Why the Dutch are wrong on net neutrality

By Martin Cave
15 Jul 2011 View Comments
LSE's professor Martin Cave

The attempts by the Dutch government to regulate around net neutrality will only limit opportunities for entrepreneurship, investment and job creation.

If passed and approved by the Dutch Senate, the bill would be the strongest net neutrality law on record in Europe and goes significantly beyond what the EU agreed only 18 months ago – who would have thought the Dutch would be at the forefront of goldplating EU legislation?

Further reading

Telecoms companies oppose the move, saying it will make it difficult for them to give quality guarantees and they won't expand their networks if they can't profit from them, while advocates say the bill will spur innovation.

Over-regulation before investment is wrong and the Dutch position threatens competitiveness, as Computing's article 'Why the UK shouldn't go Dutch on net neutrality' effectively argues. As I stated in the recent paper I presented to the OECD (Organisation for Economic Co-Operation and Development) in Paris on Monday 27 June, the need for the legislation in Europe is unproven, and the unintended consequences on the deployment of next-generation networks are simply not worth the risk.

The approach taken by the Netherlands differs from that of other EU member states and especially the UK approach. UK Digital Minister Ed Vaizey should be congratulated for to date adopting a sensible approach to net neutrality and getting ISPs to agree to a voluntary code with transparency.

At the end of last year, Vaizey stated that legislation on net neutrality was not required, thus ensuring a competitive broadband market to be self-regulated through consumer choice. This was absolutely the right decision.

Consumers across the UK are benefiting from competition, investment and innovation owing to the deployment of broadband networks because the internet has been largely free from burdensome and expensive government regulation. ISPs need to be able to prioritise data to provide the level of service demanded by customers for these essential functions.

In the UK, we already have reliable mechanisms to guard against abusive or dominant practice. Net neutrality in Europe is therefore a solution looking for a problem that doesn't exist. Moreover, if problems were to emerge, it can be solved with far less expense to internet users by mandating clearer customer information and using existing tools to deal with market power.

The need for the legislation is unproven, and the unintended consequences on the deployment of next-generation networks, competition, innovation and renewed economic growth and jobs simply not worth the risk.

Fortunately, most EU policymakers seem to recognise this, and remain focused on accomplishing the most important broadband objective in Europe: supporting European economic recovery, not making us more uncompetitive.

Professor Martin Cave is a leading telecoms economist and a lecturer at the London School of Economics

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