Will a Latvian Proposal Lead to an Internet Cattle Class?

The backbone of tomorrow’s Internet may have a remarkable Latvian touch. The Latvian presidency’s proposal on net neutrality challenges the fundamental principle of equal access to all content and applications on the Internet.
The day before the Latvian Presidency of the EU Council’s opening ceremony, Latvia made a proposal to the Council which caught the world’s attention. The proposal outlines how EU legislation should permit telecom operators to make exclusive agreements with companies and individuals to provide faster Internet speeds.

At first glance, the proposal might appear harmless; after all, it is ‘comme il faut’ in most parts of the western world that you get what you pay for. When someone books a business class seat, they expect the service to be better than in standard class. And when they pay even higher fees for the comfort of first class, it is easy to expect even better service, and for the standard seats to almost seem like “cattle class” in comparison.

Nevertheless, the proposal has been met by a remarkable political criticism. According to The Register, the Dutch MEP Marietje Shaake responded to the proposal by saying that it was “disappointing to the point of insulting”. Along with more than 100 of her fellow MEPs, she signed an open letter to the EU Council, dated 4 March 2015, in which the Ministers of the Telecoms Council were strongly urged “to adopt an ambitious position on the Telecoms Single Market. Both with regard to ending roaming charges and with regard to net neutrality.”

Internet speed as a product
Professor Roman Beck, an expert in the field of IT and business at the IT University of Copenhagen, is not surprised by the harsh resistance to the proposal. He explains that access to the Internet can be considered a basic public service, similar to water or electricity supply. Following that argument, the general public will not accept different quality levels for different user groups. In other words, Internet services should not be perceived as a tradable product; rather, they should be comparable to the highway system, where the same traffic laws and speed limits apply to all cars - from expensive luxury cars to the smallest, compact cars.

“What is important for private Internet users is a critical matter for businesses. Imagine a ferry where transport fees are calculated by the value of the freight. Some goods would no longer be shipped, because their value would make it unaffordable. Now imagine a new Internet start-up with no access to fast-priority delivery trying to offer a service, competing with established Internet giants that can easily afford it. The barrier to access for small companies not only prevents competition, but it also essentially prevents innovation in some areas,” professor Roman Beck says.

The needs of the industry
In contrast, the telecom companies claim that differentiated Internet speeds are necessary in order to protect innovation and competition. In a press release from 20 March, ITSPA, the Internet Telephony Services Providers’ Association, announced an award to the Latvian Presidency to show their support for the net neutrality proposal.
For several years, telecoms companies have been lobbying intensively to convince European politicians that less regulation is needed, calling, for example, for government to prioritize critical online-services in the health sector, prevent online queues and support the development of driverless cars. Steven Tas, chairman of the association Etno, that represents some of the largest European telecoms, recently said to the Register that “any future regulation must recognize how networks function: We need balanced rules on traffic management as well as measures that allow the development of specialized services and innovative offers.”

The chief executive of Deutsche Telecom, Timotheus Höttges, shares this point of view. In an interview with Bloomberg at the Mobile World Congress in Barcelona in March he argued that telecoms need less regulation in order to compete with new competitors such as Google and Facebook.
“I’m asking for a level playing field. That we are operating the same business model [sic]. This is what we are fighting for. This is fair competition. I love competition,” he said.

Professor Roman Beck recognises that the needs of the industry will be an important factor in shaping the future development of the Internet. Politicians will have to find a balance between supporting competition and investment into the underlying structure of the internet while ensuring that smaller players, for example startup companies and non-commercial media, have a fair chance of reaching an audience:
 “Essentially, the basic right to access the Internet needs to be formulated as a human right. Having access is not enough if bandwidth is not available. At the same time, investments into the internet need to be lucrative for telecom companies.”

EU vs. US
Net neutrality is not only a hot topic in Europe. Nearly four million commenters took part in the Open Internet event in the US organised by the Federal Communication Commission, FCC. On 26 February the FCC published a press release on the decision to enforce net neutrality against the will of the telecom companies:  “Today, the Commission — once and for all — enacts strong, sustainable rules, grounded in multiple sources of legal authority, to ensure that Americans reap the economic, social, and civic benefits of an Open Internet today and into the future,” the FCC wrote.
The telecom industry immediately responded by declaring war on the FCC rules, demonstrated by the large number of lawsuits the FCC has faced since then.

At the IT University of Copenhagen, Professor Roman Beck, who has followed the ongoing debate in the US, notes, “ …while it’s too early to say how the FCC decision will affect the investments into the Internet infrastructure, telecoms and internet service providers in Europe and elsewhere claim that they cannot finance the investments into the Internet backbones if they cannot access new revenue streams.  Assuming that this is true, a solution needs to be found that allows a functioning, open Internet for all, while those with a “need for speed” can also have faster connections.”