The social, cultural and economic implications of information and communication technology (ICT) are profound. From information aggregators, social networking sites and search engines to Business to Business (B2B) exchanges, online banking and retail websites, the Internet has changed and is changing our lives. ICT is estimated to be responsible for as much as 40 per cent of annual increases in European productivity. Meanwhile, although it represents only about 5 per cent of European GDP, ICT represents over 25 per cent of the continent’s research and development outlays.
The potential for future innovation is in principle unlimited. However, innovation might be seriously curtailed by government regulation of telecommunications networks. We are particularly concerned with certain proposed regulations currently being considered by the European Union, which threaten to prevent broadband access providers (BAPs) from providing the kinds of differentiated services that would benefit consumers.
Such regulations, ostensibly intended to promote “net neutrality,” would diminish the quality of service (QoS) provided to many customers. Bottlenecks would become worse, connection speeds would falter, urgent calls would fail to go through, Internet connections would be dropped at crucial times, and so on. Instead of providing the backbone of future productivity growth and new products and services, the Internet would increasingly become a source of frustration.
BAPs and other Internet Service Providers (ISPs) operating in a competitive environment have strong incentives to provide the bandwidth and QoS demanded by the range of end users that exist. The best approach to improving the provision of broadband access is to ensure that the environment in which BAPs operate is competitive. That means removing regulatory and other government-imposed barriers to competition, not creating new barriers in the form of restrictions on differentiation and mandatory QoS.