Net Neutrality and How It May Affect Australia

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The term net neutrality was coined in 2003 by a Columbia University media law Professor who argued that Internet service providers (ISPs) should be designated common carriers, meaning that they provide content from a content provider to consumers. The neutrality term was meant to ensure that ISPs are obliged to deliver content without discrimination or by charging different rates to different consumers. The idea applies to media such as telephone, video, digital TV, and web browsing. Net neutrality has been strongly supported by the current U.S. Government who holds the view that content providers should deliver such services on similar terms to all ISPs operating wired access networks and mobile networks.

Net neutrality, as a principal, originally implied that in the interest of fair competition between internet service providers and content providers, Internet providers must not:

  • Block access to particular sites, content or services
  • Shape particular internet traffic
  • Charge more for particular internet traffic
  • Prioritise some internet traffic over other traffic.

The U.S. Court of Appeal ruled in 2010 that the Federal Communications Commission lacked statutory authority to enforce net neutrality. FCC, in response, has issued an Open Internet Order which provided:

  • Transparency
  • No blocking
  • No unreasonable discrimination.

The Court has subsequently ruled that Items 2 and 3 above are in conflict with FCC’s statutory authority which, by FCC’s own definition, only allows it to regulate common carriers who supply telecommunication services.

A revised FCC ruling is due to be released for comment in May and finalised by year end 2015.

What does this mean?

In the U.S. this means that, for the time being, there is an unregulated situation in regards to net neutrality. Major content suppliers like Times Warner, Qualcomm, Verizon, AT&T, and others, could decide to impose higher fees for traffic prioritisation, charging ISPs high fees for premium content and faster download speeds for content like movies. If this happens, increased fees would presumably be passed onto consumers. Consumer advocates in the U.S. fiercely oppose this preferred policy held by the large content providers and the situation is unlikely to be finalised before the end of this year at best.

What does this mean for Australian consumers?

As mentioned in the introduction to this article, net neutrality is supposed to apply to video, digital TV, and web browsing. The situation in Australia is not nearly as serious because of existing laws and market practices. To start, Australia already has differential rates for premium content delivery to consumers.

Australian consumers have free access to six commercial TV stations whose income rely on advertising revenue. In addition, consumers sign up for premium content not available on free to air TV.

Australia’s National Broadcast Network Co. (NBN) has the mission to provide all Australians with fast broadband services using a mix of technologies like fibre optic cables, high-speed Wi-Fi networks, and satellite connections. In addition, NBN is scheduled to offer combined telephone, data and TV, as well as paid premium content.

Australian companies like Telstra, Optus, TPG, and iiNet already offer premium content, and Foxtel is in the process of becoming an Internet service provider.

Content broadcasting over the Internet is definitely on the way, and most TV sets sold today are already fitted for receiving such content.

Consumer advocates in Australia stress that national agencies like the Australian Communications and Media Authority (ACMA) and the Australian Competition and Consumer Commission (ACCC) need to more thoroughly review and define existing regulations in regards to net neutrality. Its impact on the three-tier organisational structure of telecom services should be made clear: content providers, Internet service providers, and consumers.

In addition, advocates recommend that NBN should provide traffic management services that do not increase the cost that Internet service providers charge consumers for different types of traffic.

Competition in Australia is already healthier than it is in the U.S. Some service providers in Australia do exclude premium content from user’s usage allowance and shape traffic by limiting their output rate to consumers, both practices in violation of the original definition of net neutrality. However, people are free to respond by changing their supplier.

The year ahead should clarify how internet neutrality regulations apply to international web browsing and to Australian consumers.

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