Net Neutrality in Australia

Currently there is a big debate raging in the US about net neutrality. This is the principle that carriers (ISPs) should treat all traffic equally. They shouldn’t be allowed to prioritise certain traffic or charge more or less for it’s carriage.

This is a big deal in the USA because they have a significantly poorer competitive landscape than we do due to allowing (even encouraging) “infrastructure competition”. This is where a company can build a network (fibre, HFC, wireless) and then sell services direct to retail on that infrastructure. There is no requirement for that company to sell access to that infrastructure to other competitors.

The net result is that most customers in the USA have access to typically one ISP on each of the technologies (ADSL, HFC, wireless or sometimes Fibre). If there is only one technology available, customers have no choice about which ISP to use. To make matters worse, just as in Australia, there has been a massive consolidation in the telco industry leaving just a small number of large players who have the ability (and have shown their willingness to) throw their weight around.

If you want an example of what happened when Australia tried infrastructure competition, you only have to look at the disaster that was the original HFC roll-out. Optus and Telstra chased each other down the street with their construction crews with the sole purpose of destroying each other’s business model. The net result is that neither made enough money to cover the cost and the roll-out halted.

In Australia we do not formally have net neutrality. Due to the competitive pressure between the number of ISPs at retail, there is probably little incentive for any of them to “behave badly” in this respect and therefore no great pressure to introduce regulation.

Having said that, Telstra has been known to manipulate traffic to their own ends, the obvious example being their unwillingness to perform peering with anyone. Telstra, uniquely, charge both their retail customers and the content providers (Facebook, Amazon, Google etc) for data to traverse their network. They can only do this because of their market power in Australia.