On 21 February, the European Commission published its White Paper on the future Digital Networks Act, which we have analysed in great detail to ensure that there was no possible threat to net neutrality. You may remember that Allied for Startups and its members have been deeply involved in maintaining the free and open nature of the Internet, which serves as a level playing field for innovation and startups. Here’s why. 

The White Paper explains that there are few examples of a regulatory authority or a court intervening in the contractual relationship between market actors, as there is no market gap or investment failure, as proven by experts. The prominent case of intervention we do have is the South Korean one, known as “Sender party network pays”. 

In 2016 the South Korean government allowed Internet service providers (ISPs) to implement fees based on the amount of data traffic exchanged between them, which we know as network fees, and that have already proven detrimental to the competitiveness of South Korea’s market. The imposition of high fees has forced many South Korean and foreign content providers into a difficult position, where they must either leave the market or compromise the quality of their services. Meanwhile, smaller Korean providers and numerous startups are encountering significant obstacles to entering the market. In fact, the video and game live-streaming platform Twitch has since left the South Korean jurisdiction because of the prohibitive network fee. Their statement reads: “Operating costs in Korea are significantly higher than they are in other countries and we have been open about this challenge for some time.”

Startups have observed this development with interest. If a widely popular live-streaming platform has been effectively thrown out of the market because of an internet fee, what would the same fee look like in the EU? 

We’re thrilled to see that the Commission has taken notice of the stark opposition that civil society, NGOs, consumers, industry players, and associations have presented. The paper, however, does leave the door open for a rebranded network fee by stating that “policy measures could be envisaged to ensure swift resolution of disputes”. To us, this sounds like the Commission isn’t quite ready to fully close the door to any threat to the Internet. The next steps will be highly dependent on who Commissioner Breton’s successor, if he has one, may be. 

Allied for Startups will continue to fight for a free and open Internet, in Europe as well as across the globe, wherever the debate is taking place.