ISP Rate Hikes Follow Net Neutrality Regulations in the Netherlands

Today in unintended consequences: A Dutch Internet Service Provider apparently tried to add a surcharge to competing services accessed over its connections. When the surcharges were outlawed via a strict new net neutrality regulation, the company responded by hiking its rates across the board:

The Netherlands' largest telecommunications company announced big price hikes for mobile Internet customers on Tuesday, less than a month after Parliament approved one of the world's strongest "net neutrality" laws.

KPN had posted weak first quarter earnings as its customers with mobile Internet subscriptions flocked to Skype and other Internet-based messaging services, undercutting KPN's own more costly offerings.

When the company tried to add a surcharge on competing services, the move backfired. Customers protested loudly and Parliament passed a bill barring companies from hindering competitors or giving preference to their own traffic on mobile networks.

"KPN has decided not to block any services or to set separate rates for different services," the company said in a statement Tuesday. It said its new charges "comply with the forthcoming Dutch legislation and are net neutral."

It's not a foregone conclusion that the FCC's net neutrality regulations will lead directly to higher overall Internet connection rates, but it's certainly a possibility. When ISPs are banned from covering their operating and development costs through targeted pricing schemes, they end up with little choice but to resort to general rate hikes. 

Read my March 2011 magazine feature on the FCC's fight for net neutrality here. 

Comments

[heller]

#48 Ana

[Crickets]

[A good European progressive]

But now that the charges are distributed evenly, it's equal!

[Captain Obvious]

It's not about who is getting charged or how much, you imbecile. Stifling competition by applying arbitrary tariffs on some services but not others is a bad thing.

Any technical person could get around these charges, it is thanks to morons like you that this legislation has to be passed.

[cynical]

"When ISPs are banned from covering their operating and development costs through targeted pricing schemes, they end up with little choice but to resort to general rate hikes."

You mean, when oligopolistic companies are banned from using their gatekeeper status to make connected markets less competitive, it's harder for them to make money? Shit, next you'll tell me that if we privatized GSEs/government programs, a lot of them might have to raise their prices.

While I'm not familiar with the details of the Dutch law, I imagine that "targeted pricing" is still legal -- they can, for example, sell a higher-tier connection that gets priority access in times of high congestion. To use a ROADZZZZ example, congestion pricing is perfectly legit, while attempting use your private ownership of the main thoroughfares into town to shut out all competing shipping companies is not. Guess which one is neutral/good for competition and which is bad?

[Virginia]

So legally the Dutch can increase rates at rush hour (roadzzzz example) on everyone but can't increase rates for trucks and lessen them for motorcycles?

[cynical]

No, that would be the same sort of thing. More like, they can't impose punitive fees for shipping in goods from companies that they don't own in order become the sole seller of those goods in the town.

[sevo]

"While I'm not familiar with the details of the Dutch law, I imagine that "targeted pricing" is still legal -- they can, for example, sell a higher-tier connection that gets priority access in times of high congestion."

If this isn't true, your entire argument fails.

[cynical]

Not really, since they can almost certainly throttle high-bandwidth users, even if they can't charge them a premium to get more service and make everyone happy. It's less ideal, but it's highly unlike that the law requires that intensive users subsidize low-intensity users.

[califronian]

But it's NOT the main road in town. It's NOT your road. It's NOT the public's road. Someone else owns it. Someone else built it. Someone else raised the investor capital to realize it. Good grief. You net neutrality people are insane.

Your principles boil down to: "I want a better deal than I'm getting offered so we need to nationalize it"

[sarcasmic]

Your principles boil down to: "I want a better deal than I'm getting offered so we need to nationalize it"

ftfy

[cynical]

Someone else built it on public rights of way, with government consent/aid, you mean. Telecoms aren't free market enterprises and never have been.

[Old Mexican]

Re: cynical,

You mean, when oligopolistic companies are banned from using their gatekeeper status to make connected markets less competitive, it's harder for them to make money?

Yes, it is harder and counterproductive, if the intention behind the ban was to make markets more competitive.

What makes markets more competitive is LESS intrusion in the market, not more. Companies do not become oligopolistic just like that; they always receive a "little help" from their friends in government. Take away that help, and companies will have to compete on value.

The ban was nothing more than one of those "let's do something!" knee-jerk attempts at appeasing the population, and like any other such reaction, it ends up blowing in their faces.

[cynical]

From a state of nature, sure, but from a state of some regulation, sometimes a regulation actually does counteract the negative effects of another regulation.

I don't support net neutrality in practice because the FCC cannot be trusted with power, but recognizing that sometimes a highly-regulated, uncompetitive "private" industry cannot easily be healed, quarantine may be the more practical solution.

