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Network Neutrality Becoming a Major Concern for Europe's Governments

Henry Lancaster

There is no single definition of network neutrality, though generally it is recognised as the principal that there should be no restrictions by fixed and mobile ISPs, or governments and the like, in providing consumers with access to internet networks. Nor should there be restrictions or discrimination against associated content and platforms.

A number of European regulators and governments are now making forthright statements defending the principal. This month, EU member states must transpose into national laws the revised New Regulatory Framework: this revision of the five directives (dating to 2002) was adopted to answer issues created by increased competition in the telecoms sector, in conjunction with the development of new technologies. It was supplemented by the EC's declaration of net neutrality, and specifically by calls for laws which guarantee an open and neutral internet. Indeed the newly established Body of European Regulators for Electronic Communications (BEREC) is tasked with ensuring that national regulators abide by these directives, as also the net neutrality principal. Since its creation, BEREC has reported several breaches of net neutrality, particularly the blocking of mobile VoIP.

A number of mobile operators have tried to introduce charging models for content which in some way bypasses their SMS and voice services. Telefónica is among them, having threatened to charge search engines for using its network. T-Mobile in Germany and in other markets has blocked Skype (though other MNOs, notably H3 in the UK, have enveloped Skype within their offerings), and TeliaSonera recently announced that it would not permit VoIP services on its fast growing LTE networks across Scandinavia and the Baltics: it already bans the use of VoIP from its cheaper contract plans.

KPN has similarly announced plans to charge new customers for services such as Skype and WhatsApp (which compete with its own services), and for access to Facebook, YouTube and other sites. Deep packet inspection technologies would ensure that customers do not access the 'value-added' sites without paying a premium first. In some respects the plan may be an attempt to ease worries among investors following a poor financial performance for the first quarter of the year: the company reported a 1.3% fall in revenue and a 4.1% fall in EBITDA, year-on-year. In explaining the 8.1% fall in EBITDA in the Mobile International division, KPN implicated customers using a range of apps which caused a fall in SMS and voice usage, and so reduced revenue and profit.

As for regulators, there is some inconsistency. The Norwegians were among the first to defend net neutrality, as early as 2007. It recognises that banning mobile VoIP is less due to concerns over network capacity (mobile VoIP is not bandwidth hungry) than to protect operators' own voice services, and revenue, from competition. KPN initially had the blessing of the Dutch regulator, OPTA, on the basis that the company would not block sites as such but would simply adopt a different charging model for services carried. Yet KPN may be forced to change its proposed surcharges: the States-General recently amended the country's telecommunications law to guarantee net neutrality in both fixed and mobile networks, and so prevent operators from surcharging for such services. The amendment was tabled by the Dutch Minister of Economic Affairs, Agriculture and Innovation, and was supported by a coalition of political parties.

On the EU level, the EC is sticking to the guidelines of the revised NRF: that ISPs are to be transparent about their traffic control measures, and be honest about advertised connection speeds. There is no ban on traffic shaping measures, such as bandwidth throttling or limiting certain kinds of traffic, as long as ISPs meet minimum levels of service and do not obstruct customers churning to other providers.

Meanwhile the Council of Europe (a separate entity from the EU, and which acts on behalf of 47 member countries), has produced draft principles on internet governance which assert that ISPs should not prioritise content from companies that have paid them, or charge extra for content from particular providers.

As has become habitual with mobile operators, their own failings — partly through lack of investment in improved offerings, combined with a reluctance to allow customers to use more fully the networks they are upgrading — are leading them to adopt policies which run counter to customer interests. In consequence, we should expect many more governments to enforce net neutrality through legislation.

By Henry Lancaster, Senior Analysts at Paul Budde Communication. Henry is also a contributor of the Paul Budde Communication blog located here.

Related topics: Access Providers, Broadband, Net Neutrality, Policy & Regulation, Telecom, VoIP

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