Event Summary: TRPC Roundtable on “Connectivity, Innovation and Growth: Fostering an Open Internet in Taiwan”

Event Summary

TRPC Roundtable on “Connectivity, Innovation and Growth: Fostering an Open Internet in Taiwan”

14 April 2017

TRPC’s “Connectivity, Innovation and Growth: Fostering an Open Internet in Taiwan” Roundtable took place at the Commercial Section of the American Institute in Taiwan (AIT) on 14 April 2017. The event was organised in partnership with AIT, the Internet Society Taiwan, and Netflix. Representatives from the government, telecommunications industry, academia and civil society took part in two panel discussions focussed on the importance of the Open Internet to Taiwan’s digital development. The Roundtable was held under Chatham House rules.

The Roundtable explored how improved connectivity, growth and innovation are fuelled by an Open Internet. Through the participants’ discussions, the “Open Internet” concept was scoped to refer to a level playing field where markets are competitive and where lawful online content is protected under net neutrality principles. The Roundtable’s first panel focussed on the findings from TRPC’s recent report Connectivity, Innovation and Growth: Fostering an Open Internet in Asia while the second panel focussed on the current regulatory and policy environment for the Open Internet in Taiwan. Assessing the status of Open Internet policies in the current political environment (particularly that of the United States, China and Taiwan), two issues emerged for detailed discussion by participants.

First, panellists discussed the government’s role in maintaining an Open Internet environment without unnecessary intervention in the market – a neutral approach the government is seen to be practising in Taiwan while it is committed to ensuring equitable telecom services access for all users; promoting reasonable network management practices; and creating a stable and competitive market. Net neutrality, while having emerged multiple times in public debates over the previous years, is not mandated in Taiwan. Between a regulation-based and a market-based approach, Taiwan has been following the latter – leaving the issue of net neutrality to Internet Service Providers’ (ISPs), content providers’ and users’ discretion. Article 21 of the Telecommunications Act, which requires telcos to provide services in a fair and non-discriminatory manner, has not been used to penalise ISPs for potential traffic discrimination. Article 6 of the draft Digital Communications Act takes a similar approach – it allows ISPs to optimise traffic without imposing unfair traffic management practices, but avoids spelling out the legal consequences of violating the Article.

Under the umbrella of net neutrality, zero-rating was discussed and one panellist portrayed it as a form of discount to consumers by telcos, which could have both positive or negative implications depending on how it is structured. On one hand, zero-rating schemes could be discriminatory if they subsidise specific content or services – particularly in vertically integrated telco-OTT business models. On the other hand, zero-rating schemes which do not discriminate among providers/services of the same class could offer consumer benefits while maintaining principles of fairness and competition.

Second, participants discussed the importance of reasonable pricing for peering arrangements – an area where Taiwan needs to improve by having cheaper and more convenient solutions to foster interconnection between ISPs and content providers. Panellists agreed that settlement free interconnection leads to greater bandwidth usage and debated the best regulatory approach for achieving such conditions in Taiwan’s telecommunications market. A panellist suggested that while transit should be charged, peering should be free and equal importance should be accorded to content providers and consumers. It was also suggested that both the regulation of Tier-1 companies and these players’ efforts towards improving data traffic need to be enhanced to provide lower barriers to entry and encourage greater market competition and investments. The recent reduction of IP peering charges by Taiwan’s largest telco, Chunghwa Telecom was commended as a step in the right direction. It was also noted that TPIX offers cheaper services than Korean Internet Exchange Points (IXPs) – even though Korea has a government mandated annual price reduction scheme.

Several content-related issues were also raised such as the importance of local content, the geographic content licensing system, site-blocking, piracy and copyright issues. A participant clarified that lawful content should not be subjected to blocking, throttling and paid prioritisation while illegal/pirated content could be managed through legal recourses such as site-blocking. It was also noted that in several markets (e.g. UK, Australia), online piracy rates had decreased after legitimate streaming services were introduced.

Overall, participants agreed that public understanding of key Open Internet issues such as net neutrality needs to be improved through further discussions. An Open Internet is necessary to support local startups and digital businesses to thrive and internationalise. It is also an important consideration for foreign companies which are looking to build partnerships and invest in the local digital economy. As the Taiwanese digital content industry becomes more competitive and innovative, the government will need to develop a clearer vision for transforming Taiwan into a digital economy hub, while maintaining a watchful eye over market changes in order to provide a healthy regulatory environment.

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