Net Neutrality – Ofcom UK Softens Open Internet Safeguards UPDATE2

Ofcom has today published new proposals to soften some of the UK’s existing Net Neutrality protection rules, which were established some years ago to ensure no serious blocking or slowing of access to legal websites or other internet services by broadband ISPs and mobile network operators. But there are some positive statements too.

Back in 2011/12 the United Kingdom became one of the first countries in Europe to adopt a self-regulatory approach toward protection of the open internet (here). The same rules later went on to help provide some of the foundation for the EU’s related Directive in 2016 (here), which was also adopted into UK law (i.e. it may be better to think of them as guidelines).

The regulation means that providers cannot easily impose excessive restrictions against internet traffic and should treat almost all of it equally (i.e. they should avoid favouring specific services, such as by blocking or slowing access to rivals). However, there are some exceptions to this, such as when providers need to impose general traffic management, court ordered blocks or for security measures (e.g. anti-virus/spam filtering) etc.

The measures 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.

Why Change Net Neutrality Rules?

However, some big broadband ISPs and mobile operators have never fully given up on their desire for a relaxation of the rules, which was underlined last year by BT’s all too predictable call for greater freedom and their rehashing of old – and often highly questionable – arguments about data capacity and costs (here). A recent statement from the European Telecommunications Network Operators’ Association (ENTO) echoed a lot of that (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 they fear might shift more costs from ISPs on to their shoulders. Suffice to say that, on this topic at least, the wider online industry remains split clean down the middle by vested interests (internet content vs access providers) – Summary of consultation responses.

Nevertheless, there are some examples of situations and services where the current rules can run into problems. For example, the Zero Rating (i.e. free mobile data) of some online services and websites during the COVID-19 pandemic (i.e. those providing support and useful info.), which was a largely positive move, did in some cases appear to challenge the rules.

The future use of Network Slicing on 5G networks (example), which enables mobile operators to create multiple virtual networks for specific services and with different characteristics – all on top of a single physical network, is another area that could test the rules. For example, imagine a network slice with a guaranteed level of latency that was targeted at online gamers (sounds good, but it might mean those on other packages seeing slower performance). Suffice to say, there’s something to be said for ISPs that aim to give the same good quality connection to all customers, rather than only a select few.

What Has Been Decided?

Ofcom launched a review of all this last year, although the scope was 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. But any changes to the core rules themselves would be a matter for UK Government and, ultimately, Parliament.

The regulator has today set out a series of changes to update their current guidance, which appears to give network operators a bit more flexibility.

Ofcom’s Proposals

In general, net neutrality has worked well and supported consumer choice as well as enabling content providers to deliver their content and services to consumers. However, there are specific areas where we propose more clarity in our guidance to enable ISPs to innovate and manage their networks more efficiently, to improve consumer outcomes:

• ISPs can offer premium quality retail offers: Allowing ISPs to provide premium quality retail packages can better meet some consumers’ needs. For example, people who use high quality virtual reality applications may want to buy a premium quality service, while users who mainly stream and browse the internet could buy a cheaper package. We propose new guidance clarifying that ISPs can offer premium packages, for example offering low latency, as long as they are sufficiently clear to customers about what they can expect from the services they buy.

• ISPs can develop new ‘specialised services’: New 5G and full fibre networks offer the opportunity for ISPs to innovate and develop their services. We propose guidance to clarify when they can provide ‘specialised services’ to deliver specific content and applications that need to be optimised, which might include virtual reality and driverless vehicles.

• ISPs can use ‘traffic management’ measures to manage their networks: Traffic management can be used to manage congestion on networks so that a good quality of service is maintained for consumers, and so we propose guidance to clarify when ISPs can do this.

• Most zero-rating offers will be allowed: Zero-rating is where the data used by certain websites or apps is not counted towards a customer’s overall data allowance. We propose to update our guidance to make clear we will generally allow these offers, while setting out the limited circumstances where we might have concerns.

We also propose to clarify our approach to enforcement where there is clear public benefit. This includes enabling ISPs to prioritise and zero-rate access to emergency services, offer parental controls, and manage internet traffic on aeroplanes and trains where there is limited capacity available.

We set out views on a further set of issues where there may be a case for giving ISPs further flexibility in future but which are not permitted under the current rules. These would be a matter for Government to consider as they would require legislative change. These are:

• Allowing retail packages in which different content is provided to different quality standards, for example a package that only has a specific gaming application with guaranteed low latency;

• Allowing greater flexibility to apply traffic management to specific content to address congestion; and

• Allowing zero-rated content to continue to be accessed after a customer’s general data allowance has been exhausted.

