U.K. Regulator Not Initially Convinced Net Neutrality Rules Needed

Ofcom, the U.K. communications regulator, has opened an inquiry into network management and network neurality issues by suggesting it does not presently see evidence of anti-competitive behavior that requires "ex ante" (rules instituted before any obvious problems) regulation.

Ofcom's proceeding is noteworthy for its refreshing honesty about the "network neutrality" debate; namely that the stakes include the utlimate division of revenue and profit in the developing broadband ecosystem.


"As the telecommunications market, content sector and online sector change, points of friction will inevitably arise over who controls customer relationships and the rate of innovation," Ofcom said. "Firms across these sectors are also competing for a share of advertising revenues and consumers’ expenditure at a time when there are concerns about the sustainability of many of the existing business models, not just for traditional telco and content distribution businesses but also a surprisingly large number of online businesses."

"As the value chain is taking shape, network operators and content providers are bargaining over how future rents will be divided and technical measures such as DPI and DRM are being deployed in part to strengthen relative negotiating positions," Ofcom noted.

The situation is especially acute in the mobile space, where bandwidth consumed, and hence network cost, is growing far faster than revenue.


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