Net neutrality rules are stunting innovation, network investment and could prevent agentic AI from reaching its full potential in the UK according to ‘Net Fatality’, a major new report from Stephen Howard of Communications Chambers for Virgin Media O2.
The rules, which require telecoms providers to treat all traffic equally, were originally intended to protect consumers. However, the decade-old legislation, set in a different era of connectivity, is now preventing operators from launching new services and stymieing innovation.
Reforming the rules could unlock a new wave of innovation worth hundreds of millions of pounds to the economy the report finds, as well as helping unleash new investment in networks, including in advanced 5G.
It warns that alongside limiting innovative new services, consumers could experience worse quality services in future.
Agentic AI is set to unlock significant productivity gains for businesses and consumer benefits, with telecommunication networks essential to its success. However, today’s rules hinder operators’ ability to effectively prioritise traffic when networks are congested, preventing the UK from getting the most out of game-changing agentic technology.
The report identifies a series of real-world use cases that reforming net-neutrality rules could unlock including:
- Apps offering essential services for SMEs: which could include an enhanced payment service to support small businesses operating in busy areas like festivals or food markets. This would ensure they can rapidly and reliably process payments even at times of network congestion
- Providing reliability and performance in the moments that matter: allowing operators to use customer insights or customer preferences to prioritise time-sensitive apps such as map based navigation, requests for taxis outside of major venues or connecting to an electric car charging station in the depths of a multi-storey car park
- Allow more effective service prioritisation: for example, enabling a user to readily prioritise an important video call over other apps using their connection
The mobile market is intensely competitive but needs substantial private sector investment to meet government connectivity targets. Net neutrality reform would support operators in extending 5G deployment to realise the most advanced features of this technology, maximise its potential and thereby help deliver on the government’s ambitions.
Reforming the rules would unlock a new wave of innovation by encouraging operators and startups to develop services which give customers greater control and address common connectivity pain-points.
Lutz Schüler, CEO of Virgin Media O2 said “Outdated net neutrality rules limit innovation and hold back the full benefits of the infrastructure we’re building. We’re not able to help customers by prioritising taxi and map apps when travelling home at night and can’t prioritise payment apps for sole traders in crowded markets. No one is winning.
“New technologies like Agentic AI will improve the online experience and we’re investing £700m this year in our mobile network to boost connectivity across the UK, but with network traffic growing relentlessly we won’t get the most out of it without much-needed reform.
“To unleash private sector investment, improve consumer and business services, and deliver the UK’s 5G ambition, government should use its mobile market review to remove these antiquated roadblocks to innovation so we can bring about better connectivity and services for all.”
Stephen Howard of Communications Chambers said: “The UK will get the telecoms industry it regulates for – the question is whether that’s one embracing innovation, technological advances and new opportunities, or one that’s stymied by out-of-date rules.
“If we want a mobile sector pushing the boundaries with the latest technologies and services like 5G and agentic AI, then we need modern regulation that’s fit for purpose, with rules that preserve the open internet, but which give operators the freedom to get creative and experiment.”
Virgin Media O2 is one of the UK’s largest private sector investors, deploying more than £2bn a year in its networks and services. This includes investing around £700m annually in its mobile network through its Mobile Transformation Plan to enhance reliability, speed and coverage.
Over the next three years, the business is forecasting double digit annual growth in network demand, driven by greater data consumption per customer, increasing numbers of 5G‑enabled devices and greater demand for upload capacity.
