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US President Barack Obama has urged the communications regulator to support net neutrality, saying that equal internet access should be a basic right for all Americans, in a move that sparked outrage among cable and telecoms groups.

What is “net neutrality”?

At its simplest, net neutrality just means that everyone gets equal access to the internet wherever you are and whoever you are. Net neutrality advocates in Europe and the US – now including Mr Obama – are looking to enshrine the principles of unrestrained freedom of internet access in law.

What are the proposals?

Brussels regulators wants to see net neutrality included as part of a wider “connected continent” package of reforms, which will also cut roaming costs, while Mr Obama wants to see the Federal Communications Commission reclassify broadband as a public utility to guarantee equally universal access.

Seems fair – so why would the telecoms sector be against giving internet access? Isn’t that their business?

It sure is, but telecoms and cable companies also like to charge a bit extra for people who want a premium service – so-called internet “fast lanes”. For example, internet TV services can pay to cut out stalling or “buffering” their shows, or computer games providers to host thousands of people fighting each other in massive open world battles.

Telecoms companies compare this to the airline industry where some pay extra to go first class and others are happy in economy class – but they all get to the same place in the end. To do this, though, telecoms groups sometimes “throttle” back the services that have not paid for the upgrade.

Throttling?!

It is as good a name as any for the effect in “squeezing” the pipe that supplies your internet. Services such as Skype – which directly compete with telecoms services from the internet providers – have been throttled in the past. As have certain bandwidth hogging services such as YouTube – causing the ticking clock of doom as users wait patiently for services to start. At a recent conference, Reed Hastings, chief executive of internet video group Netflix, argued that internet “slow lanes” were damaging the digital economy.

So is it just naked commercialism for the telecoms sector?

Not entirely. Companies make some valid points about needing to manage traffic sensibly given the huge rise in data services, while they also want to provide innovative services that require guaranteed levels of delivery quality such as telemedicine or e-education.

Another of their arguments is that they need the higher revenues from offering a premium service to fund investment in next-generation networks. However, some counter that they get sufficient funds from broadband customers.

Do the net neutrality advocates agree?

Not especially. There is potentially some scope in the European proposals for loopholes on specialised services. But more fundamentally, the need for a “first class” service is entirely rejected by net neutrality advocates – Mr Obama among them – who argue that the internet is a basic utility that everyone should have equally good access to (unlike flying first class). It raises all sorts of contextual questions about whether the right to access the internet is really equal to, say, water or electricity – but most people in the western world probably rely on their home and mobile broadband now as much as they do such utilities.

So what happens next?

The telecoms and cable companies are vehemently opposed to all regulation supporting net neutrality and the debate could yet end up in years of legal wrangling. In the US, the FCC has already lost two court cases on net neutrality before its latest revision allow internet service providers (ISPs) to charge services like YouTube to reach customers at higher speeds on “commercially reasonable” terms. The FCC will now consider Mr Obama’s intervention. But in Europe, it is a battle that telecoms groups will lose if existing proposals go ahead – as officials insist they will in spite of the departure of chief architect Neelie Kroes.

Copyright The Financial Times Limited 2017. All rights reserved.
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