In the close of last week, the global internet world was abuzz after Federal Communications Commission in the US, equivalent to the Communications Authority in Kenya, in a 3-2 vote, repealed the net neutrality policy — a set of new rules governing US internet service providers not to block or downgrade lawful web content, nor offer preference to content over others through differential pricing.
For example, if a provider of video programming wants to ensure that its customers receive its content quickly and so wants to purchase faster internet service from network providers, the video programming provider should not be allowed to buy this enhanced access because it will tilt the playing field since competitors, mostly new innovators, who can’t pay for the same access will be pushed to slower connections.
This set of new rules achieved what’s often called network neutrality or net neutrality — a term coined by Columbia Law Professor Tim Wu in his 2002 paper, Network Neutrality, Broadband Discrimination which the Obama administration pushed for arguing that it will bring certainty and predictability to the broadband economy.
The main justification for net neutrality regulation laws is to prevent harm to consumers and economists look at it in two different ways.
First, from the economic structuralism perspective, those who advocate for net neutrality believe that the internet is a public good and people are entitled to have a “neutral” provision of information over the internet because the internet was designed to be neutral.
Therefore, it’s necessary for government to fix prices because without such regulation a relatively small number of internet service providers will become managers of the internet with a “monopolistic” voice that overrides public interest.
This public interest theory in regulation is always popular because most people believe that regulation is costless to society and that’s how the world should work since it’s assumed to carry no extra-cost.
Second, from the economic liberal’s perspective who advocate for the repeal on net neutrality say the debate is basically a competition economic issue on whether price discrimination should be allowed or not?
As far as they are concerned, net neutrality is simply a price-fixing issue impeding infrastructure deployment because growth in demand for bandwidth-intensive applications such as streaming videos like Netflix or online gaming require vast capital investment but internet providers are not willing to take the chance since the prices are fixed and they might fail to recoup their costs.
At the same time, these bandwidth-intensive applications are sensitive to delay and this congestion leads to degradation of service for all internet users.
So the price-fixing is a heavy cost to the netizens since the sector is denied quality services due to lack of incentive to always improve it.
Therefore, the solution is for internet providers be entitled to freedom to manage their own networks without government interference, which means the right to set prices using surge pricing model where they can charge web content providers such as Yahoo!, eBay, Youtube, Netflix according to an increase in demand.
So what are the implications of the net neutrality repeal and lessons Kenya can take from the debate?
First, in the event that US internet provider companies negotiate a deal with major web content providers like Netflix, YouTube and other streaming services that are bandwidth-intensive to increase service charges, the most likely scenario is that those providers will not pass to the US consumer since they will still want to retain their respective market positions but possibly pass it to unsuspecting customers around the world, which may include Kenya.
Second, though Kenya finds itself under net neutrality policy position by default, the big concern is the fate of the preservation of the global open internet access policy and its interconnectedness nature.
After the net neutrality repeal in the US which actually redefines whether the internet is a public good, the question now posed to other jurisdictions who look up to the US as the global influence in best regulation practices, like Kenya, is whether to replicate the US net non-neutrality policy.
Third, time is ripe for Kenya to open the public debate about regulating the broadband economy by clearly separating the two mini-markets of internet service providers and web-content providers as the best regulation regime of wireless spectrum management in order to foster development through non-discriminatory competition.
For example, with mobile network accounting for the vast majority of internet consumers in Kenya, what are the chances that Safaricom #ticker:SCOM can unsuspectingly use its market power to unfairly discriminate, like degrading peer-to-peer traffic of e-commerce site Jumia in favour of its own e-commerce site Masoko?
Or its own taxi hailing application Little Cab over competitors Uber and Taxify? Or any other internet service provider using its infrastructure to favour its own content in the web-content market.
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