Research Notes

What Norway’s telecom regulator forgot to say about net neutrality rules in the US

A week ago NKOM, Norway’s teleocm regulator, released a blog comparing US and Norwegian approaches to net neutrality rules. This note critiques NKOM’s analysis and includes the important points about the American rules which NKOM failed to mention.

Strand Consult has made a detailed analysis of the more than 20 countries with net neutrality rules and the various legal instruments used. The US is unique where the telecom regulator attempts to create rules from existing telecom regulation, and it has been struck down in court twice for exceeding its authority. It now faces it’s third attempt.

As for the rest of the world, net neutrality is pursued either through parliamentary legislation or multi-stakeholder dialogue. The soft approach, as pursued in Norway, has been more successful to deter net neutrality violations than hard law. Moreover, society wins with a lower cost model of regulation and reduced risk of regulatory errors. If the US wants a sustainable net neutrality solution, Congress, not the FCC, must act.

NKOM does not discuss the seven lawsuits which have already been filed against the FCC for the new rules, including one from a small broadband provider with only 700 customers. The charges include that the rules are unconstitutional (they violate freedom of speech and amount to taking of operators’ property without compensation), violate the Communications Act (Congress expressly defines that mobile wireless broadband should not be regulated, and the FCC’s rules contradict that), and amount to regulating small providers with no market power (A provider int he US today needs to have a employee devoted full time to FCC compliance. The new rules threaten to put small providers out of business, destroying the very competition that the FCC is supposed to create.). Moreover the FCC has already been criticized for its lack of process and procedure, culminating on voting of 300 pages of rules which the public was never allowed to see.

There is a simple reason why net neutrality is such a hot issue in the US and increasingly around the world. Net neutrality advocacies receive millions of dollars in funding by the Ford and Soros Foundations to conduct their activities. These foundations have large portfolios of stock from companies which stand to gain from net neutrality rules, and they fund a global coalition of “grass-roots” organizations to protect their investments under the guise of acting the “public interest”.

The great irony that the debate fails to recognize is that consumers access increasingly more data on the Internet at an ever-falling price. If there were some systematic problem of blocking or throttling, we would see a decline in the amount and number of services, application and content that users demand. We do not.

The success of the Internet has very little to do with regulators. A detailed investigation of autonomous systems numbers showed that NKOM was only aware of 10% of the Internet connections that had emerged in Norway. Thus NPT is making policy without a proper accounting of its own country or even evidence of problem. This is a classic problem of regulation in that authorities rarely have sufficient information and as such, proceed with the “illusion of knowledge.”

NKOM also failed to mention the follow up analysis by the EU Competition authorities of net neutrality violations. In a press release dated October 3, 2014, the Commission found no evidence of abuse in content or interconnection markets among the operators. Also an EU Parliament report concluded that existing telecom rules are sufficient to address net neutrality concerns.

Make no mistake, net neutrality is a jobs program for regulators offering lifetime employment. Along with its net neutrality rules, the FCC asked Congress for a 23% budget increase to fund the hiring of lawyers so that the agency can police abuse and bring investigation against any party—including over the top (OTT) providers. Unless Norway wants more regulation of the Internet, it is best to leave the current system as it is.

Strand Consult has spent significant time and resources to to understand the net neutrality debate in various countries. The valuable knowledge is gathered in Understanding Net Neutrality and Stakeholders’ Arguments. This report will ensure that Strand Consult’s customers are prepared to engage in this high stakes debate. To purchase this invaluable report and participate in a workshop with Strand Consult, contact Strand Consult.