The paradox of Open Internet regulation

On 1 August, a US court ordered a halt to the implementation of the newly reinstated federal net neutrality regime pending a final decision on its legality.

Probably one of the most newsworthy aspects of this decision has been the lack of media coverage. Something seems to be changing.

Restoring net neutrality in the US

Recall that the US telecommunications regulator, the FCC, approved in April 2024 the reinstatement of net neutrality rules, which had been repealed in 2017. These new rules came into force on 22 July 2024.

In the case of the United States, the legal debate on net neutrality has for many years focused not so much on the content of the regulation, but rather on the legitimacy of the regulator to approve a regulation that affects the broadband market.

The interesting thing about the succession of approvals and repeals of net neutrality regulation in the US is that it has made possible to show in a very clear way, based on evidence and facts, the real impact and need for net neutrality regulation. And the reality is that the US market in the period 2017 - 2024 has shown that the impact and need for this regulation is none.

Despite the apocalyptic predictions that dominated headlines in 2017, predicting that repealing net neutrality regulations would spell the end of the internet as we knew it, the truth is that the US digital ecosystem has continued to be as vibrant and dynamic as ever.

Few explanations have been heard from those who so vehemently painted an apocalyptic picture in 2017.

The global debate on net neutrality

The net neutrality regulation is probably the most hotly debated regulation worldwide, the one that has generated the most heated discussions in the digital ecosystem, and the one whose impact and relevance has proven to be the most inconsequential.

It should be understood as inconsequential in terms of the objectives of ensuring an Open Internet, which were set out in 2005, and are now widely shared:

• All users should be able to access any legal content of their choice,
• execute any lawful application of its choice and
• connect any device of your choice, if it does not harm the network.

How forgotten these original principles have been in the regulatory tangle that has developed over the last 19 years.

Neutrality regulation has had a clear impact, not on preserving an Open Internet for end-users or consumers, but on introducing an imbalance in the digital ecosystem. It has given a small number of companies that provide the majority of internet services a competitive advantage over other companies in the ecosystem, in particular telecom operators.

The paradox of net neutrality regulation

One of the great paradoxes of net neutrality regulation and standards is that they were born to limit the ability of telecommunications operators to act as gatekeepers in the digital ecosystem of the Internet.

In 2024, it is clear, and widely acknowledged in recent legislative initiatives such as the Digital Markets Act (DMA) or the Artificial Intelligence Act, that the ability to act as a gatekeeper in today's Internet belongs to other actors, notably large technology companies. Telecom operators have long since lost this ability, despite the zeal of telecom regulators to maintain a vision of an Internet that no longer exists.

Maintaining regulation and rules that not only do not limit the power of the big internet gatekeepers, but reinforce and amplify it, cannot be seen as the way to guarantee an Open Internet in 2024.

An Internet where 60% of all traffic on the networks comes from only 7 companies does not seem to meet the goal and ambition of an Open Internet as envisaged in the 2005 principles. On the contrary, it has probably become the most concentrated economic environment ever, in any sector of the economy and on a global scale. This does not seem to be a result that makes us proud of the impact of Open Internet regulation, but rather raises many doubts about its impact and effect.

This reality is taking hold in many countries and regions. It has arrived in the United States: the lack of interest in the FCC's recent actions shows the extent to which they are responding to a political reality rather than a market need.

Other regions, particularly in Asia, have understood that net neutrality regulation has not benefited their digital ecosystems, but rather has harmed them, especially their local digital industries. This has largely led them to adopt an approach based on reclaiming the original principles of net neutrality, leaving aside the regulatory approach adopted in other regions.

Recently, the UK regulator has also initiated a review of net neutrality regulation, with the aim of adopting a more flexible model that allows both consumers and businesses to benefit from the technological innovations and possibilities brought about by the new 5G and fibre networks.

Similarly, the president of the Brazilian regulator has expressed surprise at a regulation that so unfairly favours large Internet companies to the detriment of other players in the digital ecosystem.

The situation in Europe

Europe maintains net neutrality regulation on the premise that it preserves the Open Internet. This is despite the lack of evidence that this regulation has had any impact on maintaining an Open Internet. Moreover, there is ample evidence that it has strengthened the market power of large internet companies. There is also evidence of the imbalance it creates in the digital ecosystem, the difficulties it creates for innovation in connectivity, and the resulting harm to end users.

There is hope that the evidence shown by the US market over the 2017 - 2024 period will encourage other regions, particularly Europe, to rethink regulatory assumptions that have moved away from the principles and goals of the Open Internet.

These principles and objectives have always met with broad consensus, but it seems clear that they require a regulatory approach adapted to the reality of the digital ecosystem in 2024.

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