The unintended consequences of Europe’s net neutrality law after one year

By Roslyn Layton of AEI.

"The EU’s law “laying down measures concerning open internet access” came into force in 2016. After a year with the law on the books, telecom regulators across Europe have submitted compliance reports to the supervisory Body of European Regulators for Electronic Communications (BEREC) and the European Commission. While no bad internet service providers (ISPs) or violations have emerged, a regulatory bureaucracy is growing because of the law. A new report analyzes experiences across some 30 European countries and describes the unintended consequences. Here are three.

Speed measurement: Valuing convenience over accuracy

The EU’s law requires disclosure of network speeds and empowers national regulators to implement measures of network assessment. Speed may be the least important parameter in measuring a user’s quality of experience, but many regulators like to regulate it because it provides the appearance of objectivity. Measuring network speed is difficult for a variety of reasons, including the defining of end points and differences in terminating device and applications. Network providers spend millions of dollars annually on measurement. Speed cannot be guaranteed without a quality of service guarantee or prioritization, but these are unwittingly prohibited by most net neutrality rules.

BEREC’s goal is to promote a regulatory regime based on crowdsourced measurement tools. While it recognizes that these tools are inaccurate and scientifically uncertified to measure speed, BEREC states that it prefers the “convenience” of these measures because they are user generated. BEREC’s ostensible goal is for users to generate complaints on missed speed targets using the questionable crowdsourced measures. These would be automatically forwarded to the regulator, which could then penalize the ISP accordingly.

If a speed disclosure regime is the goal, this can be managed through a country’s competition authority under contract enforcement. Having a specialized regulator to do this task is a waste of resources. If anything, this is an argument to transition net neutrality to competition authorities.

Invasion of privacy

BEREC may want to crowdsource speed measurement, but it also wants to retain the ability to surveil networks to ensure that ISPs are not conducting so-called non-neutral traffic management. It seems a perversion of the concept of a free and open internet that governments monitor networks to ensure that ISPs are doing nothing wrong. The nature and extent of BEREC’s proposed surveillance could violate users’ privacy, but then again, the EU’s new privacy regulation, the General Data Protection Regulation, does nothing to protect Europeans from privacy invasions conducted by government.
More generally, net neutrality rules force users to value all content the same, unwittingly give undesired content (violent material, personally and politically subjective material, pornography, malvertising, etc.) the same value as desired content and may well violate the European Convention on Human Rights. Articles 8, 9, and 10 protect privacy and family life, freedom of thought, and freedom of expression. Similar to the First Amendment in the US, European governments are restricted in interfering in these rights and in a person’s freedom to receive and impart information. Net neutrality appears to violate these tenets, as it empowers regulators to control the price and transmission of internet data, depriving users the freedom to contract. As I describe in my recent paper, Voice Over Internet Protocol co-inventor and Vonage co-founder Dan Berninger is suing the Federal Communications Commission (FCC) at the Supreme Court because users on his Hello Digital platform are unable to speak, since the ability to ensure signal quality is prohibited by the Open Internet Order.

No new innovation

The stated goal of the EU legislation is to protect end users and promote innovation. In addition to the problem of violating Europeans’ privacy, there is no evidence that new internet innovation has resulted from the EU rules. I’ve discussed this in a recent AEI paper on whether net neutrality stimulates innovation. Europe continues to fall behind the US and East Asia. No European company has appeared on Mary Meeker’s internet trends report for years, while Chinese internet companies gain an increasing foothold.

Many Europeans are dissatisfied with the EU, as the victories of protest parties in elections show. The European Commission and Parliament made a gamble to regulate net neutrality and roaming in the same legislation, on the desperate hope that the EU could translate Europeans’ love of the internet and mobile communications into love of EU government. Unwittingly, it seems that this law adds additional bureaucracy and unintended consequences that deter the stated goals of the rules.

Policymakers, especially the FCC, should take heed of the European experience and be emboldened to restore internet freedom — a regime that keeps the government’s hands off the internet, protects users from government surveillance, and allows entrepreneurs the quality of service they need to launch innovation."