Stakeholders Move Closer to Deal on EU Telecom Reform as EC Promises Flexibility

The “Connected Continent” telecom overhaul package (http://bit.ly/18T49d) would, among other things, enshrine net neutrality into law and ban incoming roaming charges (CD Sept 12 p7). Del Castillo’s report (http://bit.ly/1hUMLMs) responds to the EC proposal, which is also being vetted by the Internal Market and Consumer Protection Committee (CD Nov 29 p12).

In her report, del Castillo said the proposal is an important step toward completing Europe’s digital single market, but some of the measures “should be subject to a deeper, structured public consultation” and thorough advance assessment of their expected impact. On net neutrality, she agreed with the EC that the principle that the Internet should be open and available to all must be enshrined in the regulation. She defined openness as accessibility for all, and said ISPs should not only be required to meet users’ basic needs but should also be allowed to meet more specific requests for services such as IPTV. The legislation should ensure transparency and nondiscrimination, she said.

In a competitive world, telecom companies have to do their best for all types of services to attract and keep customers, said Eric Debroeck, Orange group regulatory affairs director. Not all customers have the same needs, and traffic management is critical to providing good quality services at affordable prices, he said. Among other things, Orange wants the definition of “specialized” (managed) services to be very carefully defined, as well as an open-ended list of what administrative practices telcos can perform on their networks, he said.

Net neutrality is also a prerequisite for safeguarding lively competition between content and access providers, said Jürgen Burggraf, head of the liaison office for German public broadcasting consortium ARD. The proposal must clearly say that an “open Internet must be the norm” and specialized services the exception, he said. Public broadcasters don’t oppose managed services because they also use them to reach as many people as possible, but users must always be able to access the open Internet, he said. That’s especially true as telcos become more vertically integrated, raising the risk they might be tempted to discriminate against content from other providers that rely on them for transmission, he said. ARD wants the difference between open access and managed services made clear in the legislation, he said.

The net neutrality provisions are the portions of the EC proposal that garnered the most support across the various sectors linked to information and communication technologies and among Internet-based companies, del Castillo said at the hearing. The EC and the Body of European Regulators for Electronic Communications are in accord, a not insignificant point lawmakers should keep in mind as they assess the proposal, she said. Over-regulation on net neutrality might stymie future developments, she said.

The industry has developed on the basis of the best-effort principle but there are conditions attached so the market can function, said Benoit Loutrel, director general of French regulator Autorité de régulation des communications éléctroniques et des postes. Users must know what quality of service they are receiving and regulators that see a downward trend can step in, he said. Mechanisms already exist to deal with this situation and the EC proposal boosts them, he said.

Debroeck said prioritizing the best-effort principle would be an economic mistake. For example, he said, if a user were watching IPTV, Internet access would be restricted because there would not be enough capacity or power to run both services. Guaranteeing that the entire bandwidth is available for the Internet would be more expensive and would place an economic burden on operators and consumers, he said.

Opinion was much more divided on roaming fees. The EC plan to tackle them through voluntary agreement “generates a high degree of uncertainty,” del Castillo’s report said.

The EC proposal seeks to drive down roaming rates, including internationally, to levels comparable to domestic calls by giving operators the freedom to develop solutions, said Scott Marcus, director of German consultancy WIK, which analyzes network industries and infrastructure-based markets. But it’s unlikely such roaming alliances will form because the incentives aren’t there, he said. The strength of the current roaming regulation is that it controls costs and prices together, he said. To cut roaming rates, those factors must be treated in an integrated way, which the proposal doesn’t do, he said. The proposed regulation would slow the move toward lower roaming prices, but it also has good points, said Marcus, who urged lawmakers not to throw the baby out with the bath water.

The proposed mechanism for collective agreements could harm consumers by consolidating some big mobile operators and hurting smaller ones, said European Consumer Organisation Senior Policy Officer Guillermo Beltrà. Consumer groups fear that the EC plan is too complex, with no end goal in sight, he said. The EU should “outright abolish roaming fees as of 2015,” he said.

It’s clear that roaming has become a “be-in-touch product,” del Castillo said. Getting rid of roaming charges wouldn’t necessarily mean having a single market but it would help, she said, citing the significant barriers to consumers’ use of their phones across borders. Viola said the EC welcomes the idea of ending roaming charges because “roaming is something of the past.” However, he said, doing away with roaming fees shouldn’t lead to more regulation. If the only way to end roaming charges is to ratchet up price regulation, “the process will derail,” he said.