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Ofcom UK to Support Broadband ISPs in Killing Net Neutrality

Posted: 29th Sep, 2010 By: MarkJ

Market regulator Ofcom UK, which recently completed its Net Neutrality (the principal of treating all internet traffic as equal) consultation (here), is expected to tell broadband ISPs that they are free to trample all over the principal, just so long as customers are told about it in a "transparent" way. To most ISPs, transparent = small print, which of course nobody ever reads.

The news emerged from a PC Pro article and responses to Ofcom's consultation where several ISPs, including BT and the TalkTalk Group, effectively admitted that they'd favour any video/content provider (e.g. YouTube over the BBC's iPlayer) that paid them the big bucks (pound sterling, if you prefer).

The Executive Director of Strategy and Regulation at TalkTalk UK, Andrew Heaney, said:

"[Its] perfectly normal business practice to discriminate between them. We would do a deal and look at YouTube and look at the BBC, and decide."

BT's Director of Group Industry Policy, Simon Milner, added:

"We absolutely could see a situation when content or app providers may want to pay BT for quality of service above best efforts."

Ofcom claims that it can see a "real economic benefit", especially in emerging IPTV markets, for this kind of approach. However many respondents remain unconvinced. The BBC in particular noted a crucial difference between discrimination against different types of content/services and necessary Traffic Management / Shaping activity for balancing broadband bandwidth demand during busy periods.

BBC Statement to Ofcom

"We recognise that reasonable traffic management may be required in some circumstances in order to manage the network. In our view, reasonable traffic management practices include measures that address legitimate network congestion and traffic management issues for technical and legal reasons.

But this should be the exception and should be based on traffic type. In our view, discriminating traffic by content provider or origin will distort competition and deviate from the end-to-end principle which is at the core of the open and neutral character of the internet."

At present many UK ISPs already restrict broadband traffic to certain services (e.g. P2P, video streaming etc.), or more generally during peak usage periods, as a means of balancing the load on their network and giving everybody a reasonable service. This is now an accepted practice and unlikely to change beyond Ofcom's demand for more transparency.

As the BBC describes, the real debate is not with network management solutions but the potential for harm that could occur if ISPs start favouring content sources based on who pays them the most cash. However KCOM ( KC ) believes that the economic model used by ISPs is now a lot more complicated than it once was.

UK ISP KCOM Statement to Ofcom

"However, Cisco, Akamai and others have shown that continuing consumer traffic demand growth forecasts of 50%+ per annum, largely fuelled by video content, are realistic. In addition, this growth is not uniform – the distribution of volume consumption is increasingly skewed to a small proportion of users making use of specific applications who dominate actual bandwidth consumption.

How can users continue to receive acceptable service at an acceptable price? It seems likely that most will not tolerate an overall price increase to provide additional bandwidth capacity that is mainly being consumed by a small minority."

It is of course easy to counter that and argue, much as we have done many times before, that consumers should be paying for what they use, just like Gas, Water and Electricity providers already do. In reality this kind of model would be difficult to achieve and could isolate a huge swathe of the consumer market, specifically those that make above average use of their ISPs "shared" bandwidth.

Somebody who downloads 100GB+ in a single month, which isn't so hard to achieve if you make regular use of digital PC game downloads, software updates and video streaming, from a fast broadband connection, could easily be hit by bills in the £60+ per month mark.

The existing shared model adopted by most big and small ISPs, where light users offset heavy users in terms of both usage and thus price, therefore has some clear advantages. However even this model is now under strain from growing video and other content demands.

On the other hand, if you start favouring one content provider over another then ISPs could risk confusing the market and alienating their customers. Imagine the outcry if an ISP limited access to Facebook, which some have already hinted at. It's a big website but it's still just a website, like ISPreview.co.uk or BBC.co.uk. It wouldn't take long before the old legal defence of ISPs being "mere conduits of data" begins to break down and free speech is threatened. We're not there yet.

Sky Broadband Statement to Ofcom

"As noted throughout this submission, the retail internet access market in the UK is highly competitive. The market structure supports a high degree of rivalry between competitors as evidenced by the changing market shares of participants and strong growth of the recent mobile broadband entrants. This and continued internet take up, is noted in the recent Ofcom Communications Report.

Given there are no market structure problems (the failure of the first two tests), the adequacy of competition law (the third test) is not relevant."

As it stands Ofcom will rule that the UK ISP market is highly competitive and that there is not, at present, any widespread indication of abuse by unfair content favouritism beyond needed load balancing Traffic Management measures. Admittedly BT might already be restricting traffic to iPlayer but most are more flexible.

It is however very clear that some ISPs, such as BT and TalkTalk UK, do intend, when given the desired opportunity, to go beyond existing measures. Ofcom will need to remain extra vigilant of how this impacts internet access in the UK. BT Wholesale's new Content Deliver Network (CDN) might mask part of the problem but it's not a total solution.

ISPs could one day end up becoming like a Digital Mafia, only allowing you to view particular content with good quality if the service owner first pays up to have the nailed wooden boards remove from their front door. It starts with video but it won't end there.

Selection of Ofcom NetNeutrality Responses

* BBC
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/BBC.pdf

* BT
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/BT_plc.pdf

* ISPA
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/ISPA.pdf

* KCOM
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/KCOM.pdf

* Sky Broadband
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/Sky.pdf

* UK Music
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/UK_Music.pdf

* TalkTalk
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/TTG.pdf

* O2
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/Telef_nica_O2_UK.pdf

* Skype
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/Skype.pdf

* Vodafone
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/responses/Vodafone.pdf