Virgin Media O2 Calls on Ofcom to Weaken UK Net Neutrality Rules for Mobile

Broadband and mobile giant Virgin Media and O2 (VMO2) has today attempted to reignite the Net Neutrality debate, again, by calling on Ofcom to soften their guidelines in order to “unlock innovation and new mobile network investment“. The rules were originally established to prevent unfair blocking or slowing of access to legal websites and other internet services by comms providers.

Just to recap. The original rules meant that service providers couldn’t 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 rival services). But, there were some exceptions, such as when providers needed to impose general traffic management, parental controls, court ordered blocks or certain security measures (e.g. anti-virus/spam filtering) etc.

The rules, which are widely supported by online content providers – the very services that make the internet worth visiting in the first place, have generally done a reasonable job of protecting consumers from bad practices by commercial providers.

However, Ofcom did agree to further soften their Net Neutrality guidelines in 2023 (here), such as by clarify some prior conflicts around zero rated data, allowing providers to offer premium quality retail packages (e.g. those with tweaks to deliver lower latency) and support for specialised services so that providers could deliver specific content and applications that need to be optimised (e.g. a limited allowance for network slicing on 5G mobile).

Round Three of the Net Neutrality Battle

Every time this topic comes up there’s an inevitable rehashing of old arguments, with major broadband and mobile operators (e.g. BT, Virgin Media etc.) typically opting to talk in vague language to avoid having to spell out the more controversial changes that they’d really like to make.

The same is largely true of VMO2’s latest injection into the debate, which describes the net neutrality rules as being “out-dated” and complains of how they’re “now preventing operators from launching new services and stymieing innovation“. All of this is then centred around a new report, that they commissioned, from Stephen Howard of Communications Chambers.

The report claims that alongside “limiting innovative new services“, consumers might also experience “worse quality services in future“. For example, it highlights how the current rules prevent operators from fully realising the benefits of Agentic AI, such as by hindering their ability to “effectively prioritise traffic when networks are congested“. The report then identifies a series of real-world use cases that reforming net-neutrality rules might “unlock“.

Example Use Cases for Softer Net Neutrality Rules

➤ Apps offering essential services for SMEs: which could include an enhanced payment service to support small businesses operating in busy areas like festivals or food markets. This would ensure they can rapidly and reliably process payments even at times of network congestion.

➤ Providing reliability and performance in the moments that matter: allowing operators to use customer insights or customer preferences to prioritise time-sensitive apps such as map based navigation, requests for taxis outside of major venues or connecting to an electric car charging station in the depths of a multi-storey car park.

➤ Allow more effective service prioritisation: for example, enabling a user to readily prioritise an important video call over other apps using their connection.

The first example is one that should technically already be allowed via network slicing in 5G environments and indeed we have seen these being deployed before, often with Ofcom not appearing to throw up any particular roadblocks. But in the comment below VMO2 appears to be talking about prioritising specific payment apps, rather than general payment processing, which might be a bit more contentious.

The next two points seem a bit more wishy washy, as we’re not really sure if either of those are problems that strictly need softer Net Neutrality to resolve. Laying on appropriate network capacity or deploying small cells is usually a good fix and video calls aren’t as intensive for today’s connections as they once were. We’ve not personally had any problems with mobile video calls, maps or taxi apps etc.

Lutz Schüler, CEO of Virgin Media O2, said:

“Outdated net neutrality rules limit innovation and hold back the full benefits of the infrastructure we’re building. We’re not able to help customers by prioritising taxi and map apps when travelling home at night and can’t prioritise payment apps for sole traders in crowded markets. No one is winning.

New technologies like Agentic AI will improve the online experience and we’re investing £700m this year in our mobile network to boost connectivity across the UK, but with network traffic growing relentlessly we won’t get the most out of it without much-needed reform.

To unleash private sector investment, improve consumer and business services, and deliver the UK’s 5G ambition, government should use its mobile market review to remove these antiquated roadblocks to innovation so we can bring about better connectivity and services for all.”

The report itself appears to go a bit further by calling for a seemingly complete “repeal of the net neutrality rules“, which would of course have commercial benefits for network operators, albeit with the flip side being the potentially negative impact upon consumer protections. Some content providers might also face additional charges for distributing content that they’ve already paid to send over the internet.

Depending on the assumptions made, the report suggests that such a repeal might deliver incremental revenues in a range of between £174m and £871m per annum. Network efficiency gains could amount to a further (non-recurring) £384m. The combination of additional mobile capex and improved efficiency in the utilisation of existing infrastructure would together be worth around £142-557m a year – equivalent to 8-31% of current investment levels.

“Note that these estimates relate purely to the mobile subsector and could conceivably be substantially higher with the inclusion of fixed-line [broadband] activities,” said the report. The financial incentive is clear, at least for network operators. But in fairness, VMO2 may have a point around some areas, so while we don’t support the existing rules being repealed, there may be scope for further tweaks to support greater flexibility in certain specific areas, albeit without giving big network providers carte blanche to do whatever they like.

The reason we’re seeing this now is because of the Government’s ongoing Mobile Market Review (summary), which aims to ensure that existing mobile network policy and regulatory frameworks are updated to support investment, innovation, competition and consumers.