Source: WIK-Consult, photo courtesy of alexindigo, Flickr.com
My study for the BNetzA (German telecoms regulator) on Network Neutrality in Europe has finally published. (Don’t worry, it’s available in English). In this study, we look at Network Neutrality – the catch-all phrase that emerged in the United States over the past decade to reflect a number of potential behaviors that some consider to be anticompetitive – and what the implications for European regulators might be.
The report reviews the economics that underlies the Network Neutrality debate, including price discrimination, network externalities, transaction costs, switching costs, two-sided markets, and the economics of vertical foreclosure. It also briefly reviews the technical aspects of quality differentiation for IP traffic (including packet delay, jitter and loss). It provides background on a number of alleged deviations in the U.S. (including Madison River and Comcast), and assesses the Network Neutrality concerns that have been raised in Europe (for example, by the BBC’s iPlayer). In the end, we conclude that Network Neutrality manifests itself very differently, and much less problematically, in Europe than it does in the United States. The report also considers the ways in which the changes proposed to the European regulatory framework as part of the ongoing “2006 review” might strengthen the hand of European regulators, and at what cost.
Insight: Putting aside the regulatory analysis, I think that the two most important and far-reaching aspects of our analysis are the taxonomy of network relationships we created and the way we describe end-to-end latency in IP networks. In order to describe the nature of relationships in an interconnected-multilateral-all-IP network world, we characterize relationships among network participants and service providers as being one three dimensions: vertical, horizontal, or diagonal. (See Section 2.3 in the report). I am also very pleased with how we use ski lifts to explain of queuing and link delays in end-to-end latency. (See Figure 1 in the report). It is my hope that these two approaches will make the debate more objective and approachable, and help to reduce the ever-present hyperbole.
