Tag: Open Internet

Net Neutrality in the EU – A work still in progress

Which neutrality do you prefer?

Which neutrality do you prefer? 1)Copyright by EFF-Graphics under the Creative Commons Attribution 3.0 Unported

Aiming to allow everyone to communicate with anybody globally, the net neutrality principle establishes that all content providers should have equal access on networks. In this context, it enables people to access and impart information and it provides entrepreneurs with the proper platform to invest and develop new businesses models. Therefore, non-discrimination commitments are required from Internet Services Providers regarding users, contents, devices or communications.

But it is easier said than done… In fact, it appears that net neutrality is not a straight forward principle, thus allowing different interpretations. Perhaps the very own nature of the concept can – at least partially – explain the difficulty of the institutional and political debates surrounding the legislative reforms in the telecommunications sector both in the EU and in the USA.

On the EU side, the negotiations regarding the draft regulation laying down measures concerning the European single market for electronic communications and to achieve a Connected Continent (the TSM proposal) have been quite tumultuous.

As you might well remember, it all began with the text proposed by the European Commission, in 2013, which was claimed to fully implement the principle of net neutrality, while it actually stripped it of all real meaning. In fact, it foresaw an almost unlimited right of Internet Services Providers (hereafter ISPs) to manage Internet traffic.

Afterwards, there were the debates within the European Parliament, which first reading ended successfully last April, resulting in a clear and strict interpretation of the net neutrality principle and a proper framework for ‘specialised services’. Indeed, according to the text, telecommunications operators would be allowed to develop access offers with an optimised quality of service for specific applications, which wouldn’t be able to not run properly on the so-called ‘best-effort Internet’.2)A Best Effort Internet refers to the model of the Internet that does not differentiate between ‘levels’ of content providers. All web authors, large and small, enjoy the same ability to produce content or services that can, via the Internet reach an audience / customer base.

Currently, the debates are being held within the Council of the European Union which, along the European Parliament, is the EU co-legislator. However, the meeting of the EU Member States’ telecommunications ministers, held in Luxembourg, past June, clearly demonstrated the existing major divisions among Member States.

Considering the most recent proposal of the Italian Presidency (see here and here), it was quite evident that Member States were heading to a looser and weaker approach to net neutrality rules. The proposal consisted in a ‘principles-based approach’ in order not to inhibit innovation and to avoid having an obsolete regulation in the future.

However, the proposal did not address the principle of net neutrality but rather its opposite, as it set principles to traffic management:

Clear principles for traffic management in general, as well as the obligation to maintain sufficient network capacity for the internet access service regardless of other services also delivered over the same access.

In fact, the very important definitions of net neutrality and specialised services were not included in the text.

According to the document of the Italian Presidency, “instead of a definition of net neutrality there could be a reference to the objective of net neutrality, e.g. in an explanatory recital, which would resolve the concerns that the definition might be at variance with the specific provisions.” However, clear provisions are required in order to ensure its full enforcement.

Specialised services, which refer to the types of content that operators could prioritise over others, despite not being regulated, were not prohibited. Thus said, if they were not foreseen in the text, the principle of non-discrimination should at least have been clearly stated instead. It was not the case.

In its place, it was foreseen that ISPs will be able to apply traffic management measures as long as they were transparent, proportionate and not anti-competitive. Measures “that block, slow down, alter, degrade or discriminate against specific content, applications or services, or specific classes thereof” could be applied under certain circumstances, such as to “prevent the transmission of unsolicited communications”; to prevent “temporary congestion control”; or to meet their “obligations under a contract with an end-user to deliver a service requiring a specific level of quality to that end-user”.

Moreover, the proposal did not contain any reference to the obligation of Member States regarding the guarantee of the right to freedom of expression, which must be ensured at both the end-user and the content provider.

Thus said, this text raised some confusions and concerns. To start with, regarding unsolicited communications, it must be noted that an e-mail service is not an internet access service. Moreover, it should have been clarified that the prevention of temporary congestion should be an exception and not be established ‘by default’. Furthermore, the concept of a “contract with an end-user to deliver a service requiring a specific level of quality to that end-use” is not fully compatible with the ‘best effort’ Internet concept.

Last but not the least; the text lacked a clear non-discrimination principle for Internet access providers. For instance, the text did not refer the discrimination based on pricing which would lead to a result where big telecommunications companies would be able to pay for preferential treatment for their services or to have their services accessible for free, while others, with less financial capacity, would end up being excluded due to throttling of their services.

