US Communications Commission decision to fuel further fight in the EU

Digital rights activists hailed the European Parliament's April 2014 vote in favour of net neutrality and called it a hard fought success. Yet the dice are still rolling and the much debated US Federal Communication Commission's move of 15 May 2014 favouring a dichotomy of regular and specialised services may well serve those asking for ‘balance’ between the net neutrality principle and the protection of telecom investment, not the least EU governments. The status report of the Hellenic presidency for this week's telecom Council clearly illustrates that net neutrality is far from approved in the EU.

The FCC ruling

The latest FCC ruling comes as a result of a court judgement from earlier this year which condemned the FCC 2010 Open Internet Order. The FCC ruling from May is for the first time allowing broadband providers to charge for faster data delivery where “commercially reasonable”. Opponents are warning that the pay to play-rule will harm new entrants, innovation and users.

Net neutrality in Europe

European member states are far from just approving the EU Parliament’s decision to strengthen net neutrality obligations. “While all delegations supported the principle of open internet (art. 23), views differed as to whether it is the right moment in time to regulate this issue now and whether to address it in this Regulation or in the Universal Service Directive or to even introduce in a 'soft' instrument, such as Recommendation or BEREC guidelines,” the status report prepared by the Greek EU presidency summarises. “Most delegations however agreed,” the report adds, “that the text could not stay as it is and would need to be improved substantially.”

Many delegations also found that the list of allowed traffic management measures (art. 23 (5)) had to be changed. Some member states would prefer “a non-exhaustive list”.

All in all the EU member states even after 10 meetings of the responsible expert group (TELE group) in the first half of 2014 failed to agree on even a set of “common underlying principles” for the possible connected continent regulation. The “right balance” between rights of end users on the one hand and the burden for operators on the other hand” had to be struck, the Greek presidency said, quoting some delegations.

If the effects of the FCC's 15 May 2014 vote in favour of fast lanes for ‘specialised services’ on EU governments remain to be seen, telecom operators and their organisations welcomed the FCC move.

Telecom operators: right moment for transatlantic joint approach

Telecom operators in Europe have always cautioned against stricter net neutrality rules. Cable Europe Executive Chairman Matthias Kurth at the end of last month “called upon industry and regulators on both sides of the Atlantic” to now engage in a dialogue on “pro-innovation and pro-consumer legislative frameworks”.

The cable industry was fully in support of an open internet, Kurth was quoted saying, similar to the commitment by EU member states. “Yet what we are witnessing is a real risk that in a desire to ensure an open environment, regulatory constraints will stifle the most innovative and exciting developments. We are in the thick of this debate in Europe, and I know that the US is tackling the same issues.” Both sides should learn from each other and “allow for constructive co-operation between infrastructure carriers, content providers and OTT players on commercial terms, from which consumers are already reaping rewards”.

Klaus Landefeld, Board Member of Eco, the Association of the German Internet Industry, in an expert statement for the Digital Agenda Committee of the German Parliament acknowledged the importance of the future FCC policy on net neutrality. Further changes of the FCC position were still possible, though, Landefeld wrote, while welcoming the FCC's focus on consumer choice and the need for transparency when it comes to services that would violate the net neutrality concept. Certainly the definition of “reasonable commercial deals” - according to the FCC a prerequisite for the specialised services - was still very much unclear.

Landefeld in his expert comments was not all in favour of strict net neutrality regulation: “Overly strict regulatory provisions preserving network neutrality could create barriers to investment in broadband roll-out and the rolling-out of network infrastructure in general. At the same time providing too weak or no protections for network neutrality could harm small and medium sized enterprises and providers lacking market power, thereby limiting or stopping the development of innovative new services and applications and, in extreme cases, even limit access to information.”

No dumb pipes only

Representatives of network providers reiterated warnings against network neutrality legislation. Vodafone's Head of Regulatory Strategy and Law, Stefan Korehnke said during the Anga Cable Conference in Cologne in May, his company was opposed to rules that were prohibitive for emerging business models. Competition anyway would not allow a network operator to discriminate against a service like YouTube as customers would just move to another provider.

Korehnke welcomed the FCC concept to leave it to providers to sell their specialised services. The EU Parliament's request that specialised services had to be split from regular ones and fed through separate channels, to the Vodafone manager was “nonsense”.

Michael Fries, CEO of UK-based Liberty Global, said at the ANGA Cable opening panel that net neutrality was an important, but misunderstood topic. Certainly nobody wanted to stop users from going wherever they wanted, but at the same time network providers had to calculate the cost for building the highways. Added Fries: “We will never be a dumb pipe because we are investing in that user interface and we are investing in a whole series of activities from broadband to video to mobile.”