HomeFinancial/RegulationUK telcos were 'net neutered' by regulations says analyst

    UK telcos were ‘net neutered’ by regulations says analyst


    Time to set telcos free from Net Neutrality

    Net Neutrality regulations kill creativity while failing to achieve their objective, says a new report from analyst Strand Consult. The biggest problem is that by imposing a one size fits all approach to network provision, the regulation neutralizes the scope for invention that is a creative technology company’s greatest asset in a free market economy; it’s flexibility. Instead of being able to adapt and create new service levels for each type of customer, the telco is forced to provide a rigid command economy style blanket offering.

    The study Net Neutrality Regulation is Failing UK consumers, innovators, and investors found empirical proof that there are no countries leading the development of 5G nation that have zealously enforced net neutrality regulations. “The notion of neutral traffic management is at odds with a smart 5G network, which adapts to meet the needs of the customer, service, and spectrum with intelligence, efficiency, and speed,” says the report, “under net neutrality regulation, mobile operators face uncertainty that compelling offers will be deemed “non-neutral”. Hence modernising, if not removing NN regulation, is important to remove risk for operators so that they can invest and market their services.”

    Net Neutrality actually weakens the bargaining position of UK mobile operators in dialogue with global content giants, says the report. While Ofcom and the UK government want to stimulate 5G rollout, they have been damned by their own good intentions. Regulation prohibits consumers from enjoying tailored 5G offers which would incentivize their adoption, increase their value, and meet their budget. It also prohibits the traffic management which could help networks run more efficiently, reducing cost and data usage says the report.

    “South Korea, Japan, China, and the US are all speeding ahead on 5G investment and rollout,” says the report. The report examined the reasons why these countries are able to progress relatively quickly. Though they often had nothing in common, demographically speaking, there was one critical factor. Their telcos were unencumbered with the net neutering effect of over regulation. “People and enterprises in these countries innovate and adopt 5G-enabled services in social care, creative industries, advanced manufacturing, transport, climate solutions, and other domains. Europeans are missing out on this valuable 5G innovation, in part because of misguided NN regulation.”

    According to Strand Consult’s calculations, the stifling effects of adhering to net neutrality have set UK back by £340 million a year in lost output. The irony is that the UK already had healthy regulations in place, before it layered on the extra European level of compliance.

    The report gives ten reasons why net neutrality stifles economies. Among the accusations were that the pointless regulation actually harms consumers, rather than helps them. The damage is caused by limiting the range and type of service broadband providers can offers, making them less accessible and relevant, and forcing consumers to value data uniformly. The lack of flexibility imposed by net neutrality meant that service providers were prevented from accessing free and zero-rated offers of health and education applications during the COVID pandemic. At a time people were at their most vulnerable financially and locked down in their homes, restricted from schools and hospitals, but the lack of imagination and initiative show by regulators prevented useful services from being rolled out. 

    Ultimately net neutrality slows 5G investment, rollout and adoption, because telcos aren’t allowed to explore their options to adapt their networks and find ways to make money. “Countries with no net neutrality regulation like China, Australia and New Zealand produce significant innovation, apps, and services,” said report author Roslyn Layton.

    The problem is unlikely to change so Europe could remain stifled. Few telecom regulators have performed or published actual cost-benefit analyses or impact assessments of the regulation, said the report. Domestic policymakers find it hard certify or quantify how the regulation fulfills its stated goals for end user rights and innovation. 

    Meanwhile, the European Union faces a €300 billion shortfall to achieve connectivity goals. The UK must find £25 billion to reach its 5G targets but the money is likely to be hard to come by when investors can see little return on investment. “Net neutrality has stifled internet innovation in Europe,” the report concludes. Since its rules were imposed in 2015, Europe’s share of global internet market value has fallen to less than 2 percent of the world’s total and is on track to be eclipsed by Africa. European companies used to figure in the top 20 internet companies; today only one European company scrapes into the Top 50.