[SugarFree]

I think the most surprising part of this story is that The Netherlands doesn't offer Internet as a tax-supported "free" public utility.

[Lord Humungus]

So there's hope?

[SugarFree]

Not now, after the "outrageous" rate hike. Some things are just too important to leave in the hands of greedy corporashuns.

Governments: We break it, we take it, and "fuck you" that's why.

[Virginia]

It might be that simple in the states. However in Europe there's the added layers of govt failure, govt bonds to pay for pensions, bond market rebellion, fiscal unity and eurobonds, then redistribution of German wealth to Greece, Spain, Portugal, Ireland, and Italy.

Okay, if Germany wants to militarize and attack the rest of Europe over that, then I'll cut them some slack.

[kinnath]

If we had let Germany keep most of Europe back in the 40s, we could have avoided a lot of these problems.

[ZekWoo]

OK wow, now that is kinda scary when you think about it.

http://www.web-anon-tools.us.tc

[sarcasmic]

alt alt-text: Enough with your damned masturbating, it's MY turn!

[T]

Odd thought, engendered by this. RC likes to point out that foreseeable consequences are not unintended. But what if the consequences foreseeable by us, and anyone who understands how buying things works, are literally not foreseeable to legislators. IF you literally can't understand, for whatever reason, the consequences of what you're doing, this might be unintended.

Of course, that just means you shouldn't be holding office, but that's another issue.

[Captain Obvious]

This 'unintended' consequence is better than the alternative.

Tacking on arbitrary costs for 'competing' services is anti-competitive monopolistic behaviour, and would stifle competition.

The only people who would get hurt by anti-neutrality are entrepreneurs and the technically inept.

Libertarians should be for net-neutrality in the same way they are for freedom of speech. Treating one type of traffic as illegitimate by tacking on a surcharge and not on another only stifles free speech.

[califronian]

"Libertarians should be for net-neutrality " I don't think that word libertarian means what you think it means.

The owners of the ISP have a right to sell their service under whatever terms they want to, and hope consumers are willing to pay. End of story.

Whining about how you want to download GBs of porn and netflix and skype without paying for it childish.

[Captain Obvious]

Nobody is suggesting that people be allowed to download unlimited porn if they want to.

The argument is that people should be allowed to download as much porn as you download right-wing propaganda, without their porn downloading being penalized with arbitrary fees.

Since it makes no difference in cost to the ISP if you download porn or conspiracy theorist bullshit, why should the ISP be permitted to stifle speech it doesn't like?

We don't live in a perfect world where anyone can set up an ISP, or where one can switch to another ISP, because there aren't a whole lot of choices out there and the barrier to entering the market is incredibly high.

Use your imagination and think about what will happen if we allow corporations to dictate what we are allowed to see or hear.

[califronian]

You really don't get it.

Corporations can never dictate what we are "allowed" to see or hear. To reframe "sell you access" as "allow you to have access" is specious at best. I hope you're not just so stupid youc an't understand that you're just trying to be specious.

[no not really.]

freedom of speech refers to restrictions on the govt. It does not mean forcing private citizens to allow their property be used freely by someone else.

[Captain Obvious]

I understand the difference between positive and negative rights. Free use and fair use are not the same thing, though you would make them out to be. Getting what you pay for is one thing, getting raped by a government sponsored monopoly is another!

[...is obvious]

ok I see what is going on here.

[califronian]

one thing the net-neutrality crowd never seems to grasp is that if you grant the government the power to prevent selective pricing and prioritization of data, you are simultaneously granting the power to DICTATE it . Wait until some net neutrality commission demands priority for certain privileged contributors. It will start off will public interest data and end up being granted to the very actors that this regulation is supposed to prevent. Take it to the bank.

[Captain Obvious]

You understand so little and yet you talk so much. You aren't even worth arguing with because you fail to grasp the most basic concepts.

Nobody is asking for privileged data streams here and any net neutrality commission that would demand such would be an oxymoronic joke!

[califronian]

How can you give the power to govt to control the network's treatment of packets and then not believe that the govt can control the network's treatment of packets?

You sir, are a useful idiot.

[Meister574]

"When the company tried to add a surcharge on competing services, the move backfired. Customers protested loudly..." and could have gone to a different ISP.

[LoneSnark]

This was a mobile carrier. It seems what happened was customers stopped buying minutes from their carrier and signed up for Skype over 3G instead. On my carrier here in the states we have the same issue, but the carrier has done nothing about it. Maybe never will. But, if they did, I'd be happy with it given the cheap service.