27 February 2011

Net Neutrality: It Is Getting Serious In Austria


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Do you remember my primer on net neutrality? In that very same I expressed my concern about the development in the United States and showed some optimism as to the “stable conditions” in Europe. Well, I might have been wrong. But let me first remind you

What is net neutrality about?

In a nutshell: net neutrality is the principle proposed for user access to the Internet, which would prevent Internet Service Providers (ISP) from acts of discrimination related to different kinds of Internet traffic that would result in restricting content, sites or platforms.
Having monitored the press releases this week, I
came across what sounded very much like a war cry against that principle. Somewhat suprisingly, it came from Austria.

What is the current menace?

In a very recent meeting in London, Mr Hannes Ametsreiter, CEO of the Telekom Austria Group, reportedly challenged the principle of  net neutrality, thereby using harsh, even menacing expressions. For those not necessarily familiar with the abovementioned company: Telekom Austria is the incumbent telco operator in Austria that still has a significant market power.

From what I read, he has considered to block the access to services such as Skype and Google Voice, provided they “cannibalize and eat up our revenues“. This sounds scary, does it not? And should Internet users just accept that threat or can they rely on some shelter? Let us have a look at the regulatory front.

What does the regulation say?

You will not find a specific language on net neutrality in the regulations currently in force. The Access Directive from 2002 spends some words on “adequate access, interconnection and interoperability of services” in its Article 5. In the light of the older legislation, however, this represents an instruction related to interconnection rather than to net neutrality. The latter did simply not represent an issue in 2002.

But things have changed with the issuance of the revised Telecoms Package in 2009. The updated version of the Access Directive contains not only European Commission’s declaration on net neutrality, it even mandates the Member States to “promote the ability of end-users to access and distribute information or run applications and services of their choice“. The Member States are under the obligation to transpose that directive by 25 May 2011.
Things look now brighter, do they not? Nevertheless, we should take Mr Ametsreiter’s words very seriously.

My concluding thoughts

I have some understanding for Mr Ametsreiter’s concern. Incumbents such as Telekom Austria are under the obligation to provide for a universal service. In the last decade however, they have gradually been bleeding market share and revenue in the realm of voice services. A good chunk of the customers they have lost went to Skype and Google Voice, since those have a nearly free of charge Voice over IP offerings. Incumbents claim that they remain sitting on the cost of their infrastructure, while Skype and the like absorb the profits. Without such infrastructure, incumbents as well as other ISP assert, there would not be Skype or content providers at all. But would there be any interest in ISP if there were not content providers?
Reminds me of who came first, the chicken or the egg.

The optimists among use might say: the market competition will solve it all.
I do not think so.
It is simple – if an incumbent makes a first step, others will follow and the market will fail. And this is the reason why we have regulation – to remedy such failures, irrespective of whether Mr Ametsreiter likes it or not.

 

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8 May 2009

Bulgaria still with highest mobile termination rates


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Mobile-Phone-Mastphoto © 2010 Micky Aldridge | more info (via: Wylio)

The European Commission has set out clear guidance for EU telecoms regulators on the cost-based method to be used when calculating termination rates – the wholesale fees charged by operators to connect the call from another operator’s network which are part of everyone’s phone bill. The guidance is in the form of a soft law

Recommendation

that national regulators are obliged to take “the utmost account” of.

The Recommendation indicates specifically that termination rates at national level should be based only on the real costs that an efficient operator incurs to establish the connection. Eliminating price distortions between phone operators across the EU will lower consumer prices for voice calls within and between Member States, saving business and household customers at least

EUR 2 billion in 2009-2012

and help investment and innovation in the entire telecoms sector.

Mobile termination rates varied widely in the EU in 2008 from 2.00 euro cents per minute (in Cyprus) to 15 euro cents per minute (in Bulgaria). Mobile termination rates (on average 8.55 euro cents per minute) are also typically 10 times higher than fixed termination rates (on average ranging from 0.57 to 1.13 euro cents per minute).