Research Notes

Net neutrality advocates are the new ambulance chasers in EU. They write the rules, create the complaints, and bully the regulators into adjudication. Small telecom operators don’t know what’s about to hit them

An ambulance chaser is a lawyer who follows an ambulance to the emergency room, hoping to make clients out of victims. The proper term is barratry, overzealous prosecution of rules for the purpose of profit or harassment. Having succeeded to promulgate net neutrality rules in 50 countries, net neutrality advocates now use the rules they wrote, to define and submit egregious complaints about telecom operators. Concurrently they pressure telecom regulators to enforce rules, frequently for illegitimate infractions. If regulators don’t respond the way advocates want, then advocates intimidate them with negative press coverage and targeted clicktivist campaigns. The use of such pseudo-public pressure to censor, intimidate, and silence critics is also a form of barratry, and there are rules against it in a number of countries.

The work of net neutrality advocacies is by no means done. Getting rules on the books is just the beginning. The philanthropic foundations that fund net neutrality indicate that they will continue funding. This means that advocacy organizations will lodge complaints about whatever suits the funders’ whim and financial portfolio. Netflix wants price controls for “free” interconnection and overbuilt network capacity. Google wants reduced copyright restrictions. Established advertising platforms want to limit the entry of broadband providers with asymmetric privacy obligations. These and other concerns will fall under the “open internet” grab bag which is designed to deprive operators of their property and force them to provide their services for free.

Strand Consult’s analysis of net neutrality around the world shows that net neutrality complaints to regulators are almost always made by advocacy organization and almost never consumers. The common complaint frames a small or entrant operators trying to differentiate in the market by making compelling offers to their customers. Unsurprisingly real consumers don’t complain about these things. Zero rating and free data are not problematic to normal people who recognize and expect that companies in every industry compete by differentiating their goods, services, and prices.

Respect My Net is a crowdsourced net neutrality tool in which European users can lodge violations, which presently notes 67 “verified” cases. Invariably the issues involve small mobile operators with free offers of music, video, and social media. The EU net neutrality law does not mention the term zero rating and certainly does not ban it, so these are not even violations. What is telling is that there are no real violations per the rules, namely blocking, throttling and prioritization. The threat of operators harming openness with the bone-crushing, innovation-killing practices is nowhere to be found. All told there has been more blocking by governments in the last year alone than by all the world’s operators put together since the dawn of the millennium. This itself speaks to the utter failure of net neutrality policy which fails to identify the perpetrators of blocking.

The ostensible non-profit advocacy that hosts Respect My Net does not list its financial support, other than to say its “supporters” include the Open Society Institute, started by George Soros with the billions he made when he broke the Bank of England. This is a typical hypocrisy exhibited by net neutrality advocacies which are funded by the world’s richest individuals, foundations, and Internet companies. The transparency for which they advocate, they do not practice themselves. To be sure, operators lobby on a range of issues, but nothing they do is as well-funded, coordinated, or as effective as the net neutrality lobby.

A global network of sophisticated professionals and database marketing systems
German Professor of Communication History and Media Culture Maria Lobisch describes internet activist as no mere volunteers: they are elite, educated professionals with law degrees who know to navigate the channels of political power. Moreover being an activist today is a bona fide profession with a number of universities offering masters’ degrees in the topic. Even the co-founder of Occupy Wall Street runs a boutique consultancy to create “authentic” revolutions. These highly sophisticated, globally networked advocacies use state of the art marketing tools and database systems to unleash targeted advocacy on a variety of causes on a moment’s notice. Individuals, whose emails are harvested for support in one country on one issue, are deployed on another, comprising a number of global platform for advocacy across a range of crony capitalist issues.

The recent Body of European Regulators for Electronic Communications (BEREC) consultation for guidelines on implementation of net neutrality is a case in point. The lion’s share of the near 500,000 submissions came from a handful of advocacies (SaveTheInternet, Avaaz, OpenMedia and AccessNow). This high number was reached in part by copying each email petition individually to the 28 national regulators. In the tranche of emails Strand Consult received as part of its study for its free report on the advocacy Save the Internet, one-third of the submissions to BEREC’s came from Americans.

