Will net neutrality kill off innovation?

Opinion

Will net neutrality kill off innovation?

Three of Europe's largest telecoms operators met the EU the other week. They discussed targets to improve broadband speeds across the continent by 2020.

Why is that bad news? Let Randy Fuller, director of strategic marketing officer at Tekelec, a telecoms software provider, explain.

Serious capital investment on the behalf of the operators is required if the EU is to achieve its targets, argues Fuller.

The operators would argue that in order to pay for this initiative they would need to develop new business models to generate the revenues needed to finance broadband network construction. This approach is in conflict with the decision by the Dutch parliament to introduce net neutrality legislation, a move that could have drastic consequences for mobile operators.

Although the regulators' intentions to provide universal access to high-speed broadband are good, any decision to impose net neutrality is not in the best interests of the end-user. The idea behind net neutrality may seem fair, but it will in fact lead to the degradation of the very service that the EU is striving to open up. Network innovation would be stifled considerably by a restrictive policy that would permit the non-discrimination of traffic, and leave the operators incapable of meeting future broadband needs.

Net neutrality will lead to a situation where the quality of a subscriber's broadband experience would be dependent on the state of network congestion, with a small minority of bandwidth-hungry subscribers able to exhaust network resources at the expense of the remaining majority.

In the long-term net neutrality would preclude the introduction of new, and innovative, services that would serve to improve the subscriber experience, generate investment for network construction and benefit customers, content providers and operators. Operators would be unable to offer service tiers that would allow them to differentiate themselves in an already crowded and saturated marketplace.

The complexities of managing broadband traffic inherently require operators to be able to differentiate traffic based on quality of service, bandwidth allocation, application types, and other criteria. A tiered service approach would also benefit the end-user and prevent the free-for-all situation that would favour a minority of subscribers. Operators would be in a position to make traffic adjustments based on usage, meet the demand for new applications and offer a level of service that meets with a subscriber's expectations.

Ultimately telecoms regulation in the EU will need to strike a fine balance between open access and market innovation. If the EU is to achieve its broadband targets then it will need to grant the operators the freedom to innovate and offer subscribers a range of choices, and better services. Otherwise the operators will not be able to finance the broadband network construction and run the risk of becoming nothing more than a utility supporting a common infrastructure that offers a standard service.

This was first published in July 2011

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