‘Net neutrality’ could lead to soaring broadband prices

Broadband prices across Europe could soar if regulators in Europe insist on “net neutrality” rules that would prevent carriers from charging content providers premium rates to prioritise certain types of web traffic.

A leading think-tank, Copenhagen Economics, has warned that under net neutrality, European consumers could end up paying up to a third more for new broadband platforms as the internet becomes increasingly congested. For example the average monthly broadband subscription rate could rise from €33 ($44) to €44 in Sweden, and from €29 to €39 in Germany. The neutrality model is currently used extensively in the US, but European regulators and industry players have kept clear of this model, arguing that the situation is different because users have a greater choice of network providers.

However, large telecoms companies in Europe are increasingly concerned that changes introduced by the European Parliament into the telecoms package – legislation aimed at overhauling EU telecoms laws – could make straight the way for net neutrality regulation in the years to come.

A new report from the Centre for European Policy Studies due to be published this week says that the net neutrality model would obligate typical users to subsidise heavy downloaders, would discourage service providers to invest in new-generation networks and would encourage content providers to engage in “free-riding”. The report concluded that “mandating net neutrality would not be a desirable option”.

The warnings come ahead of talks later this week between EU telecoms commissioner Viviane Reding and the heads of global telecommunications and cable operators. According to industry sources, Reding, EU ministers and the current French EU presidency had encouraged net neutrality by planning amendments to the telecoms package which would enable national regulators to set boundaries to prevent slowing of service over networks.

However, national regulators such as Ofcom do not support net neutrality. Ed Richards, Ofcom chief executive, said today: “We don’t think we should bring it over from the US lock, stock and barrel. We have quite often got more competitors in Europe than in the US.

“The key for us is transparency. Consumers must know whether there are different arrangements for different ISPs and network providers must have the freedom to make commercial decisions about how to run their networks and invest in new-generation networks.”

Richards urged to EU to encourage independent regulation rather than revert to an era of protected national monopolies run according to political aspirations. Independent regulation, he added, was essential for growth and creativity.

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