EU Administrations Strongly Endorse Net Neutrality, Tougher Mobile Roaming Principles

EU governments should “encourage the principle of net neutrality” and ensure the open and neutral character of the Internet as their policy objective, the Transport, Telecommunications and Energy Council of Ministers said in conclusions adopted Tuesday. Officials also agreed generally on many aspects of a European Commission proposal to drive data and voice roaming charges down, but many details remain to be settled, they said. The council also finalized its position on a five-year spectrum policy.

The council acknowledged the existence of several concerns: (1) Discriminatory traffic management and data treatment. (2) Discrepancies between actual and advertised Internet connection speeds. (3) Network congestion. (4) Sustainability of business models of network operators and ISPs. (5) Personal data protection. Officials stressed the need to keep the Internet open and neutral as a policy objective.

Governments welcomed EC plans to impose further regulation to preserve net neutrality if national regulators find evidence of problems, and asked the EC to monitor the issue of traffic management to allow for a “smooth flow of proportional, necessary and transparent traffic management practices that do not affect net neutrality.” It also asked stakeholders to develop behaviors and economic choices that support an open Internet platform; keep small players and innovative models from being shut out; and enable access to or transmission of online content, applications and services.

Network operators said they share the council’s concerns about the sustainability of current business models due to increasing Internet traffic. The European Telecommunications Network Operators’ Association wants the EU and its members to “avoid any additional regulation which would limit operators’ capacity to develop responses to the challenges ahead,” said Executive Board Chair Luigi Gambardella. ETNO members, the main investors in today’s and tomorrow’s networks, all oppose anti-competitive traffic management practices, but some management is needed to ensure efficient use of the network, the organization said. Differentiated offers based on capacity or quality of service respond to consumer demand, it said.

"Carefully collected evidence has shown blatant infringements” of net neutrality, said European Consumers’ Organization Director General Monique Goyens. ISPs are blocking VoIP service or unfairly prioritizing their content in some places, she said. Stringent measures have been called for by the council and European Parliament “and we expect the Commission to protect Europe’s consumers by listening up,” she said.

EU officials have a lot of hard work ahead to approve new mobile roaming rules before the current ones expire, a representative of the current Polish Presidency said Tuesday at the council meeting. The EC proposed a “fundamentally new” regulatory approach in July after mobile operators failed to end “roaming rip-offs” despite existing price caps on voice calls and text messages (CD July 7 p7).

Under the plan, customers will be allowed to sign roaming agreements that are separate from their national service contracts and keep the same phone numbers. Alternative providers will have access to others’ networks in other EU countries at regulated wholesale prices. The plan also envisages a new retail ceiling on data roaming prices and decreasing voice and text rates until the new rules kick in in 2016. The ultimate goal is to end the concept of roaming and have a single price in all EU members, Digital Agenda Commissioner Neelie Kroes said when she announced the proposal.

"We are in a hurry,” Kroes said Tuesday. An EU annual growth survey recognized roaming as a growth initiative that will help businesses and lower prices for consumers, she said. The EC proposals “aims to tackle the root of the problem” -- the lack of competition in Europe’s roaming market, she said. Any structural solution (as opposed to simply capping rates) should make it possible for different kinds of players to enter the market, she said. “Decoupling” roaming from national rates should be based on clear criteria, she said. It will take a combination of things to address high data roaming charges and foster competition, she said.

Most governments seem to favor the “Plan A” approach of finalizing legislative work by June 30, the council chairman said. Some think that if that deadline is missed, the current regulation could be temporarily extended under a “Plan B,” he said. But Kroes said just the mention of an alternative scenario to completing work by June could give some countries an opportunity to “leave the scene.” Denmark, which assumes the presidency in January, said it would give Plan A high priority. Several countries, however, urged governments not to enact laws in haste.

Another issue on which there’s widespread agreement is what the regulation on structural measures should contain. Most delegations think it should set out general, political principles and objectives, with technical details left to regulators and the mobile phone industry, subject to final official approval, the council chairman said. The details should provide for proportionate costs, simple solutions, and the security of mobile communications, Denmark said. Splitting roaming from national rates must be done under technological neutrality principles, several official said.

The council chairman is “keeping my fingers crossed” for the Danish Presidency, he said. But Tuesday’s discussion augured well for Plan A, he said.

The draft European Parliament response to the roaming proposal is under consideration in the Industry, Research and Energy Committee. Its author, Angelika Niebler, of Germany and the European People’s Party, amended the plan in a way that kills “the most important mechanism envisaged” by Kroes, the mandatory mobile virtual network operator (MVNO) for international roaming, said Innocenzo Genna, who represents a group of telcos interesting in launching an MVNO business. It will be impossible for an MVNO to enter the market, thwarting EC hopes to boost competition and cut roaming tariffs, he told us.

Amendments in the report will adversely affect MVNOs in two ways, Genna said. Some subject enforcement of the MVNO rule to a previous market analysis procedure under the EU access directive, he said. This will hamper MVNOs because “it is well-known that MVNO cannot be regulated by way of market analysis” since most European markets are characterized by 3-4 operators with no obligation on them to give access to MVNOs, he said. The second problem is that the Niebler proposal decreases retail roaming caps but fails to proportionally lower the wholesale prices paid by MVNOs for access, he said. The resulting margin squeeze for MVNOs means “the business case is vanished,” he said. We're told the EC is pleased the Niebler report leaves some room for “local break out” options.

Governments also approved compromise language on the EC’s proposed five-year radio spectrum policy program Tuesday. The program is intended to foster efficient spectrum management and ensure spectrum is available by 2013 for wireless broadband, the council said in a draft statement, also adopted, of its reasons for backing the plan. Among other things, it requires an inventory of spectrum uses in all EU members, reallocation of the 800 MHz digital dividend band to mobile broadband by 2013, and free-up of at least 1200 MHz of spectrum for wireless uses by 2015. The European Parliament is expected to adopt the proposal in February, the council chairman said.