Will dismantling net neutrality benefit the Caribbean as Digicel says it will?

Digicel sees the repeal of net neutrality in the US as a “victory for telecoms, consumers and economies”, and is encouraging Caribbean countries to do the same. But will our countries truly benefit if we dismantle net neutrality rules in the region?

 

Globally, Internet (net) neutrality still remains a highly contentious issue, which still has not been conclusively settled. Most recently, we discussed the intended roll back of the net neutrality rules by then incoming Chairman of the Federal Communication Commission, which is still being hotly debated in the United States (US). As at the time of writing, based on the widespread opposition the proposal is receiving, there is a possibility that the dismantling of the current net neutrality framework in the US might not come to pass.

Regional telecoms carrier, Digicel, has been a vocal supporter of the roll back of net neutrality rules, and over the past several months have been emphasising its position to anyone who will listen. Further, in support of the FCC’s plans to repeal net neutrality, which was published last week, Digicel again was in the news supporting the move:

The move by the FCC in the US to roll back restrictive net neutrality regulation as it relates to regulating the Internet is a “victory for telecoms, consumers and economies” Digicel said today as it urged Caribbean regulators to take note and not simply apply a blanket one size fits all approach in their markets….

The company’s biggest contention is that the current net neutrality rules appear to favour “the interests of the large Internet companies like Google and Facebook (who notably invest no money in infrastructure) while stifling innovation and seriously hampering the telecoms companies who provide and pay for the Internet networks” (Source: Digicel). It thus wants the power not treat all Internet traffic the same. As a result, some content providers, such as Facebook and Google, could pay (more), or could otherwise be hindered in accessing Digicel’s customer base, and so open up new revenue streams for the company, especially since profits from traditional sources are not as robust as they used to be, and the it has some massive debts that must be serviced.

We know Digicel’s position, but what issues we should be considering?

Although Digicel has been calling out Caribbean regulators to abolish their current posture supporting net neutrality, which would better allow the firm to “continue to invest with certainty in our networks” (Source: Digicel), there is a bigger picture – and a broad range of issues – that ought to be highlighted and considered.

First, the argument that Digicel, and even the FCC Chairman have been making, that net neutrality has been hindering investment, has not been the case in practice. In the US, infrastructure investment has been on the rise since 2015, since the current net neutrality framework was introduced (Source:  Business Insider). Furthermore, companies, such as AT&T, Comcast, Verizon  and Altice, to name a few, are on the record stating that the more stringent net neutrality rules have not affected their investment strategies (Source: Ars Technica).

Second, many telecoms/Internet network carriers, including Digicel, have also become content creators, or have developed value-added platforms and services for their customers that are delivered over the Internet. It therefore means that they are competing directly with other platform and service providers, and if the current net neutrality rules are abandoned, Digicel could marginalise its competitors, in favour of its own services. Hence, the very thing that it has accused Google and Facebook of doing – stifling competition and innovation – Digicel would be in a position to do to others.

Third, it is important for us to contextualise our own significance in the grand scheme of things. Based on 2016 estimates, there are about 20 million Internet users in the Caribbean region, with the highest number of users in the Dominican Republic, at over 6 million (Source:  Internet World Stats). Although 6 million (or 20 million, regionally) is not necessarily a customer base to be overlooked, we ought to appreciate that Caribbean telcos may not be able to successfully leverage access their customer base against global content providers without consequence. If a firm, such as Google, walked away from accessing over a billion people in China, it may lose little sleep over our paltry market size in the Caribbean.

Fourth, we, the Caribbean Internet user, are the ones accessing the services of the major content providers in other jurisdictions. Primarily, and as a region, we are still just consumers of content, and not content creators.  Further, many individuals across the region are leveraging the innovation and revenues generating opportunities that have emerged, for example, as Instagram and YouTube influencers – thanks to a free and open Internet. Changes to the current net neutrality rules could put the opportunities and gains the Internet currently offers in peril, potentially limiting innovation in the region.

Finally, we must also recognise that there is limited competition in the Internet segment in the Caribbean region. In most markets, there are no more than two network operators, and based on history, they may not be able sustain more. It thus means that Caribbean customers already do not have much choice, and potentially can be wrapped over a barrel as well – in terms of the packages and prices service providers offer. Hence, it ought not be lost that a firm, such as Digicel, in the absence of net neutrality, could not only be able to leverage its power to control access content not only against content providers, but also against its own customers.

In summary, the Caribbean region ought to carefully consider whether it is in its best interest to repeal, or otherwise adjust, the current net neutrality rules. Based on the above, it could be argued that so far, Digicel has been making broad brush statements to invoke change – to move us from “sure to unsure” ­– but it has presented very little authoritative evidence to support its position. Further, it seems to be glossing over the inevitable fallout and not seeking to manage expectations. In light of the stakes involved, that is just not good enough.

 

Image credit:   mdavidford (flickr)

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1 Comment

  • Very good analysis Michelle.

    Here’s the thing. A US$50 investment in Caribbean spectrum by content providers coupled with the investments already vested in a few of of their ‘moonshot’ projects would tear a hole in the mobile data market………and render them now truly existential threats to our badmouthing regional service providers. So they want to go there our strategic response is ‘let a thousand flowers bloom”!

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