Australia: Net neutrality - are developments in the US and Europe a sign of things to come for Australia?

Last Updated: 24 April 2014
Article by Geoff Hoffman, Linda Evans and Hugh Brolsma

Most Read Contributor in Australia, November 2017

Key Points:

Solutions are likely to be complex, and certainly not the clarion call of pure net neutrality so often heard.

"Net neutrality" has not received significant public attention in Australia despite the telecommunications and media industries undergoing major regulatory and technological change and the issue being highly contentious both in the United States and Europe.

In the US, the Federal Communications Commission (FCC) has tried unsuccessfully to impose pro-net neutrality rules, while in Europe such rules recently took a further step to becoming law following a favourable vote by the European Parliament.

We expect to see the issue of net neutrality rise in prominence in Australia as the NBN is reformulated and Internet service providers (ISPs) seek to use content as a means to differentiate their product offerings.

What is "net neutrality"?

Net neutrality refers to the principle that all network traffic should be treated equally. This means that network service providers (NSPs) and ISPs should not differentiate between (or otherwise discriminate against) different types of Internet traffic. A non-neutral Internet has many implications, particularly where NSPs and/or ISPs have an interest in the content that travels (or does not travel) across their networks.

What regulations does Australia currently have?

Australia does not currently have specific net neutrality laws.

What is the policy issue?

For proponents of net neutrality it is an essential premise of the "end to end principle" which underlies modern network design. It is argued that without net neutrality, important innovations of the past may not have occurred (or not in the way that they did) and innovations of the future may be prohibited or hampered. Net neutrality's supporters also argue that differentiation of data amounts to censorship of content and that NSPs/ISPs should invest more in networks to open up more bandwidth, rather than simply managing existing bandwidth.

On the other hand, it is argued that NSPs/ISPs need to manage their networks more efficiently given the increasing amounts of data being transferred over them. Two factors are particularly important:

  • Some applications such as video and/or voice based services are more time-sensitive than others, such as email and, therefore, giving priority to time-sensitive services is likely to maximise the value of networks overall.
  • The place of NSPs and ISPs in the value chain, and their direct relationship with consumers, is under threat from "over-the-top" service providers, undermining the ability of the networks to recover sufficient revenue to fund network enhancements.

It is also argued that end users should determine the priority of data traffic by selecting from the available services which allow them to send and receive their desired types of data and also that incentives for NSPs/ISPs to develop networks or develop innovative products will be diminished if they are forced to operate neutral (or "dumb") networks. Finally, concerns are raised that if NSPs/ISPs are not able to maximise financial returns from their networks, this will constrain further investment in those networks.

Why is net neutrality such a big deal?

By being able to differentiate between traffic, NSPs and ISPs are able to segment their product offerings and therefore charge relatively higher or lower prices. This may mean that where consistency of data flow is particularly important (such as for commercial video conferencing) a service provider may offer a high standard of service, but charge relatively more for it.

However, it also means that NSPs/ISPs can discriminate between types and sources of content and charge higher prices to facilitate the transfer of such content (or otherwise degrade performance relative to other content or even block it).

What is seemingly a simple concept is not necessarily straight forward when it is considered in the context of real-world commercial arrangements.

The recent high-profile deal between Netflix and Comcast is an example. Under this arrangement, Netflix (a strong proponent of net-neutrality and source of >30% of downstream Internet traffic in the US) will pay Comcast to facilitate a more direct connection between Netflix and Comcast, delivering Netflix content to Comcast customers quickly and more reliably.

While the details of the Netflix/Comcast arrangement have not been disclosed, a joint announcement stated that "Netflix receives no preferential network treatment" under the agreement (market analysis suggesting that this is a transit issue). However, many see this as a sign of the times that content providers and, ultimately consumers, will be required to pay more to transfer certain types of content over the Internet.

What's happening overseas?

In the US, the FCC released the "Open Internet Order" in December 2010 which sought to impose transparency, no blocking and non-discrimination rules on ISPs. However, in January 2014, the Court of Appeals for the District of Columbia (on a challenge by major telecommunications company, Verizon) ruled that the FCC had exceeded its authority as far as the no blocking and no unreasonable discrimination rules were concerned (Verizon v Federal Communications Commission, No. 11-1355 (D.C. Cir, 2014)).

The ruling was based on the finding that ISPs are not classified as "common carriers" (which are subject to blocking and discrimination rules) but rather "information services". The FCC announced that it would take various steps to "ensure that the Internet remains a platform for innovation, economic growth, and free expression" following this judgment.

More recently, on 3 April 2014, the European Parliament voted to approve legislation supporting net neutrality in the face of strong opposition by telecommunications companies. Although this legislation must also be approved by the Council of the European Union, it indicates a desire by regulators and legislatures on both sides of the Atlantic to facilitate (and require) net neutrality.

Where to from here?

It remains to be seen whether NSPs and/or ISPs will take steps to treat certain traffic of their customers differently for competitive reasons and/or whether the Australian regulators or the government will seek to take steps to ensure that this does not occur.

In 2013, in response to a report that Telstra was trialling new ways to manage its broadband network, the ACCC has stated that it would be concerned if ISPs were controlling traffic on their networks to influence their own content over other content. However, the Convergence Review took the view that the ACCC's powers are "too narrow to address [...] network neutrality issues that inhibit competition" and recommended that they "be reviewed once the NBN is implemented".

In Australia, costs of network usage are commonly determined by volume of data traffic, meaning that NSPs and ISPs are able to constrain usage through prices (or otherwise revenues rise as usage rises). Even most early stage NBN plans are subject to data limits. By contrast, broadband plans in the US are usually unlimited as to data traffic.

However, as Internet bandwidth continues to improve and the Internet develops as a very significant (if not the principal) medium for consuming media content, ISPs are increasingly looking to content as a means of differentiating their service offerings. Equally, if distribution bandwidth is constrained, content owners will naturally look to ways to ensure that their revenue from Internet distribution is not handicapped. In this context, the NSPs, ISPs and content owners have an incentive to de-neutralise networks.

One possible solution to these tensions may be to recognise two different types of service discrimination.

On the one hand, there is discrimination that recognises the different needs and/or value of different content, but is neutral as to the source of the content or its relationship with the NSP or ISP. Discrimination here can unlock value in networks and improve the performance of networks to users and raises no competition concerns; in fact, it is arguably pro-competitive.

On the other hand, there is discrimination which seeks to favour particular, perhaps related, content or content sources at the expense of others. This is potentially anti-competitive, especially where monopoly networks (or networks with market power) are involved.

With net neutrality being such a controversial issue in major overseas jurisdictions and given current industry developments in Australia, we expect that it is only a matter of time before this issue comes to the fore here. The issue and its implications are complex and there is tension between different objectives of promoting competition and maximising value in network services. Solutions are, therefore, also likely to be complex, and certainly not the clarion call of pure net neutrality so often heard.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions