Network neutrality (“net neutrality”) generally refers to the notion that an ISP should treat all traffic equally, whether content, application, or service. Based on this principle of nondiscrimination, proponents of net neutrality seek to restrict the ISPs’ ability to interfere with or inappropriately manage Internet traffic (Atkinson and Weiser 2006). Blocking or slowing down (also referred to as “throttling”) the delivery of certain types of content, applications, or services is one of the main concerns of net neutrality advocates. However, such network traffic practices may be considered necessary to ensure that illegal content is not distributed or to manage networks better during congested periods. Another issue relates to prioritization of certain types of traffic. This may occur where ISPs deliver latency-sensitive traffic, such as voice or streaming video, faster than traffic that is not latency sensitive, such as a music download. Prioritization may also occur where an ISP charges application or content providers to be guaranteed better or faster access to subscribers.

Additionally, net neutrality proponents generally seek to improve the transparency of what the ISPs are doing with regard to traffic management and other Internet-regulating actions. This involves whether an ISP discloses to interested parties its network management practices, such as blocking, degrading, or prioritization. Interested parties may include consumers, the government, and applications, content, and service providers.

3.6.1 Goals of Net Neutrality Regulation

Regulatory authorities have tended to focus on several overarching goals when instituting net neutrality consultations and rules over the last several years, including (1) consumer protection, (2) promotion and preservation of access and innovation, and (3) safeguarding of freedom of speech and freedom of information. Consumer protection issues include transparency and disclosure requirements as well as prohibitions or restrictions on blocking or degrading subscribers’ use of lawful content, applications, and services.

The second goal addresses the access that content, applications, and service providers have to an ISP’s network, particularly if their services compete with an ISP’s services. For example, an ISP may block applications for VoIP services if these services compete directly with the ISP’s voice telephony service. Another example may involve paid prioritization in which an ISP favors one content provider over another through a peering agreement, which could affect competition among content providers. Finally, there is also a concern that, as new applications and services are developed, providers may find their access blocked or limited—either for (anti)competitive reasons or because new entrants do not have the ability to pay for priority access on an ISP’s network.

3.6.2 Regulatory Approaches

As policy makers consider whether net neutrality provisions are needed in their country, they may find it useful to view the possible approaches to net neutrality along a spectrum. At one end of the spectrum, a policy would require “pure” net neutrality of no discrimination; the ISP would be prohibited from managing Internet traffic in any way and would simply work on a “best efforts” basis, delivering all content on equal terms. Companies would be prohibited from charging content providers for priority or favored access. At the other end of the spectrum, a policy would permit an ISP to engage in any network management practice, including allowing it to block users from accessing certain types of legal content, applications, or services without the users’ knowledge. Although a country may not have specific net neutrality policies or rules in place, issues related to blocking, delaying, or prioritizing traffic may be addressed by competition laws, while transparency and disclosure may be addressed by consumer protection laws or laws protecting freedom of information or speech.

In practice, regulatory authorities are adopting net neutrality policies all along this spectrum. For instance, a regulator may find that it is not necessary to regulate ISPs’ network management practices, but that stronger rules on transparency of traffic management policies are required to ensure that consumers are well informed. This is the case, for example, of the EC policy on net neutrality contained in the April 2011 report, “The Open Internet and Net Neutrality in Europe” (European Commission 2011). The report frames traffic management as a quality of service issue for consumers relating to (a) the blocking or throttling of lawful Internet traffic and (b) Internet traffic management practices. The EC does not impose any rules or restrictions on the blocking or throttling of lawful Internet traffic, but it does recognize concerns over possible consumer protection or competition issues. Instead, the EC recommends that national regulatory authorities conduct further inquiries into such practices before adopting any rules or guidelines on the matter. Similarly, the EC recognizes that traffic management is necessary to ensure the smooth flow of Internet traffic, particularly when there is network congestion. As such, the EC does not impose any rules or restrictions on traffic management practices, such as packet differentiation, IP routing, or filtering between “safe” and “harmful” traffic. The only rules imposed by the EC in the open Internet report, aside from the ability to switch providers in one business day, are associated with transparency and disclosure. These rules require Internet providers to ensure that adequate information about their services is available to consumers, including identifying any possible restrictions on access to certain services, actual connection speeds, and possible limits on Internet speeds. Additionally, providers must make certain that consumers are informed about traffic management practices and their effect on service quality (for example, bandwidth caps), prior to signing a contract.