While hundreds of thousands of form letters were received in the BEREC consultation, only 1000 original and substantive responses were received in which the responder actually read the proposed guidelines and commented meaningfully. Nevertheless BEREC grandstanded on the total half million number, as if it gave them credibility for their otherwise misguided, but fortunately, non-binding rules. BEREC has given up the pretense that they are an expert, independent regulatory body. They admit to selecting stakeholders based not upon the facts, but on which has the best arguments. This a troubling development, as well as the admission that quantity (regardless of its country of origin), not quality, matters.

Since the promulgation of the guidelines, advocacy organizations have gloated about their success, even enjoining the likes of the French regulator Sebastian Soriano who noted, “I must confess that some of these tweets and messages that I received made me emotional… people asking me to “Save the Internet” and “Stop corporate capture…” I really wanted to respond to them.” Organizations have vowed to “keep the pressure on” and “there is still much left to do”.

The net neutrality movement advances with military precision from ideation to ambulance chasing. Its leaders, based at the elite Google-funded think tanks at Harvard and Stanford, develop the thought leadership and talking points which are incorporated into campaigns and policy documents, and then syndicated across global coalitions and the networked media sphere. Harvard’s Berkman Center itself annotates how the system worked in the US to stop copyright protection with the anti SOPA-PIPA campaign as well as Title II reclassification which culminated in President Obama instructing the FCC, a seemingly independent telecom regulator, to adopt net neutrality rules that defy Congress’s intention that the Internet should be “unfettered by Federal or State regulation.” Eight lawsuits are still pending in US district court challenging the legality of the FCC’s subsequent action, but to advocates based outside the US, the President is a hero and his action justifies further net neutrality rulemaking.

Consider Stanford’s Barbara van Schewick who had 150 meetings with American government officials to support net neutrality rules and lodged more submissions than an party on the FCC’s Open Internet rulemaking. She wrote her doctoral thesis while at Stanford, and Larry Lessig was her PhD supervisor. Lessig set up the Stanford Center for Internet and Society (CIS) as an incubator for Google’s lawyers and to reduce online copyright restrictions. As part EU rulemaking, Van Schewick corralled 126 academics in a letter to BEREC saying that without strict guidelines, educators would be “frustrated” in their ability to do their job. There is no evidence whatsoever for such a claim and among the 126 academics, just 6 had produced any relevant papers on net neutrality, none of which appeared in peer-reviewed journals.

Van Schewick is the favorite academic reference of net neutrality activists, even though her so called “seminal” book on the internet architecture has no empirical evidence to prover her claim. Her paper excoriating T-Mobile and zero rating lists just two references, the results of a market research survey from American wireless trade association CTIA and a Wall Street Journal article describing an interview with Slate magazine’s vice President of Technology. Neither of these are academic research or regulatory investigations and neither references even mention the term “zero rating.” Incidentally the CTIA study concludes that consumers don’t want the Internet to be regulated and can in no way be construed as supportive of restrictions on zero rating.

Regardless of her lack of empirical evidence, Van Schewick was invited by Nkom’s Frode Sorensen and ACM’s Henk Don to speak to a closed BEREC meeting of more than 100 regulators in February 2016, a key meeting to craft the guidelines. BEREC refuses to publish the minutes or even a summary of the discussion. Net neutrality advocates like to report that zero rating is illegal in Norway by linking to a blog by Soresen on Nkom’s website, but that fact is that but there is no such statute which bans zero rating in Norway. Nkom has transitioned its rules from a voluntary regime to the non-binding BEREC guidelines. Nkom continues to ignore the Norwegian sunshine laws and deny Strand Consult’s request for information on Soresen’s role in the BEREC process.

A fellow at van Schewick’s same Stanford CIS is Thomas Lohninger, who worked closely with BEREC to develop the rules. He has just lodged a zero rating complaint about Hutchinson 3 Austria to the regulator.

Van Schewick’s arguments also underpinned advocates’ complaints in Chile in 2013 about new MNVO Virgin Mobile, saying that an offer of zero rated WhatsApp was a disincentive to use competing messaging services. No evidence was provided for this claim. However it can be verified empirically by reviewing mobile app traffic that half a dozen competing messaging services enjoyed popularity during the period that WhatsApp was zero rated and did not suffer loss of traffic or users. This shows that messaging apps are not substitutable, as advocates insinuate. Each app has a unique value proposition catering to a different user segment. Zero rating one does not foreclose the other.

