What Europe can teach us about keeping the Internet open and free

September 20, 2013

Outgoing FCC chair Julius Genachowski (Photo by gregelin)

In a Washington Federal courtroom earlier this month, Verizon squared off against the Federal Communications Commission. At issue was the concept of net neutrality — the notion that all Internet traffic, no matter where it's going or who it came from, should be treated the same. Internet service providers say the rule makes it hard to manage network load at peak hours. Supporters say that if the FCC's net neutrality rule is overturned, it could harm competition and consumer choice online, as companies who cut deals with incumbent broadband providers gain a leg up over those who can't afford to pay their fees.

If American policymakers had made different choices a decade ago, we might have avoided this fight altogether. If the market for ISPs was a little more competitive, consumers would have more choice and broadband providers would have less power to pick winners in the Internet economy.

The question is, what would a more competitive broadband market look like?

One way to find out is to look at what other countries have done. Experts point to Europe, where nations have committed themselves to something called local loop unbundling. That's a fancy term for when major network operators are required to share the infrastructure they built with other service providers.

In France, unbundling dropped the costs of starting a new ISP to attractive levels. Start-ups didn't have to worry about laying their own cables; they just piggybacked off the existing ones. As the market flourished with more ISPs, according to the New America Foundation's Danielle Kehl, some of those providers even began building their own Internet infrastructure that could compete with the big carriers. As a result, a 100 megabit-per-second, triple-play bundle now costs around $35 — which is 17 times as fast and roughly half as expensive as the most cost-effective Internet plan in the United States.

The U.S. market could have turned out much like that. In fact, with the telephone industry, it did. But then the FCC decided not to regulate broadband the same way. Whereas telecom providers had to practice unbundling, Internet providers didn't — the better to encourage them to build more infrastructure, or so the logic went. If all the companies expected to freeload, nobody would take the responsibility to lay the cables.

Today, that means every ISP owns its own network. But it also means there are fewer competitors in the marketplace.

"In the year 2000, there were 9,000 ISPs in the United States," Kehl told me. After the FCC steered clear of unbundling for broadband, she said, the number fell by 74 percent to less than 2,500 in 2005.

Now that the market for broadband has become so empty, net neutrality is one of the few policies that can keep the Internet open and affordable, Kehl said.

Europe will be watching the D.C. Circuit closely for a decision on net neutrality. However the case turns out, it will set a major precedent for the dozens of activist groups working independently in each country, said Roslyn Layton, an American Internet economist at Aalborg University in Copenhagen.

"Every country defines net neutrality differently. I've counted 12 different definitions," she said. "This is how the individual groups capture their constituencies, but the definitions make it hard to develop a single regulatory framework" across the continent.

The United States, with a more explicitly federal model, can set one rule and have it apply nationwide. Unless it's overturned. In which case — get ready to smash the piggy bank.

Brian Fung covers technology for The Washington Post, focusing on telecom, broadband and digital politics. Before joining the Post, he was the technology correspondent for National Journal and an associate editor at the Atlantic.
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