Ofcom Finalises Softer UK Rules to Protect the Open Internet UPDATE

Ofcom has finalised their move to soften the Net Neutrality rules, which were originally established to prevent unfair blocking or slowing of access to legal websites and internet services by broadband ISPs and mobile operators. Providers will now gain more flexibility to create “premium” packages (e.g. better latency) and “specialised services“.

Back in 2011/12 the United Kingdom became one of the first countries in Europe to adopt a self-regulatory approach toward protecting access to the open internet (here). The same rules later went on to help provide some of the foundation for the EU’s related law in 2016 (here), which post-Brexit has also been adopted, with minor alterations, to became part of UK domestic law.

The rules mean 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 prevent 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.

The Problem Areas

The UK communications regulator, Ofcom, has thus far tended to take a soft approach toward implementation and enforcement of these rules (i.e. it may be better to think of them as guidelines), which has at times made it difficult to know whether a particular product or service would be considered in breach or not.

For example, the Zero Rating (i.e. free mobile data) of some online services and websites during the COVID-19 pandemic (e.g. those providing support and health info.), which was a largely positive move, did in some cases appear to challenge the rules.

The use of Network Slicing on 5G networks (example), which enables mobile operators to create multiple virtual networks for specific services and often with different characteristics (e.g. a guaranteed level of latency for online gamers) – all on top of a single physical network – is another area that could test the rules.

In response, Ofcom launched a review with the goal of updating the guidance to help clarify their approach to both monitoring and ensuring compliance with the existing Net Neutrality rules. Crucially, the regulator is not making any change to the core rules themselves, as that would be a matter for UK Government and, ultimately, Parliament.

Summary of the Key UK Net Neutrality Changes

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 provide 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 means they 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 can buy a cheaper package. Our updated guidance clarifies 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. Our updated guidance clarifies when they can provide ‘specialised services’ to deliver specific content and applications that need to be optimised, which might include real time communications, virtual reality and driverless vehicles.

• ISPs can use traffic management measures to manage their networks: Traffic management can be used by ISPs on their networks, so that a good quality of service is maintained for consumers. Our updated guidance clarifies when and how ISPs can use traffic management, including the different approaches they can take and how they can distinguish between different categories of traffic based on their technical requirements.

• 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. Our updated guidance clarifies that we will generally allow these offers, while setting out the limited circumstances where we might have concerns.

We also clarify that we are unlikely to have concerns where ISPs take reasonable approaches to provide services with clear public benefit. This includes enabling ISPs to prioritise and zero-rate access to emergency services, offer parental controls, manage internet traffic on transport and in public spaces where there is limited capacity available, and prevent access to scam websites and other harmful content.

The most important thing to say is that Ofcom has NOT found “sufficient evidence” to support calls by major broadband ISPs and mobile operators, such as BT and Vodafone (examples here and here), which have long sought to be able to charge content providers (Netflix, websites etc.) for carrying traffic. “Ultimately whether or not a charging regime should be introduced in the UK is a decision for Government and Parliament,” added Ofcom.

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.

However, the regulator has said that ISPs should be able to create “premium” packages (e.g. those offering better latency) and “specialised services” (e.g. those optimised to support virtual reality and driverless vehicles), which might potentially also allow major providers to create a two-speed internet via the backdoor by – over time – subtly degrading the performance of their regular packages. Ofcom does try to counter this by requiring providers to be sufficiently clear with customers about what they can expect from any “premium” services, but ISPs don’t have the best record in the area of transparency.

Selina Chadha, Ofcom’s Director of Connectivity, said:

“The net neutrality rules are designed to constrain the activities of broadband and mobile providers, however, they could also be restricting their ability to develop new services and manage their networks efficiently.

We want to make sure they can also innovate, alongside those developing new content and services, and protect their networks when traffic levels might push networks to their limits. We believe consumers will benefit from all providers across the internet innovating and delivering services that better meet their needs.”

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 who pay them the most money for specific performance improvements. On the other hand, domestic-grade business packages have long claimed to optimise traffic for popular business services, and consumers can already pick packages with different speeds at extra cost.

Finally, the regulator appears to have stopped short of allowing Traffic Management policies to become too aggressive when needing to tackle network congestion, although they have said that such a change may be allowed – with government approval – in the future. In the past, such policies were notorious for heavily restricting file sharing traffic and blocking online content platforms, which may make sense on certain networks (e.g. free public WiFi), but not on others (e.g. home broadband).

In our view, the previous rules, while imperfect, did generally work reasonably well to keep the balance fair and the internet, open, as it was always intended to be. Ofcom’s changes will no doubt result in some ISPs pushing the guidelines as far as they can go, and we’ll need to see what they come up with before really being able to judge, but there is a risk that these changes may allow too much flexibility and give rise to the law of unintended consequences. On the other hand, networks and services are rapidly evolving, and the rules did need some tweaking to account for that new flexibility.

UPDATE 27th October 2023

We’ve had a comment from Mobile UK.

Hamish MacLeod, Chief Executive of Mobile UK, said:

“Mobile UK welcomes Ofcom’s updated guidance on Net Neutrality. The revised guidance gives extra clarity, which should assist in the design of new services and tariffs.

However, as Ofcom acknowledged during its consultation, they are constrained by the law and this was as far as they could go within existing rules. We now ask the Government to remove the regulations which are hindering investment and innovation, and replace them with a principles-based code which protects basic freedoms but promotes innovation.”

Similarly, BT called Ofcom’s changes a “step” in the right direction, but naturally they want more.

Howard Watson, BT’s Chief Security and Networks Officer, said:

“These changes are welcome and important and will help us to manage our network in the short term. But they are the start of further reforms that are needed, so we can face into the future with confidence. Unless and until telecommunications companies have the necessary environment to negotiate on a level playing field with content providers, the challenges of meeting growing demand will remain reliant on telcos funding endless capacity upgrades.

The internet is hugely valuable, but the benefits and costs could be more evenly spread. We need to create a new model that supports the laudable public policy goals of increasing coverage and getting more people online, while also ensuring reliability, quality and investment efficiency.

Ofcom’s statement is clear that any further reform will need Government action. Supporting the future delivery of content over the internet is becoming vital public policy and new rules – still guided by the principles of an open internet, consumer choice, innovation and efficiency – could unleash a new wave of online innovation in the UK.”