FROM THE ECONOMIST INTELLIGENCE UNIT
Europe’s net neutrality debate is intensifying as operators embark on a collision course with regulators and lobby groups.
In Europe, net neutrality never used to set pulses racing. If a network operator tried to stop customers from accessing rival services and content over the internet, or charged extra for them, it was seen as a self-defeating action. Competition in the region was so fierce, operators not toeing the net-neutrality line would surely lose out to those that did. Market forces, not regulatory intervention, seemed an effective guardian of the open internet.
This is no longer the case. A growing number of European operators now claim the right to determine what services travel over their expensively-constructed broadband networks. And nor are they afraid to hit back against consumer lobby groups and regulators that say otherwise. The temperature of Europe’s net neutrality debate is rising.
In the UK, the Broadband Stakeholder Group (BSG), the government’s leading advisory agency on broadband, recently launched its Open Internet Code of Practice. Building on a previous initiative on transparency—giving customers easier access to information on operators’ traffic management practices—the new code cranks up net-neutrality pressure.
Signatories of the code must not block any legal content or services, or make them difficult to access. If they do, they must come clean on what restrictions are in place. And products that have restrictions cannot be marketed as providing “internet access”. For good measure, a process is being established to allow content providers to complain should they feel victims of targeted and negative discrimination.
There are many UK operators who see merit in the code. BT, BSkyB, O2, TalkTalk and Three UK are among the signatories, even though it is not compulsory. But others have refused to sign, including Everything Everywhere (a joint venture between Deutsche Telekom and France Telecom), Virgin Media (a cable operator) and Vodafone. While these three companies say they support the principles of an open internet—each signed up to last year’s transparency initiative—they object to dropping “internet access” from marketing materials. This suggests that they already maintain service restrictions, or have plans to introduce some.
The UK is not an isolated example of operator dissent to net neutrality. A report by BEREC, a pan-European regulator advisory body, finds restrictions on internet services are fairly widespread. At least 20% of mobile internet users in Europe experience difficultly in accessing voice over IP (VoIP) services, such as Skype, which work over data connections (thus denying voice-call revenue to operators). In countries where competition is not as great, BEREC says this figure can exceed 90%.
Charging extra for VoIP services, rather than simply restricting their access, might also prove popular if regulators don’t intervene. Earlier in the year, TeliaSonera announced plans to charge customers extra for using VoIP in its Spanish and Swedish operations.
Call in the regulators?
The European Parliament has so far shied away from passing laws that would forbid operators from blocking specific internet services. Neelie Kroes, digital agenda commissioner for the European Commission, prefers operators to be more transparent about any internet restrictions they might have, thereby giving customers better-informed choices. The commissioner also wants to see operators declaring their minimum internet-access speeds, another measure of service performance upon which consumers can base their decisions.
For some, reliance on greater transparency and market forces is not enough. The European Consumers’ Organisation, a lobby group, wants operators penalised if they block internet-based rivals and is pushing for net neutrality to appear in the EU’s statute book. In the Netherlands, this has already happened. KPN, the country’s biggest operator, warned 3G customers in early 2011 that it would make them pay extra for using third-party messaging or VoIP applications. The announcement sparked a consumer backlash and net neutrality was written into the country’s telecommunications law a few months later.
The European Telecommunications Network Operators’ Association (ETNO), a lobby group for the region’s biggest telecom groups, has made a pre-emptive strike against other regulators who might wish to enshrine net neutrality in law. The ITU, an international standards body, is consulting on the rules that govern the internet and ETNO, last month, submitted its proposals. The first is that ETNO members have the right to strike commercial agreements with content providers to deliver services (something now denied in the Netherlands). Another is that operators can tag internet-based services with different network priorities. For example, an operator’s own video service would have network priority over an internet-based rival’s (if no commercial agreement was in place to do otherwise). A two-tier internet, however, strikes at the heart of net-neutrality principles.
US-style confrontation
Net neutrality has long been a hotly-contested issue in the US, a country where national telecoms competition is not as intense as in Europe. The FCC, the communications regulator, passed net-neutrality regulations two years ago. Even so, a court ruled in 2010 against FCC’s censure of Comcast, a cable operator, for hiking network transport fees charged to Level 3 (which was passing over rival content onto Comcast’s network). The court said that FCC had no authority to intervene in the case. Verizon Wireless, the largest mobile operator in the US, recently filed a 116-page report explaining in detail why it thinks the FCC is over-stepping the mark with its net-neutrality regulations. The operator is taking the regulator to court.
Greater friction between operators and regulators, and perhaps even court battles, looks the direction Europe is headed in too. Competitive forces may well have preserved net neutrality in the past, but their grip is loosening. Network operators are feeling the financial strain of carrying rival internet services that drastically undermine their sales. Ovum, a research firm, reckons operators’ texting revenue worldwide fell by US$14bn last year because of the growing popularity of WhatsApp and other messaging applications. It is little wonder that Europe’s operators, like their US counterparts, are kicking back against net-neutrality forces
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Home :: Technology Briefing :: Europe :: Article
Europe telecoms: No neutral ground
August 20th 2012
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FROM THE ECONOMIST INTELLIGENCE UNIT
Europe’s net neutrality debate is intensifying as operators embark on a collision course with regulators and lobby groups.
