PAPER SERIES: NO. 18 — JULY 2015 Landmark EU and US Net Neutrality Decisions: How Might Pending Decisions Impact Internet Fragmentation? Ben Scott, Stefan Heumann and Jan-Peter Kleinhans LANDMARK EU AND US NET NEUTRALITY DECISIONS: HOW MIGHT PENDING DECISIONS IMPACT INTERNET FRAGMENTATION? Ben Scott, Stefan Heumann and Jan-Peter Kleinhans Copyright © 2015 by Ben Scott, Stefan Heumann and Jan-Peter Kleinhans Published by the Centre for International Governance Innovation and Chatham House. The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Centre for International Governance Innovation or its Board of Directors. This work is licensed under a Creative Commons Attribution — Non-commercial — No Derivatives License. To view this license, visit (www.creativecommons.org/licenses/by-nc- nd/3.0/). For re-use or distribution, please include this copyright notice. 67 Erb Street West 10 St James’s Square Waterloo, Ontario N2L 6C2 London, England SW1Y 4LE Canada United Kingdom tel +1 519 885 2444 fax +1 519 885 5450 tel +44 (0)20 7957 5700 fax +44 (0)20 7957 5710 www.cigionline.org www.chathamhouse.org TABLE OF CONTENTS vi About the Global Commission on Internet Governance vi About the Authors 1 Executive Summary 1 Introduction: Central Issues in the Net Neutrality Debate 3 Net Neutrality in the United States 5 Net Neutrality in the European Union 7 Threat of Internet Fragmentation 10 Conclusion 10 Works Cited 14 About CIGI 14 About Chatham House 14 CIGI Masthead GLOBAL COMMISSION ON INTERNET GOVERNANCE PAPER SERIES: NO. 18 — JuLY 2015 ABOUT THE GLOBAL ABOUT THE AUTHORS COMMISSION ON INTERNET Ben Scott is managing director of the stiftung neue GOVERNANCE verantwortung (snv) in Berlin, and concurrently senior adviser to the Open Technology Institute at New The Global Commission on Internet Governance was America in Washington, DC. He was the policy adviser established in January 2014 to articulate and advance a for innovation at the US Department of State, where strategic vision for the future of Internet governance. The he worked in a small team of advisers to Secretary of two-year project conducts and supports independent State Hillary Rodham Clinton. Prior to joining the State research on Internet-related dimensions of global public Department, he led the Washington office of Free Press policy, culminating in an official commission report that for six years. He holds a Ph.D. in communications from will articulate concrete policy recommendations for the the University of Illinois. future of Internet governance. These recommendations will address concerns about the stability, interoperability, Stefan Heumann is director of the European Digital security and resilience of the Internet ecosystem. Agenda program at snv. He is a member of the Freedom Online Coalition Working Group 3 on Privacy and Launched by two independent global think tanks, Transparency Online. Before joining snv, he coordinated the Centre for International Governance Innovation the Public Affairs department of the US Consulate (CIGI) and Chatham House, the Global Commission on General in Hamburg, and taught political science Internet Governance will help educate the wider public as assistant professor at the University of Northern on the most effective ways to promote Internet access, Colorado. He holds a Ph.D. in political science from the while simultaneously championing the principles of University of Pennsylvania. freedom of expression and the free flow of ideas over the Internet. Jan-Peter Kleinhans is manager of the European Digital Agenda program at snv. Before joining snv, he worked as The Global Commission on Internet Governance will a journalist at netzpolitik.org, focusing on surveillance focus on four key themes: technology and Internet regulation. He holds a master’s degree in social sciences from Uppsala University in • enhancing governance legitimacy — including Sweden. regulatory approaches and standards; • stimulating economic innovation and growth — including critical Internet resources, infrastructure and competition policy; • ensuring human rights online — including establishing the principle of technological neutrality for human rights, privacy and free expression; and • avoiding systemic risk — including establishing norms regarding state conduct, cybercrime cooperation and non-proliferation, confidence- building measures and disarmament issues. The goal of the Global Commission on Internet Governance is two-fold. First, it will encourage globally inclusive public discussions on the future of Internet governance. Second, through its comprehensive policy- oriented report, and the subsequent promotion of this final report, the Global Commission on Internet Governance will communicate its findings with senior stakeholders at key Internet governance events. www.ourinternet.org VI • CENTRE FOR INTERNATIONAL GOVERNANCE INNOVATION • CHATHAM HOUSE LANDMARK EU AND US NET NEUTRALITY DECISIONS EXECUTIVE SUMMARY of the network is tied to both infrastructure development and power over what content and services are available During the past decade, net neutrality has become a to consumers. The political and economic implications of central issue in the debate over further development of the this decision are very broad and ripple out from national Internet. At a time when the United States has just adopted impact to international consequences. Net neutrality a landmark regulation on net neutrality and the European policies could either reduce or enhance the potential of Union is in the final stages of defining its own position fragmenting the global Internet marketplace. This is why on net neutrality, this paper looks ahead and analyzes the a seemingly arcane technology policy issue has achieved implications of these decisions with a particular focus on such unlikely prominence in contemporary political their impact on Internet fragmentation. The paper begins debates. with an analysis of what is at stake in the net neutrality debate. The policy choice boils down to two competing This paper speaks to these “big picture” issues. But in technical models with very different commercial order to understand what is at stake, it is important to opportunities: a non-discriminatory infrastructure with begin with the basic technical questions of what the innovation occurring at the edges, and an evolution Internet looks like with and without net neutrality. The toward “smart” networks that are permitted to develop logic of the policy choices flows from the technical facts. new business models on the physical infrastructure, From this perspective, the policy choice of net neutrality monetizing points of network congestion by selling boils down to two competing technical architectures for pay-for-play quality of service to content and services information networks: a non-discriminatory infrastructure providers. US regulators have taken a clear position that with innovation occurring at the edges and all content/ would ban any form of discrimination in the infrastructure service providers competing equally over the same for solely commercial reasons. The future of net neutrality networks; and an evolution toward “smart” networks in the European Union is more uncertain. It largely that are permitted to develop new business models on depends on the interpretation of the final text negotiated the physical infrastructure that assert greater, centralized between the European Council, European Commission control over the content on their networks — monetizing (EC) and European Parliament (EP) by national regulatory points of network congestion by selling pay-for-play 1 authorities. The paper identifies four possible areas for quality of service to content and services providers. Internet fragmentation, if net neutrality rules in the United In many ways, net neutrality regulations are not new States and European Union significantly diverge. First, it laws. They codify the architectural “first principles” of the could lead to a further divergence between the United States Internet — preserving in formal legal rules the technical and the European Union regarding the competitiveness features that enabled the Internet’s tremendous growth. of their Internet industries. Second, it could increase The Internet was originally designed according to the best barriers of market entry for new innovative start-ups in effort, or “end-to-end,” principle. This means that all data the European Union that seek to challenge Silicon Valley packets on the network are treated without discrimination tech titans. Third, a weak net neutrality rule could lead to and flow according to the best available path from origin divergence of customer experience of the Internet. Fourth, to end point. These features were engineered into the discriminatory interconnection practices could be used to Internet’s basic technical protocols. The idea was to ensure undermine the global Internet marketplace of information that any new content, application or service could be and services. The paper concludes with the thesis that the designed with the same expectations of quality of service in greater the difference between the implementation of the routing traffic over the network (i.e., non-discrimination). two net neutrality rules, the more likely the two markets The notion of discriminatory routing that would privilege will develop in significantly different ways. certain senders of content over others was never seriously contemplated. Thus, during the early