Under another approach, a regulator may decide to institute both new network management and transparency rules, but fall short of requiring “pure” net neutrality by permitting ISPs to discriminate against certain types of traffic for a specific purpose (for example, to manage congestion) and according to a set of standards, such as “reasonable network management.” This is the case in France, where ARCEP released a report entitled “Neutrality of the Internet and Networks: Proposals and Guidelines” in September 2010 (France, ARCEP 2010). In the first proposal, ARCEP recommended that ISPs be required to provide end users with (a) the ability to send and receive the content of their choice, (b) the ability to use the services and run the applications of their choice, (c) the ability to connect the hardware and use the programs of their choice, provided they do not harm the network, and (d) a sufficiently high and transparent quality of service. Under the second proposal, ARCEP recommended that ISPs may not discriminate against different types of traffic, whether by type of content, service, application, device, or address of origin or destination. Under the guidelines, exceptions to the first two recommendations may be acceptable if an ISP follows the third proposal by complying with the “general principles of relevance, proportionality, efficiency, nondiscrimination between parties, and transparency.” Pursuant to the fourth proposal, ARCEP will permit ISPs to provide managed services along with Internet access services, but will require them to maintain Internet access service quality at or above a minimum, satisfactory level. However, ARCEP did not specify what this minimum quality of service level should be.

In the fifth proposal of the net neutrality guidelines, ARCEP addressed transparency and disclosure requirements. For example, ARCEP requires that, in their marketing materials, service contracts, and customer information through the duration of the contract, ISPs must clearly and concisely disclose to end users all relevant information regarding (a) the services and applications that can be accessed through these data services, (b) the quality of service, (c) the possible limitations of the service, and (d) any traffic management practices that may affect the user. In particular, any restrictions on data transmission that do not conform to the first two recommendations must be disclosed to users.

Like France, Chile has also adopted net neutrality rules limiting discrimination by ISPs against access to and use of legal online services, applications, and content. In addition, Chile was the first country in the world to enact broad net neutrality legislation under the Chilean Net Neutrality Act, which was signed into law on August 18, 2010. The law focuses on the principles of nondiscrimination and transparency and prohibits ISPs from blocking, throttling, or discriminating against the transmission of any legal application, service, or content. However, ISPs are allowed to manage traffic on their network, but not in an anticompetitive fashion. Chile’s regulator, the Subsecretaría de Telecomunicaciones (SUBTEL), issued the implementing regulations of the net neutrality law in March 2011.* Decree no. 368 of March 18, 2011.

Table 3.1 summarizes the approaches being taken in selected countries as well as each country’s progress in the process of developing net neutrality rules.

3.6.3 Distinction between Wireline and Mobile Broadband Services

Existing mobile networks generally present operational constraints that wireline broadband networks do not typically encounter, particularly relating to efficient use of the spectrum. This puts greater pressure on concepts such as “reasonable network management” for mobile broadband providers. As a result, some regulatory authorities have recognized the need to establish differentiated network management rules for wireline and mobile broadband services.

This is the case in the United States, where the FCC’s open Internet order applied transparency rules equally to both wireline and mobile broadband network services, but applied different network management rules to the different technologies. However, while the rule for mobile broadband is less stringent than the rule for wireline, it still prohibits operators from blocking certain websites or VoIP applications, as is occurring in several European countries, such as Sweden and the Netherlands.

Similarly, in France net neutrality rules would be applicable to any broadband access technology (that is, to both wireline and mobile networks). However, ARCEP may implement the rules differently, particularly with respect to the means of assessing which traffic management mechanisms are acceptable. ARCEP might allow mobile operators to restrict access to certain sites or applications for objective, nondiscriminatory, and justified reasons on the basis that mobile networks are currently more vulnerable to congestion due to scarcity of available frequencies and the surge in data traffic generated by smartphones. However, ARCEP proposed that traffic management practices of mobile network operators must satisfy technical imperatives and cannot involve banning or blocking an application or a protocol (including VoIP, peer-to-peer, or streaming) and must not use these practices as a substitute for investing in increasing network capacity.

In the EU, the open Internet consultation also briefly addressed whether principles governing traffic management should be the same for both wireline and mobile networks. The consultation notes that wireline broadband providers have not blocked VoIP services, but that some mobile operators have blocked VoIP services from third-party providers or have charged rates to end users in excess of normal rates for equivalent amounts of data. Since traffic management rules were not imposed by the open Internet report, no distinction is made between wireline and mobile services. However, the transparency, disclosure, and switching rules apply equally to both wireline and mobile Internet providers.