In Europe, net neutrality never used to set pulses racing. If a network operator tried to stop customers from accessing rival services and content over the internet, or charged extra for them, it was seen as a self-defeating action. Competition in the region was so fierce, operators not toeing the net-neutrality line would surely lose out to those that did. Market forces, not regulatory intervention, seemed an effective guardian of the open internet.
This is no longer the case. A growing number of European operators now claim the right to determine what services travel over their expensively-constructed broadband networks. And nor are they afraid to hit back against consumer lobby groups and regulators that say otherwise. The temperature of Europe’s net neutrality debate is rising.
In the UK, the Broadband Stakeholder Group (BSG), the government’s leading advisory agency on broadband, recently launched its Open Internet Code of Practice. Building on a previous initiative on transparency—giving customers easier access to information on operators’ traffic management practices—the new code cranks up net-neutrality pressure.
Signatories of the code must not block any legal content or services, or make them difficult to access. If they do, they must come clean on what restrictions are in place. And products that have restrictions cannot be marketed as providing “internet access”. For good measure, a process is being established to allow content providers to complain should they feel victims of targeted and negative discrimination.
There are many UK operators who see merit in the code. BT, BSkyB, O2, TalkTalk and Three UK are among the signatories, even though it is not compulsory. But others have refused to sign, including Everything Everywhere (a joint venture between Deutsche Telekom and France Telecom), Virgin Media (a cable operator) and Vodafone. While these three companies say they support the principles of an open internet—each signed up to last year’s transparency initiative—they object to dropping “internet access” from marketing materials. This suggests that they already maintain service restrictions, or have plans to introduce some.
The UK is not an isolated example of operator dissent to net neutrality. A report by BEREC, a pan-European regulator advisory body, finds restrictions on internet services are fairly widespread. At least 20% of mobile internet users in Europe experience difficultly in accessing voice over IP (VoIP) services, such as Skype, which work over data connections (thus denying voice-call revenue to operators). In countries where competition is not as great, BEREC says this figure can exceed 90%.
Charging extra for VoIP services, rather than simply restricting their access, might also prove popular if regulators don’t intervene. Earlier in the year, TeliaSonera announced plans to charge customers extra for using VoIP in its Spanish and Swedish operations.
Call in the regulators?
The European Parliament has so far shied away from passing laws that would forbid operators from blocking specific internet services. Neelie Kroes, digital agenda commissioner for the European Commission, prefers operators to be more transparent about any internet restrictions they might have, thereby giving customers better-informed choices. The commissioner also wants to see operators declaring their minimum internet-access speeds, another measure of service performance upon which consumers can base their decisions.
For some, reliance on greater transparency and market forces is not enough. The European Consumers’ Organisation, a lobby group, wants operators penalised if they block internet-based rivals and is pushing for net neutrality to appear in the EU’s statute book. In the Netherlands, this has already happened. KPN, the country’s biggest operator, warned 3G customers in early 2011 that it would make them pay extra for using third-party messaging or VoIP applications. The announcement sparked a consumer backlash and net neutrality was written into the country’s telecommunications law a few months later.
The European Telecommunications Network Operators’ Association (ETNO), a lobby group for the region’s biggest telecom groups, has made a pre-emptive strike against other regulators who might wish to enshrine net neutrality in law. The ITU, an international standards body, is consulting on the rules that govern the internet and ETNO, last month, submitted its proposals. The first is that ETNO members have the right to strike commercial agreements with content providers to deliver services (something now denied in the Netherlands). Another is that operators can tag internet-based services with different network priorities. For example, an operator’s own video service would have network priority over an internet-based rival’s (if no commercial agreement was in place to do otherwise). A two-tier internet, however, strikes at the heart of net-neutrality principles.
US-style confrontation
Net neutrality has long been a hotly-contested issue in the US, a country where national telecoms competition is not as intense as in Europe. The FCC, the communications regulator, passed net-neutrality regulations two years ago. Even so, a court ruled in 2010 against FCC’s censure of Comcast, a cable operator, for hiking network transport fees charged to Level 3 (which was passing over rival content onto Comcast’s network). The court said that FCC had no authority to intervene in the case. Verizon Wireless, the largest mobile operator in the US, recently filed a 116-page report explaining in detail why it thinks the FCC is over-stepping the mark with its net-neutrality regulations. The operator is taking the regulator to court.
Greater friction between operators and regulators, and perhaps even court battles, looks the direction Europe is headed in too. Competitive forces may well have preserved net neutrality in the past, but their grip is loosening. Network operators are feeling the financial strain of carrying rival internet services that drastically undermine their sales. Ovum, a research firm, reckons operators’ texting revenue worldwide fell by US$14bn last year because of the growing popularity of WhatsApp and other messaging applications. It is little wonder that Europe’s operators, like their US counterparts, are kicking back against net-neutrality forces.
