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Friday, June 25, 2010

Ofcom: show us the money on net neutrality

As Ofcom rightly points out, based on conventional economic analysis, there is no evidence that fundamentally changing the nature of the Internet will slow down the pace of innovation. That said, they ignored the 2006 evidence in front of all their top brass (from 12:26) that net neutrality was a serious problem, so don't hold your breath, you can't prove a negative:
"4.50 It is possible to postulate a future scenario in which the introduction of traffic management and the kind of charging models described in this chapter lead to a different kind of internet economy, in which the space available for the ‘best efforts’ internet – and the low barriers to market entry and innovation that it guarantees – is reduced. If this outcome starts to emerge, it is likely that this would lead to pressure to regulate to avert this. One possibility would be to use the powers to impose minimum quality of service to define a ‘best efforts’ internet to which all network operators and ISPs would have to designate a certain proportion of network capacity. However, we re-emphasise that there is as yet no evidence that this problem is arising, and good reasons to doubt that it will arise, given the current competitive market structure and the incentives on network operators and ISPs existing within that market structure."
However, while we slaughter, or at least harass, the golden goose (whose eggs are in any case mainly harvested in the US, while Europeans have enjoyed consumer welfare increases based on telco value destruction by BitTorrent and Skype), is there not at least a bit of room to consider that there have been vast - simply vast - 'prosumer' (EU jargon) benefits from the freedom to tinker that a neutral Internet gave us? Yes, but that's not strictly within the bounds of the economic analysis performed according to Ofcom. This is a serious and seriously bounded economic analysis of net neutrality. Stupid monkeys abound!
That's not Ofcom's fault necessarily, its just a statement of why the government should be having direct citizen consultation on net neutrality rather than delegating it to a regulatory agency that necessarily has to limit its investigation. We were promised by the Tory opposition that there would be more policy making by government rather than Ofcom after they were elected? Not that such a prospect fills me with joy as the government is in denial, but it would at least consider options in view of the announced review of the E-Commerce Directive, for instance.

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