A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Layton, Roslyn Conference Paper Net neutrality in the Netherlands: Dutch solution or Dutch disease? 24th European Regional Conference of the International Telecommunications Society (ITS): "Technology, Investment and Uncertainty", Florence, Italy, 20th-23rd October, 2013 Provided in Cooperation with: International Telecommunications Society (ITS) Suggested Citation: Layton, Roslyn (2013) : Net neutrality in the Netherlands: Dutch solution or Dutch disease?, 24th European Regional Conference of the International Telecommunications Society (ITS): "Technology, Investment and Uncertainty", Florence, Italy, 20th-23rd October, 2013, International Telecommunications Society (ITS), Calgary This Version is available at: http://hdl.handle.net/10419/88488 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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The law of net neutrality has been in effect in the Netherlands since January 1, 2013, after having been passed on June 5, 2011 by the Lower House of the Dutch Parliament and then ratified by the Upper House a year later. This paper investigates the policy, its process, and its impact. It offers a review of the background of the problem; the design and conceptualization of the policy response, the implementation of the policy, the impact of the policy and an assessment of the policy. It also provides a discussion of the market for over the top (OTT) technology services and its role in the market. Interviews with key stakeholders were conducted to provide further insight. A financial analysis is also offered to help inform the issue. As net neutrality is on the agenda of regulators worldwide, such an analysis can be helpful to policymakers. Other countries looking to implement such a rule might learn from the Dutch example. Contents Background ...............................................................................................................................................................2 The Case for Net Neutrality Legislation ................................................................................................................4 The Case Against Net Neutrality Legislation ........................................................................................................6 Policy Implementation .............................................................................................................................................9 Policy Design .......................................................................................................................................................... 11 Policy Impact ......................................................................................................................................................... 12 Censorship ......................................................................................................................................................... 13 Freedom of Speech ............................................................................................................................................ 13 Privacy ............................................................................................................................................................... 13 Innovation .......................................................................................................................................................... 13 Policy Assessment ................................................................................................................................................. 16 What is good regulation? .................................................................................................................................. 17 Can competition work? ..................................................................................................................................... 18 Did the Netherlands avoid regulatory errors? .................................................................................................. 18 Industry Trend: Over the Top VoIP Services ......................................................................................................... 19 WhatsApp and the Disruption of Mobile Messaging ........................................................................................ 20 Financial Impact to Dutch Mobile Operators ........................................................................................................ 22 Roslyn Layton CMI/Aalborg University September 2013 2 KPN: Don’t Shoot the Messenger ..................................................................................................................... 22 KPN’s New Pricing Plan .................................................................................................................................. 27 Subscribers .................................................................................................................................................... 28 Capex ............................................................................................................................................................. 30 Annual Revenue Per User (ARPU) ................................................................................................................. 30 Services Revenue Year over Year Growth ..................................................................................................... 31 Conclusion ............................................................................................................................................................. 32 Appendix ................................................................................................................................................................ 33 Addendum A ...................................................................................................................................................... 33 Background The Netherlands, population 16.7 million, has a competitive broadband market. The OECD notes that it has 6,652,000 wireline and 10,249,000 wireless internet subscribers.1 Further the OECD ranks it #1 for competition between types of networks.2 Cable deployment came early to the country (after there was already a copper network), and there are two next generation access (NGA) lines to almost every home. These copper lines were unbundled, so in practice a household could purchase access from a number of DSL providers as well as the local cable provider. There are three existing mobile networks: KPN, Vodafone, T-Mobile. A fourth, Tele2, recently acquired spectrum. Additionally some 80 virtual mobile operators purchase wholesale access to incumbents infrastructure and offer services to the public.3 Network neutrality, which has been defined differently from country to country, is essentially the idea that all data should move at the same speed across the internet. This was less of an issue in the narrowband era when it mattered little if an email arrived with a few seconds delay. In the broadband era where latency may degrade voice over internet protocol (VoIP) communications or make video gaming unworkable, network neutrality has been the subject of intense debate and has risen on the telecom regulatory agenda. The topic has been the subject of academic inquiry in law, economics and engineering for 10 years since the publishing of Tim Wu’s paper4 naming the issue. Each discipline brings certain assumptions about the motivations and incentives of the actors in the net neutrality debate, typically telecom operators; users, and content and application providers. Within the economics, academic of both the classical liberal and progressive tradition are represented. 1http://www.oecd.org/sti/broadband/oecdbroadbandportal.htm See “Total fixed and wireless broadband subscriptions by country (Dec. 2012)” 2 ibid 3 http://www.kpn-wholesale.com/nl/over-kpn-wholesale/partners.aspx 4 Wu, Tim. ”Network Neutrality, Broadband Discrimination”. Columbia University Law School, 2003. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=388863 Roslyn Layton CMI/Aalborg University September 2013 3 Proponents of net neutrality, frequently of the progressive persuasion, assert that internet service providers (ISP) will discriminate data traffic for financial