THE VIEW
The View
by

Lack of net neutrality not good news for New Territories

PUBLISHED : Monday, 09 March, 2015, 10:48am
UPDATED : Tuesday, 28 April, 2015, 11:20am

While I have no idea what internet processing speeds are in Timbuktu, I happen to live on an outlying island in Hong Kong, so I can imagine.

Indeed, I recently dashed off an email to the relevant regulator, Ofca, asking why such a low level of service was allowed. Like probably a lot of angry complaint letters, mine made no sense. It’s not Ofca’s business if my internet service stinks. It is strictly between the customer and company.

I guess I sort of knew this, but just forgot. The internet is not a public utility, like electricity is, or telecommunications used to be in Hong Kong, before the sector was liberalised.

Many ISP licences are held by conglomerates with large property interests

This means there is no universal service provision requirement for the internet. My little island could just as well have no internet service at all, instead of the snail-like 3 megabits per second we are offered by the sole broadband player.

Which in turn means one can’t call the regulator to demand better service. This is harder than you think. As a neighbour of mine put it: “It feels like a basic human right to be able to complain about the phone company!”

Finally, because the internet is not a public utility in Hong Kong, there is no “net neutrality” requirement.

This is pretty much how it works across the globe with internet regulation – except that a number of other countries have decided to commit to universal service provision, or are actively debating the idea. And elsewhere, net neutrality is a hot-button issue.

The relevant US regulator, the FCC, voted last month to maintain the internet’s public utility status after a political outcry. “Ending net neutrality would allow big companies to buy their way into the fast lane, leaving everyone else in the slow lane,” the political satirist John Oliver said in a programme on the subject that went viral.

The FCC vote was a narrow one (3-2), however, and many argue it was misguided. Some think it is too interventionist, will raise costs on users and stifle innovation. They say it is okay to be able to pay more for better services, like to fly in first class instead of economy.

Others say it would undermine fair competition if big, powerful companies could toss their money around to get premier access to internet infrastructure. There are also freedom of speech concerns - like when the Canadian phone company Telus blocked access to a pro-union website during a strike against the company.

Hong Kong is not having this debate. Ofca says it has not received even one complaint on net neutrality, that “the competitiveness of the market” acts as natural restraint.

In the US, the dominant internet service providers (ISPs) are also big entertainment firms and content providers, which is one reason net neutrality is perhaps more sensitive.

At least two of Hong Kong’s ISPs are in the business of content distribution, but this being Hong Kong, of course the conflict of interest concerns property.

Many ISP licences are held by conglomerates with large property interests, including PCCW, Hutchison, New World and Wharf. These companies will have a natural incentive to couple investment in internet infrastructure with investment in property development.

The recently listed Hong Kong Broadband Network is an exception. HKBN is not a developer, and the company has discussed penetrating some of the farther-flung residential internet markets.

So maybe over time, the “market” will starting working better for those in Hong Kong who do not live in big developments.

But it is certainly not working very well now. No one is fighting it out for the market share of scattered New Territories low-density housing customers. These areas depend on backbone infrastructure laid down in the old days – when telecommunications was a public utility – and one wonders if it will ever be upgraded, or even replaced as it frays over time.

Already some are mooting the idea of government involvement, pointing out that the last budget handed out subsidies to industry, such as film. Why not an internet infrastructure fund?

Yet even mooting the idea is risky. If companies think the government will eventually do the infrastructure spending for them, they might have little incentive to dig into their own pockets.

business-article-page