usage. Customers should be empowered to decide how services are prioritised or managed over the network. For example, if they want to prioritise their streaming over non time-critical updates, or real-time QoS boosts for gamers.

The rules should recognise that not all discrimination is harmful and even within internet access services ISPs should be able to differentiate service tiers and charge accordingly for customers who are willing to pay for a premium service. This structure avoids cross subsidy by over-offering functionality to customers who do not need it.

No feedback from a consumer survey is included to support BT’s case above. Lest we forget that those stuck on slower lines often have no choice but to prioritise traffic (if you connect at sub-10Mbps then it’s easy to saturate the line with demand). But people on fast FTTP lines really shouldn’t, ideally, have or need to make such decisions over prioritisation.

BT also argues against the end users’ rights to use the terminal equipment of their choice, which to be fair, doesn’t seem to have stopped some ISPs from bundling extremely locked-down routers and obstructing customers from using a third-party device (e.g. Truespeed).

But BT might have a point when they highlight that some terminal equipment, like IoT (Internet of Things) devices, may only need limited connectivity (i.e. limited to the functionality of that device), which could be true for smaller devices (sensors etc.). However, they extend this argument to include “connectivity sold to use with a particular gaming device, smart watch, smart phone or connected device“, which is much more debatable (e.g. if “gaming device” includes an XBox or PS5 etc.). BT then concludes with the following:

Extract from BT’s Response

We welcome the breath of Ofcom’s review, the outputs of which could provide the evidence base and analysis for Government to take forward more fundamental review. In the short term we believe Ofcom can make meaningful change including as follows:

• Refresh the guidelines from scratch with a focus on innovation and consumer welfare – the current guidelines are overly complex and have sought to find new ‘problems’ to regulate.

• Interpret the legislation in a way that provides the right incentives for the wider value chain – for instance it should be permissible to treat unidentified and/or inefficiency distributed traffic below other traffic.

• Broker a code of conduct for content distribution – for instance encouraging off-peak timing of gaming updates as was agreed during the pandemic.

The idea of off-peak timing for gaming updates is interesting, but it’s a tricky one to get right across multiple countries. Lest we forget that during off-peak periods a lot of consumers will have switched-off their gaming devices (i.e. due to being at work / school etc.).

Broadband Stakeholders Group (BSG)

As overseers of the original open internet code, the BSG’s views are important. To date, and taken as a whole, the BSG “considers the existing open internet regime has worked well. Transparency and competition between providers is strong, full internet access products predominate and negative discrimination of content and services is rare.”

However, they also “recognise that some reform to Ofcom’s guidance may be necessary to sustain an open internet to its fullest possible extent.” The group points to this being driven by significantly larger future “peaks” of traffic (today surges are usually double the normal level, but by 2031 they could rise to 4x as much), IoT, 5G take-up and greater reliance on cloud-based services.

Extract from the BSG’s Response

The BSG believes Ofcom should give consideration offering further guidance to how the rules apply in three areas in particular:

• Zero-rating;

• Specialised services, where newer services such as private 5G networks and Internet Protocol Virtual Private Networks should be explicitly addressed; and

• Interoperability and good practice among value chain participants.

In all of these areas, there is now a clear need for a neutral, cross-sector forum in which more detailed examples of good practice and guidance can be developed. This is particularly important given uncertainty created by recent European Court of Justice judgments on zero rating, the Body of European Regulators for Electronic Communications’ review of the guide-lines, and the need for a pro-innovation approach to future services.

The BSG is ideally placed to fulfil such a role via our Open Internet Forum. We therefore pro-pose to initiate a new work programme focused on ensuring that innovation and evolution flourishes within the principles of an open internet and the existing net neutrality rules.

Sadly, there’s not much detail in the BSG’s submission, thus we’re unsure of their position on VPNs. But one way or another, these areas will need to be discussed and it seems sensible for the BSG to be involved.

Channel 4

The response from C4 is short and broadly supportive of the current code, as you’d expect. But they also warn about “the concentration of market power amongst a few key firms and changes in how consumers are utilising the internet“, although they don’t name anybody and so the context is a little vague.

The broadcaster goes on to state that “relaxing net neutrality rules risks further entrenching the influence of companies who dominate consumption online and could use their market power to gain further competitive advantages, such as through paying for priority traffic.”

Channel 4 also has concerns that companies are “circumventing net neutrality rules” by offering deals for apps or services so that they do not count towards any data limits (known as “zero-rating“). They exclude beneficial zero rating from this argument, such as for emergency health services or education. We have seen a number of mobile operators offering Zero Rating features for certain streaming services and social media (C4 highlights the latter), but so far Ofcom hasn’t been overly concerned about those that remain.

Extract from C4’s Response

International evidence shows, particularly in countries with limited internet infrastructure, that zero-rating has been used to give consumers unlimited access to social media. The impact of this has been demonstrated to distort access to legal content and increase the spread of viral misinformation.

In an age of rapidly increasing online consumption, this raises important public policy questions about fair access to public service media. Firstly, that the zero-rating practice has the potential to be exclusionary as few public service media organisations have the financial resources to agree these commercial deals.

Secondly, that zero-rating has the potential to undermine PSB prominence frameworks as by their nature these deals give preferential access to certain apps and services.

In 2021, the Court of Justice of the European Union (CJEU) ruled against zero-rating practices by Vodafone and Telekom, stating that is not in accordance with the EU’s net-neutrality law (the same one that the UK adopted). But it remains to be seen how this is actually going to be interpreted elsewhere and if it will even impact Ofcom’s thinking.

Comms Council UK

Naturally the Comms Council UK, which largely represents the wider VoIP (internet phone) sector, is strongly supportive of the existing rules and will be weary of any changes that could obstruct the services they support. “The resounding view of our membership (baring one ongoing area we consider needs a watching brief from Ofcom, backed by its powers as necessary which we discuss below) is that the Regulation has been a success and it should be left alone,” said the council.

As for the “ongoing area” of concern hinted at above, the council later notes Ofcom’s position that it “do[es] not intend to look at ‘device neutrality’ in the context of any restrictions on internet access determined by the device manufacturers and/or operating systems“. The Council says this is “ill-advised, as it risks today’s expectations of ubiquitous service reliability and will likely necessitate subsequent regulation, further disrupting the industry and its consumers.”

Extract from the Comms Council UK’s Response

In circumstances where devices are provided as an integral part of the Internet Access Service (e.g. a bundled router or handset), then we consider that the subject of device neutrality cannot simply be ignored.

Had Comms Council UK not lobbied hard for a decade on the subject, had NICC not issued a standard on SIP ALG, had the existence of the Regulation not forced EE to change its terms, and other things, it is very possible that the experience of the UK during COVID-19 lockdowns could have been very different.

Historically, routers provided by Sky to its residential customers could not be replaced without the involvement of a customer services agent (as their DSLAM authenticated based on the router’s MAC address) and interfered with over-the-top voice services. Similar historical accounts can be given for several other major internet service providers, and EE had an outright ban on its customers using competing services.

It remains to be seen whether Ofcom agrees with this, but the point does seem relevant.

ISPA

It’s important to stress that not all ISPs share the views of those who want to weaken the existing Net Neutrality rules. Indeed, the ISPA, which represents UK ISPs from a much broader cross-section of the market, notes that the “core principles of the UK’s net neutrality framework have worked well” and they see “no significant or sustained concerns” that would warrant “a more restrictive interpretation of net neutrality rules.”

Flick over the page to see more feedback from the ISPA, as well as Netflix, Three UK, Virgin Media (VMO2), Vodafone, ITV, KCOM and Sky (Sky Broadband).