WhatsApp, net neutrality, and overreacting in the Netherlands

We’re getting a peek at the future in the Netherlands these days – the future fight over net neutrality.  

It’s all here – public anger at operators, plummeting voice and texting revenue, operators protesting against free internet services, and, finally, the world’s second net neutrality law.

It started in April, when leading operator Royal KPN announced poor first quarter earnings. This was largely driven by smartphone users – who make up 40 percent of the Dutch market – switching to a free texting app called WhatsApp.  In response, KPN announced plans to charge users extra for WhatsApp and Skype, as well as for high-bandwidth video.

How did that go?  From the Associated Press:

The move backfired spectacularly. 

Customers were outraged, and many began questioning for the first time how the company even knew which applications they were using on their phones.

 A few months later, reading the political mood, the Dutch parliament passed the world’s second net neutrality law (Chile was the first).  It takes effect in January and goes significantly further than EU guidelines – known as the European telecoms framework – that went into effect in May. 

Months later, the fallout continues. 

KPN and the other two dominant operators – Vodafone and T-Mobile – have raised the price of mobile broadband by cutting data allowances across the board.  In neighboring Belgium three political parties have proposed a net neutrality law, and net neutrality groups are using it as a model for countries around the world. 

Meanwhile the European Union's commissioner for the digital agenda, Neelie Kroes, said a while back that she “regrets” the Dutch law and that it “could kill innovative new offers. Even worse, it could mean higher prices for those consumers with more limited needs who were ready to accept a cheaper, limited package."

Of course, the real winners in all this will likely not be Skype-using consumers but, as the Associated Press put it in its article, big software and content companies that want to push data-heavy internet services, notably Facebook, Google and Skype’s owner, Microsoft.

So did the Dutch market really need this law?  Sure, markets should be regulated, but only if necessary, if something is going drastically wrong.   

Net neutrality advocates would disagree, but this was not a market out of control. Each operator – in the Netherlands and elsewhere – needs to be able to ensure that its network performs at the highest level possible.  This does not mean blocking all free internet services, but it does mean some level of operator control.

This leads us to the big questions: What do we regulate in telecom and what are the actual impacts of regulation, or the lack of it? 

And will this new law benefit consumers and the market as a whole?