As a result, ISPs would turn themselves into the gatekeepers of a market of customers which would only be accessible for those companies willing to pay accordingly. In fact, this is a crucial point because consumers will invariably prefer the websites or services made available for free.

The direct result of such a text was that telecoms operators would be able to discriminate between different users, their communications or the content accessed. Internet access providers, and not users, would therefore decide what applications and content could be freely used.

In an unfortunate coincidence, Günther Oettinger, the already well-know Digital Commissioner for its ‘inside the box’ way of thinking, published his first post on his blog, arguing that the full coverage of internet access in rural zones would be finally possible if the telecommunications operators would be allowed “to reap the benefit of their investments”.

Moreover, a letter sent from Jean-Claude Juncker and Frans Timmermans to the other commissioners is being interpreted as suggesting that the European Commission might change direction regarding its initial proposal.

In this context, the main challenge is to conciliate the open internet as a instrument for the democratic expression, which promotes informed citizenship and plurality of opinions, with the network operators own interests in managing their networks, namely through specialized services. ISPs should be entitled to manage traffic – namely offering customers internet access packages with different speeds and volumes – but the traffic should neither be prioritized nor discriminated based on the content, services, applications, or devices used.

More recently, the Italian Presidency appears to have distanced itself from its own proposals, alleging that

none of the compromise drafts, which had been developed at a technical level, has gathered enough consensus. Such drafts (…) are significantly different from the positions of the single Member States, including Italy, that has always chosen to act as a neutral mediator under the Presidency rather than imposing its own point of view.

This is just the consequence of the strong divergences which oppose EU Member States, which is expected to be resolved at a political level.

In this context, the recent resolution adopted by the European Parliament does not come as a surprise as it stresses that

all internet traffic should be treated equally, without discrimination, restriction or interference, irrespective of its sender, receiver, type, content, device, service or application.

In these dark times for net neutrality, one can only hope for the right balance between net neutrality and reasonable traffic management to be found.

And as Christmas is getting closer, one can also wish for the EU and the USA to ultimately adopt compatible rules on guaranteeing an open internet. As announced recently, Barack Obama is taking strong positions in favour of Net Neutrality and is calling on the Federal Communications Commission (FCC) to adopt rules to prevent ISPs from blocking and slowing down content.

References   [ + ]

1. Copyright by EFF-Graphics under the Creative Commons Attribution 3.0 Unported
2. A Best Effort Internet refers to the model of the Internet that does not differentiate between ‘levels’ of content providers. All web authors, large and small, enjoy the same ability to produce content or services that can, via the Internet reach an audience / customer base.

Open Competition or the Dominant Undertaking Crusade

Google vs EU?

Google vs EU?

Google is undergoing a rough time in the European Union, being pressured on diverse fronts. There’s the famous ECJ ruling, and the polemics surrounding the collecting of data by Street View cars. Some think that the company should be broken up. Others see it as a threat to their sovereignty. But maybe it is all about fear, as admitted by Mathias Döpfner, chief executive of Axel Springer, a German publishing giant, in an open letter to Eric Schmidt, Google’s executive chairman. Some worry that big companies will be disincentive to invest in Europe.

Thus said, what is the fuss now?

Well, actually it is an already an old question…Over the years, Google has been facing increasing criticism regarding its search business’ dominant position in Europe.

Google’s market share in Europe is up to 90%, so there is no doubt that it has a dominant position in the European market. According to settled case law of the CJEU, dominance is a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumers.1)See Case 27/76 United Brands Company and United Brands Continentaal BV v Commission [1978] ECR 207, paragraph 65, and Case 85/76 Hoffmann-La Roche & Co. AG v Commission (1979) ECR 461, paragraph 38

It is a well accepted principle that, having reached a dominant position, the concerned undertaking has a special responsibility not to allow its conduct to impair genuine undistorted competition on the market.2)See Case 322/81Michelin, ECR 3461 (1983) paragraph 57

Therefore, a dominant position is not in itself illegal. However, according to article 102 of the Treaty on the Functioning of the European Union (TFEU), if an undertaking exploits this position to eliminate competition, it is considered be an abuse, which is deemed to be an anti-competitive conduct.

