There are good reasons to allow exemptions from net neutrality

For quick reading

• Net neutrality is an anti-discriminiation law for network providers. Professor Krämer: „Net neutrality, in very simple term, means that the network provider shall not interfere in any way with the data that flows through its network. Most importantly it shall not block any content, and shall not prioritize one website over another.“
• Currently, the German Federal Network Agency reviews a Zero-Rating-Service oft he Deutsche Telekom as to whehter this violates the principle of net neutrality. Here is what Professor Krämer says: „Deutsche Telekom offers all streaming video service providers to become zero-rated without making them pay extra for it. This is generally in line with net neutrality.“
• The principle of net neutrality is not always a good thing. Professor Krämer says that there are „good reasons to allow exemptions from net neturality“: For example when it comes to time critical contenct such as video-conferences or mutliplayer games. Quote:“If the network is congested and data packets coming from those applications are delayed, it hampers a conversation in Skype or your character dies before you even know it in the case of the computer game.“
• Net neutrality can slow down the internet. Quote: „In fact, most of our econonic research on net neutrality shows that network providers have lower incentives to invest in their networks when net neutrality is enforced. (…) This is certainly a bad thing, particularly for regions in which there currently is only limited broadband connectivity, such as in many parts of Bavaria.“

About Professor Krämer

Professor Jan Krämer is one of the three spokespersons of he planned Research Cluster Cyber<>Spaces at the University of Passau (more on this). He heads the Chair of Internet and Telecommunications Business and has done extensive research on the priniciple of net neutrality. He was one of the authors of the paper „Net Neutrality: A progress report“, which is intended as an introduction to the debate and to give an outlook on future fields of research. The article was published in 2013. It was the second most cited article in the journal Telecommunications Policy in the period from January 2014 to July 2016. In April 2016, an EU-law to safeguard net neutrality came into effect.

Here is the full interview:

Professor Krämer, how would you explain net neturality to a child?
Jan Krämer: Net neutrality, in very simple terms, means that the network providers shall not interfere in any way with the data that flows through its network. Most importantly it shall not block any content, and shall not prioritize one website over another.
This is what happens when we access the Internet: We need a network provider, as for example Deutsche Telekom, Vodafone or Telefonica. The network provider is our gateway to the internet and all the computers that are connected to it. So, when we open a website or download an app, our computer, tablet or smartphone sends a request to a remote PC, to send us the data that contains the content of that website or app. The remote computer can be located anywhere in the world. However, regardless of the location of that remote computer, the data that is being sent to us eventually hast o pass through our network provider´s connection to be able to reach us. Thus, our network provider can theoretically control what we do online. In particular, the network provider could deny access to some websites or apps. It could prioritize others, so that their content reaches us faster or more reliably.
Since April 2016 we have had a law in Europe that safeguards net neutrality. A similiar net neutraulity law has been in effect in the USA since June 2015.

Is net neutrality a bad or a good thing?
J. Krämer: There is no simple answer to this question. In fact, this question has been the root of a long controversy, still ongoing, both in academia and in society.
First, everyone agrees that freedom of speech and the possibility to access all lawful content online is essential and of paramount importance in any democracy and needs to be preserved. However, also before the net neutrality regulation was passed in Europe, we had not really had a problem in this regard; indeed, such as law would not have been necessary to safeguard this goal.
Second, the term „net neutrality“ is misleading in the sense that providing the same transmission quality to all content and application providers, does not necessarily mean that the network is „neutral“. Different content and application providers can have very diffenrent requirements with respect to transmission quality that is necessary to provide a good user experience. Applications for videoconferences such as Skype or multiplayer games provide time critical content. If the network is congested and data packets coming from those applications are delayed, it hampers a conversation in Skype or your character dies before you even know it in the case oft he computer game.
Thus, there are also good reasons to allow exemptions from a strict net neutrality rule, and therefore the net neutrality law allows what is called „reasonable network management“. This meams that network providers can prioritize certain types of application to optimize the user experience.
However, they must treat equally applications that have similar requirements. The network provider is not allwowed to prioritize specific content, such as videoconferencing data coming from Skype. In particular, it is against the net neutrality law to take money from certain content providers to prioritize their data flows. This part of the regulation would have been much more difficult to address with pre-existing law. And it is supposed to ensure that all content providers that offer similar services, experience a similar network quality, and thus have an equal opportunity to be successful. In turn, this should foster competition between content providers, which is again good for consumers.
Third, net neutrality regulation brings about some transparency rules. That means, network providers must reveal how they manage the traffic in their network and which quality they actually offer to consumers. This is unambiguously a good thing.
Fourth, net neutrality limits the contractual freedom between content providers, network providers and consumers. So if you believe in free markets, this is a bad thing. In fact, most of our economic research on net neutralitiy shows that network providers are less likely to invest in their networks, when net neutrality is enforced. That means, net neutrality is likely to slow down the network providers´ investments in faster internet connections. This is certainly a bad thing, particularly for regions in which there currently is only limited broadband connectivity, such as in many parts of Bavaria.

What is Zero-Rating?
J. Krämer: If we pay the network provider for the amount of data that we access, for example the number of videos or songs that we download, or, which is usually the case in mobile networks, buy a certain data allowance from the network provider; then the network provider could also abstain from counting the amount of data coming from certain websites, videos, songs or other services. This is called zero-rating. Clearly, at first sight, this is a good thing for consumers, because consumers pay less for the data that they consume. Therefore, zero-rating has a positive connotation in the context of developing countries, where zero-rating can make access to certain parts oft he internet affordable to consumers and thereby reduce the so-called digital divide. Initiatives like Facebook Zero, for example, allow consumers in some developing countries to access a text-only version of Facebook for free, that is without data charges.
In industialized countries like Germany, zero-rating is currently viewed with mixed emotions, because zero-rating applies only to some and not all content providers, putting some content providers at a advantage. Thus, there is again a fear that this may distort the competition between content providers and reduce consumers´ choice.
 

Does zero-rating violate the principle of net neutrality?
J. Krämer: Again, there is no simple answer to the question, because zero-rating is indeed a gray area. Generally, if zero-rating applies to all content providers that offer similiar services, for example all video streaming service, it is in line with net neutrality. This means, however, that content providers do not have to pay the network provider to be zero-rated.
If, however, only specific content providers are exempt from the data costs, for example of all video streaming services only Netflix is zero-rated, then this would be a violation of net neutrality. Similarly, if content providers would have to pay to become zero-rated, this would also be a violation of net neturality.
Let´s take the controversy about the new zero-rating-offer of Deutsche Telekom, called StreamOn: Deutsche Telekom offers all streaming video services to become zero-rated without making them pay extra for this. This is generally in line with net neutrality. However, before being zero-rated, content providers need to register with Deutsche Telekom and also need to fulfill certain technical requirements. So, this effort might prevent some services from becoming zero-rated. And this is what has raised concerns. It also nicely highlights the dilemma that is inherent to net neutrality. On the one hand, consumers would profit from lower data costs, but on the other hand, it might limit their choice of services.