Dutch Offer Preview of Net Neutrality
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- February 26th, 2015
THE HAGUE — When Bruno Leenders takes the 50-minute train ride to Amsterdam, he likes to stream blues and funk music through his smartphone. At home, Mr. Leenders, a Dutch technology consultant, watches Steven Seagal action movies on Netflix. Between meetings, he dashes off a few emails.
Mr. Leenders’s digital life has not changed all that much in the two years since the Netherlands started demanding that Internet providers treat all traffic equally, the same sort of rules that the United States adopted on Thursday.
His bill has gone up just marginally. He surfs, streams and downloads at the same speed — if not a little faster given the upgrades to Netherlands’ network, already one of the world’s best.
In short, the new law was not the Internet Armageddon that many Dutch telecommunications companies, industry lobbyists and some lawmakers had predicted.
“I can still watch what I want, when I want,” Mr. Leenders said on a half-empty commuter train recently, as he checked his emails and the latest news on his smartphone. “It is not up to any company to tell what I can do online.”
As the United States moves to regulate broadband Internet service as a public utility, the Netherlands offers a rare case study of what could await American consumers and companies. The Netherlands was the second country in the world to adopt so-called open Internet rules, after Chile.
It is not a perfect comparison.
The Netherlands, with a population of about 17 million, is geographically about the size of Maryland. That makes it far easier and cheaper for operators to provide high-speed Internet access compared with carriers trying to serve all of the 50 states.
The Dutch rules also allow for some premium deals between operators and services like Netflix, the online video-streaming company. Such agreements are supposed to be tightly restricted under the new regulations by the Federal Communications Commission.
Still, the Dutch experience — at least in the short term — could be instructive.
As with the American plan, Dutch carriers cannot discriminate among types of content, say by putting the brakes on data-hungry services like movie streaming. Nor can they charge extra for faster speeds and more reliable connections to the Internet’s pipelines, which could give deep-pocketed technology companies an advantage over fledgling start-ups.
And net neutrality opponents made all the same arguments in the Netherlands as they have been in the United States.
Local telecommunications providers, including the country’s former monopoly KPN, had wanted to charge Internet and media companies like Google and WhatsApp, the messaging service, for premium access to their networks. Companies warned that the price of consumers’ monthly contracts would rise if they could not levy additional fees. Otherwise, telecommunications companies said they would not be able to invest in technology and infrastructure — and the networks could grind to a standstill.
“If you overregulate through net neutrality, there’s a risk you reduce the levels of investment because the rules become too onerous,” said Michel Combes, chief executive of Alcatel-Lucent, the French-American telecommunications manufacturer.
Top Dutch Internet service providers, KPN, Vodafone and Ziggo, all declined to comment.
Proponents, though, countered that such deals would potentially limit what content could be used online, giving carriers and broadband companies too much control over how people surfed the web. As more people worldwide rely on high-speed Internet access, the net neutrality debate has become a rallying call for advocates who consider unobstructed online access akin to a human right
“There was a lot of pressure to pass these rules,” said Nico van Eijk, a professor at the University of Amsterdam, who specializes in telecommunications and media law. “People didn’t want to be told which online services they could and couldn’t use.”
But two years later, the Internet business in the Netherlands is still humming along.
Consumers have not cried foul en masse over the costs. Dutch consumer groups say cellphone and cable packages in the last two years have remained relatively stable, with contracts priced at as little as $25 a month for the ability to stream online content. The average cellphone contract in the Netherlands is about one-third the price of an equivalent plan in the United States.
Sophie van Haasen, 31, a social worker, uses her mobile data package to stream music online through her Spotify account, and she said she was thinking about signing up for Netflix, mostly to watch the series “House of Cards.” She pays about $35 a month for her cellphone, and $40 for home broadband.
“I can’t say my payments have gone up, maybe a little as I’m using my phone more to get on the Internet,” she said, sitting at a cafe in Amsterdam in the late afternoon on her day off. “But that’s O.K. I’m getting what I paid for.”
Telecommunications companies in the Netherlands have also continued to invest in their infrastructure, bolstering network speeds around the country, which were already pretty fast before the rules went into effect. The average broadband speed is around 14 megabits a second, up about 10 percent since late 2013, according to Akamai Technologies. That compares to 11.5 megabits a second in the United States
“Prices didn’t go up,” said Martijn van Dam, 37, the deputy leader of the Dutch Labor Party, who helped draft the Internet rules. “Our experience in the Netherlands shows that it’s nonsense to say that companies won’t invest.”
In part, that comes down to competition.
While rivalry among broadband providers remains relatively limited in much of the United States, there is fierce competition in the Netherlands between wireless and broadband providers to attract customers. To give consumers greater choice, regulators have limited efforts to consolidate the number of cellphone carriers, while KPN and Ziggo, a cable provider, fight doggedly to sign up customers for superfast home broadband.
Analysts say this competition, more than net neutrality, has forced companies to compete solely on price and speed — and not on which services come bundled with monthly cellphone or broadband packages.
“You don’t need net neutrality if you have healthy competition,” said Ot van Daalen, a privacy lawyer who helped push through the Dutch net neutrality rules. “But the U.S. has less competition than in Europe. The U.S. needs net neutrality a lot more than the Dutch do.”
But the Dutch rules do color the landscape.
The Netherlands does not police so-called interconnection arrangements, in which content companies pay a fee to guarantee fast and reliable access to a network. Those deals proved controversial in the United States after Netflix struck such agreements with Comcast and other providers. Under the new rules, the F.C.C. will tightly regulate those relationships.
In contrast, the Dutch authorities have taken a harsher line on so-called zero-rating deals. Those deals allow operators to offer free access to certain online services like music streaming as part of monthly cellphone or broadband contracts.
Under the Dutch rules, such agreements are outlawed because they prioritize some Internet traffic over others. But experts predict that the F.C.C. will offer more leeway in this area, provided it does not harm the overall market.
And there are signs that Dutch regulators are taking an increasingly tough line with operators that try to skirt the rules. Vodafone was fined $225,000 last month after bundling HBO’s smartphone app into its monthly package, which was deemed a violation of the zero-rating prohibition. KPN, Vodafone’s main rival, received a $280,000 penalty for blocking Internet calling services on some of its Wi-Fi hot spots.
“As a way to protect consumers, net neutrality has worked,” said Bart W. Schermer, a partner at Considerati, a Dutch technology consultancy. “More than anything else, it’s created a level playing field.”
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