Monday, 26 March 2012

Interview with Maxime Verhagen: Deputy Prime Minister of the Netherlands

Maxime Verhagen
The Netherlands passed a law in 2011 that prevents internet service providers from charging more for certain types of content, effectively making 'network neutrality' the norm. The Netherlands is the first country in Europe to enact such legislation, and follows the lead of Chile, which enshrined the principle into law in 2010.   

Michiel Willems spoke to Maxime Verhagen, the Dutch Deputy Prime Minister and Minister for Economic Affairs, Innovation and Agriculture, who introduced the new legislation, to find out how network neutrality will work in practice in the country.

Why is network neutrality such an important issue for the Dutch Government?
In our coalition agreement, we have stated that the open character of the internet needs to be safeguarded. Because we share the ideal of preserving the open character of the internet, enabling end users to access and distribute information, applications and services of their choice is essential.

The principle of openness of the internet has been a key driver of the growth of the internet to date, and has facilitated an open environment conducive to the spectacular levels of innovation seen in online applications, content and service networks. In this respect, the internet is seen as a communication tool which is the basis for many innovations within our economy and society.

Why is this law so important for Dutch internet consumers and the Dutch telecommunications market? What is really changing?
The Dutch Government and a majority in the Dutch Parliament - the Tweede Kamer - believe that the open character of the internet and innovation is threatened by the policy of the majority of mobile operators in the Netherlands to allow competing services, such as VOIP and messaging services like Skype and WhatsApp only in the most expensive mobile subscriptions, and block them in the other subscriptions.

Clearly, the reason for this is to reduce their loss of voice and SMS income due to the extensive use of these innovative competing services. This way, an unwanted barrier is introduced for independent service providers who would like to enter the market and are dependent on mobile operators to reach their clients. With this law on network neutrality, we want to safeguard the ability for independent service providers to enter the market without experiencing unreasonable entry barriers. But, of course, the providers must be able to base their subscription costs on the amount of data or the speed of the connection. But since we think openness is key to further growth, we do not want a block on certain services or higher prices for the use of innovative services like Skype.

Could this law be a model for other Member States or the European Union as a whole? Will the Dutch Government push for regulation at EU-level?
The current EU telecommunications standards leave the possibility for a law on network neutrality. It is up to the European Commission as well as other European countries to make their own judgement on this issue. The European guidelines are of great value - for instance, the new European transparency rules on traffic management policies. But since we think the openness of the system is key to future growth, we are going one step further. I see the same discussion taking place in other European countries now as well. Of course, we are staying in close touch with the European Commission as well as with Commissioner Kroes.

Are operators transparent (enough) in the network management policies they apply? Will transparency requirements be imposed?
Yes. That is a key element. Regarding transparency, there is a lot of room for improvement. As a part of the implementation of the New Regulatory Framework, there will therefore also be an obligation for operators to be transparent on their internet traffic policy, e.g in the case of congestion. Consumers want to know how the traffic is managed and what exactly is taking place. I think these transparency guidelines together with our new plans are of great benefit for the consumer.

the Netherlands
The Googles and Facebooks of this world openly state that telecommunications operators will have to make all the required investments while most of the internet giants will get the largest chunk of the pie. How are the operators going to recover these costs under the new regime? Will net neutrality possibly halt investment?
Operators will indeed have to invest in their networks to keep up with the exploding bandwidth demand. So it is important that operators are able to earn enough money to carry out these investments - there is no doubt about that. The new law also leaves enough room for this. At the same time, some operators will have to find other business models than the ones they apply now. Instead of differentiating subscriptions for consumers by (not) blocking certain services, they need to differentiate on other parameters, like for example, data usage or speed. That will still be allowed and the providers are still in the position to compete on parameters like these two. Other important parameters are high quality service and services like protection against spam, viruses and trojans.

In relation to the previous question, do you expect shifts in telecommunications/ bandwidth pricing?
The future will show if prices of internet subscriptions will rise. It is not impossible that this will be the case. The price that a consumer ultimately pays depends on his total communications behaviour. If, for example, a consumer uses his internet subscription a lot to do VOIP, he possibly can have a cheaper voice subscription. Also relevant here is that I expect a change from flat fee internet subscriptions to subscriptions where your bill depends on the amount of data you use - something we are now seeing in Canada, for example, with usage-based billing.

So, for some users this may mean that they will pay less than they do now, while others may need to pay more. But I think it is fair that what you pay depends on what you use. So the offerings the operators will set in the market and the communications behaviour of an individual will ultimately determine what an individual has to pay. It is difficult to do exact predictions about this. On the other hand, we will give out new extra frequencies next year and we expect new competitors to enter the mobile market in the Netherlands. This may lead to increased competition and, as a result, moderate prices.

Michiel Willems © 2011-2012 ECLP, CP Publishing Ltd. London, UK. Pictures: (top), (middle), (above).