As the lead committee on the Telecoms Regulation, ITRE, will be sitting down to discuss it this afternoon, this posting postulates on the appropriate balance of providers and citizens, inspired by a couple of recent Canadian studies.
How far will Commissioner Kroes’ new telecoms proposals rig the market in favour of large providers? That is a key policy issue at stake in the Telecoms Regulation (also known as Connected Continent proposals). With the Regulation now in the European Parliament, MEPs have a chance to debate and amend it. A related question, therefore, is how will they tackle the demands of the big providers and what kind of balance will they provide against citizens rights.
Commissioner Kroes and her team have made strong PR claims that the new rules as they propose them will protect net neutrality. If she is to be believed – and there is a large ‘if’ in this context - she has protected the open Internet. However, as the ‘if’ suggests, there are many criticisms of her proposals, notably that whilst they do take a stand against restriction of services, they simultaneously permit priorisation and would kill, rather than protect, net neutrality (See Permission to stream – how new EU telecoms rules violate net neutrality ).
What has been less widely understood is the matter of bandwidth caps. The Commission’s proposed Telecoms Regulation suggests, among other things, that network providers wll be permitted to impose bandwidth caps, and in that context, to be allowed to offer prioritised services.
This takes us into a new dimension of the whole policy argument. It is known that some network providers – Deutsche Telekom, for example – want to use data caps as an artificial way to restrict usage of competiing services. The data cap will have certain services ‘included’ or ‘free’ and all the rest will be excluded. So, users will be able to access the ‘included’ services without using up their data allowance; if they use any other services, that usage will eat into the allowance. Video services will of course, eat up the allowance very quickly.
Do you see where this is going? The data caps will be set very cleverly so that users wanting to watch services that compete with the provider’s own services will find it uneconomic. Users will end up paying extra to access services that are not within the provider’s portfolio. Ultimately, they will stick with the provider’s own services, because they are ‘free’. Non ‘free’ services would ultimately be killed off for lack of traffic or become a niche service for those who can afford to pay for an un-capped service (bearing in mind the providers could set these prices very high).
Policy-makers who are educated in the old world of broadcast economics do not see what is wrong with this. Because that is exactly how it worked. And it is how, for example, BT wants it to work with its strategy of buying football rights.
But for those brought up on Internet economics, it would wreak a devastating blow to the new ecology of communications. Any videos that contain non-commercial, political speech would doubtless fall outside data caps, chilling democratic speech with the EU’s blessing. There is also a concern that Wikipedia and other freely available information, could fall outside the data caps.
Studies emerging from Canada are able to shed some light on what this means for the user. Ben Klass, a Canadian Masters student in communications policy, has published some calculations based on a similar form of data cap tariffing by Bell Canada. User’s of the Bell Canada service are given an allowance of 10 hours of mobile TV ‘included’ for $5 per month. But as Mr Klass points out, users of the service who want to watch NetFlix have their viewing excluded and he calculates that the same viewing time on NetFlix would cost users $40, or eight times as much. I have not been able to verify this calculation, but it certainly does suggest a counter-argument to that put forward by the dominant providers.
Other Canadian research from the Canadian Media Concentration Research Project, discusses the impact of market concentration in telecoms network provision, and how small oligopolies of network providers tend to close the door on new ideas and perceived external threats. Currently, the European Union is perceived to have a competitive market that permits ‘maverick’ providers.
But the Telecoms Regulation sought to change all that and take us backwards into a US-style market with a tiny oligopoly of two to three dominant providers. This is the element of the Regulation that the Parliament really does not like, and it can be expected to be cut back. On the other hand, the commercial freedom that will be granted to providers on specialised services and traffic management will maintain the skew in favour of large providers. So this is not at all clear cut.
Just think - if AT&T were to buy Vodafone, what would that mean for the EU market? Two dominate players combining into one. It’s a fairly horrific thought, but we must face it, that it’s a scenario that the stock markets are talking up this autumn.
So really, the Telecoms Regulation takes us well beyond a ‘net neutrality’ argument into a space where we must question what we, as citizens, want from the networks overall. And it does really beg the question that I started with, namely how far will the EU try to rig things in favour of the big providers?
For the background to the 2013 Telecoms Regulation (Connected Continent) see my book that tells the story of the 2009 Telecoms Package, The Copyright Enforcement Enigma - Internet Politics and the ‘Telecoms Package’ Chapters 8-12. The book includes background on the EU telecoms framework and how it evolved from the 1990s, as well as the policy conflict over copyright that beset the 2009 Telecoms Package.
This is an original article from Iptegrity.com and reflects research that I have carried out. If you refer to it or to its content, please cite my name as the author, and provide a link back to iptegrity.com. Media and Academics – please cite as Monica Horten, 2013, New EU telecoms rules - the shape of things to come, in Iptegrity.com 28 November 2013. Commercial users - please contact me.
Tags: EU Telecoms Regulation, European Commission, European Parliament, Connected Continent, net neutrality, Pilar del Castillo, ITRE, Telecoms Package.