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Summary

The net-neutrality debate in the US and the various rulings associated with it have taken many twists and turns. As with any major telecoms regulatory issue, it has become part of a political battle. The recent FCC ruling turns back the clock on broadband provider policy to 2013, before all the discussion and calls for regulatory reform began. Although this ruling will be challenged, previously strict net-neutrality rules around the world are also being relaxed, a process that is set to continue. Along with the emergence of 5G and IoT, these moves will lead to innovative and flexible connectivity business models for services with specific technical requirements. But many more battles will be waged before the net-neutrality war is over.

While debate continues, connectivity services will become more flexible, driven by 5G and IoT

The recent changes in net-neutrality regulation in the US will give connectivity providers greater liberty to offer services, an opportunity to improve ROI, and the chance to set pricing on a more market-driven basis without government or agency intervention. The broadband industry at large is welcoming this shift toward less regulation, and Ovum views the change as good for the overall industry, since it will spur network investment and reduce government intervention.

In the US, reduction in federal intervention has become a major trend that is unlikely to be reversed during the current administration. The regulatory debate is largely limited to the US for the moment and is unlikely to affect other countries for some time, but Ovum believes that 5G and IoT are set to be the main drivers behind the necessary changes in net-neutrality regulation worldwide. We expect to see the development of several services according to the specific needs of each type of network usage. The network resources allocated to self-driving vehicles or e-health services using immersive technologies will differ from those allocated to non-critical types of mass service.

The new net-neutrality regulation in the US is unlikely to lead to many changes in mobile services in the short term; operators have already stated that they will not charge or allocate resources differently based on the application or service being used. Ovum believes that maintaining and enforcing the principles of nondiscrimination and transparency and a commitment to keep the open internet are of utmost importance for the development of new services and for consumer protection. This is particularly relevant in the mass consumer and SME markets, where internet services are provided on a best-effort basis to everyone.

Ovum foresees new types of innovative services with differential pricing according to network requirements, mainly in specialized wholesale or quasi-wholesale markets with specific technical requirements, such as 5G backhaul and IoT. This approach is likely to lead to positive outcomes for connectivity providers, and the new technologies will force regulators to work with one another in a more coordinated way in the coming years, enabling changes in regulatory rules.

There is extensive net-neutrality regulation in place around the world, but many developments fall outside a purist definition of the term, addressing factors such as zero-rating of data costs for certain applications, sponsored data, content caching in local servers, CDN, and certain traffic-management practices. This shows that the concept of net neutrality is far from rigid and that the market has been able to generate alternative ways to handle traffic and adapt business models, indicating that the net-neutrality debate has become overly politicized.

New, innovative approaches are set to continue developing in the coming years, which will put pressure on regulators to stay current with fast-paced developing technologies. It is important that regulators have a clear understanding that the traditional net-neutrality debate is less relevant to specialized markets, and that the debate needs to evolve to recognize that networks serve many markets.

Appendix

Further reading

The Experience in Europe of Implementing Net-Neutrality Rules, TE0007-001150 (June 2017)

“The appointment of the new FCC chair could mean an early end of net neutrality,”TE0007-001125 (January 2017)

“Trump, Netflix, net neutrality, and mobile video,” ME0002-000738 (January 2017)

Authors

Sonia Agnese, Senior Analyst, Latin America and Regulation

sonia.agnese@ovum.com

Mike Sapien, Chief Analyst, Enterprise Services

mike.sapien@ovum.com

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