Research Notes

Net neutrality is not going away. Once rules are made, so begins a new round of battles for operators. Report Update: Understanding Net Neutrality and Stakeholders’ Arguments, Q2 2015

Strand Consult’s report on net neutrality around is world —what are the rules and how they work in practice—is updated for Q2 2015. With detailed insight on net neutrality policy in twenty countries as well as legal challenges against the rules, this report offers one most valuable and comprehensive report on the topic and unique insight to the challenges facing the mobile/telecom/cable industry.

Many believe that the battle for net neutrality will be over when formal rules are in place. On the contrary, this will only commence a new round of battles. Operators in many countries will spend significant resources to defend practices they’ve had for years, which were rarely problematic. Their attempts to make new products and services will be scrutinized even more than in the past, and they will face a new set of complaints from competitors that will use the rules to create advantages for themselves by constraining the way operators can compete.

The American experience shows how some regulators will interpret the rules. With the rules less than 30 days on the books, the American telecom regulator FCC slapped AT&T with a retroactive $100 million fine for an alleged transparency infraction, even though the practice had long since ended. This represents a 100 fold increase in fines for violations compared to previous commissions. The FCC faces nine lawsuits from operators large and small, as well as entrepreneurs, for its imposition of rules.

Policymakers can – and do – tailor their approach to net neutrality. A review in the report “Understanding Net Neutrality and Stakeholders’ Arguments” of net neutrality rules in 20 different countries not only shows significant variation in how the concept is defined and promulgated, but also in its provisions and punishments. This is important for operators to understand when they need to push back against arguments that net neutrality is “universal,” but also important to give examples of successes and pitfalls of other solutions. Moreover having access to global knowledge can equip operators to be more creative and effective in their strategies.

To be sure, many operators support net neutrality and the “Open Internet”. Indeed operators are incentivized to deliver the content, services, and applications that customers want. The question is whether heavy-handed rules are necessary, and what unintended consequences they may bring.

In addition to growing across borders, neutrality is a regulatory policy that is creeping across the Internet value chain. The report Understanding Net Neutrality and Stakeholders’ Arguments shows that the policy that originally was concerned with Internet access providers (telecom and cable companies) is increasingly being used to justify the disciplining of so called “edge providers” (third party content services and applications); scrutinizing transit, prioritization, and backbone services; implementing new requirements for privacy, security, and data retention; and regulating prices and business models.

The policy that many liken to free speech is increasingly being used to control speech. For example governments are now requiring that operators implement blocking to ensure copyright protection. Similarly the notion that operators should only deliver data, not inspect it, is being reversed by governments. State authorities are increasingly demanding access to operators’ networks, frequently under the guise of “Open Internet” policies.

Critiquing net neutrality does not mean that that there is not a role for governments and regulators to play vis-à-vis networks. The point is simply that making monumental net neutrality policies are an irresistible opportunity to government actors to co-opt the process for their own, or even illicit, purposes. This is a major risk for operators and Internet users going forward.

Operators need a long-term and coherent strategy for net neutrality that includes its functions for public affairs, regulatory, legal, communications, and investor relations. To help its clients prepare for the ongoing challenges, Strand Consult offers a comprehensive report “Understanding Net Neutrality and Stakeholders’ Arguments” and workshop. The report includes

1. Summary and analysis of net neutrality rules in 20 countries plus the EU, including a detailed breakdown of rules in each country analyzed for reasons why net neutrality took hold, legal instruments, provisions, and punishments for violation.

2. Overview of net neutrality in the US, the political and legal landscape, overview of the lawsuits, key mistakes, and best practices by operators

3. Overview of net neutrality in the EU, the political and legal landscape leading the rules, key mistakes and best practices by operators

4. Detailed case studies of Netherlands, Slovenia and Chile interviews and before/after assessment.

5. 30 arguments made in favor of net neutrality and its rebuttals

6. Overview of the sophisticated coalition driving net neutrality rules across the globe, their leaders, funders, and strategies

7. Overview of the key actors in promoting preferable alternatives to net neutrality, their arguments, strategies, and mistakes

8. Strategies to address net neutrality from a variety of functions inside the telecom organization

9. Review of key academic articles in net neutrality

10. Empirical analysis of net neutrality policy and its impact to infrastructure investment and innovation.

Operators need to understand net neutrality within a larger context of political theatre. For telecom authorities, the policy breathes new life to a regulatory function that was on its last act. But it’s not just regulators who are revived. Net neutrality offers a benefit stream to many parties. For over the top (OTT) providers, it gives perennial justification and authority to regulate their rivals through “neutrality”; for media, a storyline that sells advertising; for politicians, subterfuge to pursue any kind of action in the name of a free and open internet; for telecom activists, lawyers, consultants, and economists, job security.

Net neutrality issue will have a material impact on shareholder values, and operators need to manage it proactively to minimize losses. Operators need to think about the issue in the big picture and build long term strategies that focus on telecommunications statute reform and regulatory rationalization.

The report Understanding Net Neutrality and Stakeholders’ Arguments is particularly important for operators in countries that have managed the issue with soft measures (code of conduct, multi-stakeholder, co-regulation), as they will find that their constructive process may be brought to an abrupt halt by new legislation and rules even if no violations have occurred.

The report provides important high level summaries, detailed case studies, and actionable facts. It has already saved Strand Consult’s customers time and money. It is a report which caters to talented people who want to be successful when they argue. The report is frequently packaged with a 1-2 day workshop where Strand Consult helps the operator get up to speed and develop strategies to address the issue in the future.

Contact Strand Consult for more information and to order the report and workshop. Get the report today so that you are ready for the ongoing challenge.

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