Essentially zero rating creates net new users, as it encourage people to try services that they might not otherwise. It’s similar to a free sample of ice cream; people will not try a new flavor if they have to pay for it, but they might try it if it’s offered for free. In any case, the Chilean complaint was closed until the following year when the head of the net neutrality advocacy organization became the new regulator, and he immediately banned the zero rating offer, without any investigation or assessment to see whether there was harm to consumers or competition.

Slovenia is another country where a single person drove the complaint about zero rating, not consumers. The regulator was reluctant to respond. It was only after the activist rallied the support of local journalists to browbeat the regulator, that they responded and subsequently declared a series of offers by four mobile operators as illegal, offers that had been in marketplace since 2007. But the regulator’s decision has since been overturned, with the court ruling that net neutrality cannot be interpreted as a ban on price discrimination.

It’s no surprise that the Soros-funded Dutch net neutrality advocacy recently slammed T-Mobile’s offer of free music. Such puritanism that denies people entertainment and mirth can only be understood as pathological orthodoxy, which in fact is what net neutrality demands, utter submission to its elites’ interpretation of The Religion. The Dutch advocacy has been instrumental to lobby for the country’s net neutrality law, even penning the text, which has been toughened to ban zero rating outright, a provision that contradicts the BEREC guidelines and sets the stage for a legal challenge.

The absurd Dutch reaction is a contrast to the American telecom regulator which rightly recognizes the role of zero rating and free data. The FCC Chairman embraced T-Mobile’s Music Freedom program as “pro-competitive and pro-innovation,” and the Un-Carrier gained 8 million net new customers in 2015 in part because of free entertainment offers. Such competition reduced market share of incumbents while increasing share of entrants, which is one of the goals of the FCC. Moreover the agency owes the carrier a chance, especially when it rejected AT&T’s offer to buy T-Mobile and demanded instead that the company make it on its own.

The FCC is loath to ban zero rating and free data, and it would face a First Amendment challenge if it did. Americans consider free stuff as part of their birthright, and American law enshrines the freedom of speech, under which marketing offers (e.g. zero rating) are also protected.

Bans would not go over well in the US because the FCC would be seen as depriving the poor of communication. For example Pew reports that Black Americans have the highest participation rate for Twitter of any group. Reducing free social media would thus deprive groups of their freedom of expression. Free data could play an important role in the US where parts of the country are no different than third world countries, and overall there is still 20% of the population who is not online because they don’t see a reason to do so. In these instances a Facebook Free Basics style program (now extant in almost 50 countries) would be helpful.

The prevalence of zero rating and free data around the world and the fact that Slovenia struck down bans on zero rating makes Netherlands look all the more unreasonable with an overly strict interpretation of net neutrality. Its draconian rule is an about face from the Dutch government’s earlier view, extolling the country as the Digital Gateway to Europe, noting “Where possible, relatively ‘light’ policy instruments like transparency obligations are used e.g. on topics like net neutrality. This way the right balance is struck between incentives for competition and innovation.”

Almost 5 years after the Dutch implemented their overly tough net neutrality law, no one considers the Netherlands as the “Digital Gateway to Europe.” That honor would likely fall to Denmark, Sweden, United Kingdom, or Switzerland, all countries which took a soft approach to net neutrality until the EU rules forced a change. More to the point, there are no global Dutch-made apps to speak of. For a country that implemented net neutrality to promote its locally-made innovation, it has little to show for it.

But barratry and ambulance chasing will not go away any time soon. Advocates have worked for a decade to get net neutrality rules on the books, and now they will use them to destroy operators. The tens of millions of dollars given annually by the Ford, Soros, and other foundations, as well as US tech companies, will continue to fund advocates. Net neutrality will be used proactively to justify the crise du jour: whatever tech companies deem as the regulation they want, they will use net neutrality as the argument, and advocates will be their mouthpiece. Small operators and enterprises that want to challenge the big tech companies don’t stand a chance.

To learn more about the status of net neutrality rules around the world and why activists succeed to make rules even with an absence of harm, order Strand Consult’s report Understanding Net Neutrality and Stakeholders’ Arguments.

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