Finally, we set out our views on the possibility of allowing ISPs to charge content providers for carrying traffic, which might lead to more efficient use of networks. While there are potential benefits to a charging regime, we have not yet seen sufficient evidence that this is needed and believe there is sufficient flexibility provided for ISPs in our other proposals. Ultimately whether or not a charging regime should be introduced in the UK is a decision for Government and Parliament.

Conclusions

The move to make it easier for broadband ISPs to introduce “premium quality retail” packages (e.g. those with lower latencies) will be interesting to watch, particularly if any providers deliberately reduce the performance of existing connections in order to make such packages appear more attractive – the risk of doing that is your customers might jump ship to a different provider.

On the other hand, we’ve seen some domestic grade business broadband packages that already prioritise certain types of network traffic, so it’s not totally unfamiliar territory and the regulator’s move may be more about clarifying a fair approach. But making such technical things “sufficiently clear to customers” will be another challenge, and big ISPs in particular haven’t always been very good at getting this right.

On the flip side, Ofcom has clearly stated that they’ve not seen enough evidence to support a change that would allow ISPs, such as BT and Vodafone, to charge content providers (Netflix, iPlayer etc.) for carrying traffic, which is a broadly positive statement. The regulator reiterated that “whether or not a charging regime should be introduced in the UK is a decision for Government and Parliament.”

We think it’s always worth remembering that demand for broadband and mobile data services would not exist without attractive internet content (e.g. YouTube, Netflix, Facebook and other services etc.). Some ISPs may complain that the increase in related data usage from these services and others raises their costs, but that is a cost of doing business and should ideally continue to be reflected in the prices we all pay as end-users.

Taking the approach of some big ISPs, but reversing it, we could perhaps make a similar argument for why network operators aren’t contributing enough to help content providers cover their costs in creating the content that makes consumers want to use faster broadband and mobile networks in the first place. It’s a two-way street. But wherever the costs end up falling, consumers will still pay for it.

In our view, the previous rules, while imperfect, have generally worked well to keep the balance fair and the internet, open, as it was always intended to be. Ofcom are clearly proposing some changes that will give ISPs and mobile operators more flexibility to create new packages, but they don’t appear to have gone too far overboard.

Time will tell whether the changes proposed by Ofcom today end up changing the current balance, but in the short-term, we don’t expect much of a shift. Ofcom plans to consult on these proposals until 13th January 2023, and they expect to publish their final statement in Autumn 2023.

Consultation: Net neutrality review
https://www.ofcom.org.uk/consultations-and-statements/category-1/net-neutrality-review

UPDATE 4:04pm

We’ve had a comment from TalkTalk.

A TalkTalk spokesperson said:

“We welcome that Ofcom is updating its guidance to reflect evolving technology and consumer demands. Firstly, the new rules can and must support network efficiency. Secondly, content providers should in some cases support network capacity growth whilst also ensuring consumers continue to have unrestricted access to the content. We look forward to seeing rules that better reflect today’s needs.”

UPDATE 24th Oct 2022

The CEO of BT’s Consumer business, Marc Allera, has posted somewhat of a reaction to Ofcom’s proposals, and they largely appear to be sticking to their guns and echoing the same old tropes. One big problem is that BT tends to generalise and doesn’t give specific examples to help illustrate what they actually mean, which is an issue because the devil with those arguing against net neutrality is always in the detail.

Marc Allera, CEO of BT Consumer, said:

We believe every online journey should be possible. Whatever the destination. And at any time of any day. We’ll be putting detailed evidence into Ofcom’s consultation, but there are some simple principles that need to be tackled to achieve that.

1. Content should be delivered efficiently

Companies don’t despatch a single lorry for every unique online order – they group deliveries into a single vehicle because it’s logical, efficient and economical to do so. BT is in the business of delivering digital, not physical, parcels but we believe the same principles should apply. We have solutions that can help the largest businesses to be more efficient online and we should be supported to be able to use them.

2. Not all content is time sensitive

We wouldn’t expect a 25-lane motorway to be built to Land’s End to cope with Bank Holiday traffic for only eight days a year. Yet that’s the equivalent of what we have to do digitally under current rules. By prioritising content according to when it’s needed, we won’t waste investment to create excess capacity that’s not needed most of the year and can ensure the customer gets a better experience.

3. UK businesses should be able to benefit from innovation

Networks can be configured for specific customer needs but it remains unclear which services are allowed under net neutrality rules. An obvious example is zero-rating – removing costs to access certain content – because under net neutrality rules one website shouldn’t be prioritised over another. Yet during the pandemic, this was how we enabled free access to education resources. In the future, there will be many new opportunities to provide bespoke support for customers, but we don’t want network innovations stifled because there’s no certainty they can be brought to market.