One must be well aware that a competitive market is desirable for the competitive quality and price it offers, the choice it allows and the innovation it brings. The ultimate beneficiary of competition is the consumer of a good or a service, i.e., all of us. It might not come as a surprise that less successful competitors might try to reduce the market share of a dominant undertaking in their favour.  That is what competing is all about: to try to be better than your competitors, try to be the best at something. But one should expect that they will try to do so through competition! One should not be wary of a dominant position simply due to to its huge market share or to the amount of power it entails, although it shall not be left unrestrained either. A successful company shall not be ‘punished’ or persecuted for its success. The legitimacy of the dominant undertaking’ activities shall always be accessed according to the consumer’s interests.

Back in 2010, the European Commission opened an antitrust investigation into allegations that Google Inc. has abused a dominant market position, in violation of European Union rules (Article 102 TFEU), following 18 (eighteen) complaints presented by its competitors regarding Google’s online search and search advertising.

In short, despite the four areas of concern raised by European Commission, the focus of the case was Google’s vertical search results and the extent to which it favoured its own specialized search services, reducing the visibility of results from competing sites.

Late February, the European Commission announced (here) a settlement proposal from Google in the context of the ongoing antitrust investigation – the third from Google after the previous two were criticized as not going far enough – which it deemed satisfactory.

In this proposal, Google has committed to visibly display links of the services of three competitors, selected through an objective method, whenever it promotes its own specialized search services on its web page following a search query. Some of these links would require the competitors to pay Google.3)You can better understand the proposal from the screenshots as shown here

This proposal received a strong public backlash, namely, of course, from Google’s competitors, apparently very concerned with the users’ interest which is, as previously mentioned in the text, a valid point, however not as convincing as intended, coming as it comes from less successful competitors.

For instance, the FairSearch group, which Microsoft backs, argued that

[it]requires rivals to pay Google for placement similar to that of Google’s own material, undercutting the ability of other to compete and provide consumer choice. This will be done through an auction mechanism that requires participating companies to hand the vast majority of their profits to Google.

Several French and German publishers and companies, among which Axel Springer, created an initiative called the ‘Open Internet Project’, insisting that the commitments proposed by Google to bring this investigation to an end are not sufficient to safeguard a competitive online market. The claims can be accessed on the group’s website.

In June, the European Commission invited complainants to react to Google’s proposal and received a significant negative feedback from press publishers, pressing the European Commission to reject Google’s proposals and proceed to a formal charge with infringement, stating as follows:

(…) the most prominent areas of any search results pages would be reserved for Google’s own services, independent of their quality, while all rival services have to accept inferior visibility even if they are far more relevant to a search query.

And they added:

The only relevant “commitment” is the addition of three Rival Links’ whenever Google puts links to its own monetized services first. However, in the most relevant commercial areas rivals will have to bid for a Rival Link in an auction and pay Google the highest price for a click. As a result, websites would not be ranked by relevance anymore but primarily according to the price they are willing to pay Google. As a new type of ad, Rival Links are not a concession but a new revenue stream for Google. As rivals could always bid for AdWords-ads, their situation is not improved.

No one can blame the settlement’s critics for any lack of coherence as these reactions are in line with those of lead complainant Foundem, who sustained that the proposed rival links will consume the majority of rivals’ profits and will not be selected according to relevance, merit, or quality.

Eric Schmidt, Executive Chairman of Google, recently addressed this issue, under the title ‘We built Google for users, not websites’, stating:

To date, no regulator has objected to Google giving people direct answers to their questions for the simple reason that it is better for users.

Facing the described context, the European Commission might have to seek to obtain more concessions from Google.

As the current Commission’s will be replaced in November, it is very unlikely that Joaquín Almunia, Vice-President of the European Commission and Commissioner responsible for competition, will be able to attain a final consensus within the Commission by then and the decision will most certainly be postponed in order to be taken under the next Commission.

Thus being said, Google is obviously trying to avoid formal charges. Of course it has no interest in having to pay a high fine nor damaging its reputation. But one might wonder if any compromise will ever be sufficient for its competitors.

From the several points raised by complainants, it seems sometimes that the intention is to artificially propel traffic to websites that compete with Google. That should not Google’s obligation. That wouldn’t even be fair for Google, nor in the best interests of consumers. And it would imply a senseless and unjustified advantage for competitors at the expenses of Google and, ultimately, consumers.

What must be ensured is the effectiveness of competition on the merits in the areas of specialized search and search advertising and, more importantly, the desirable effectiveness of the principle of Open Internet. The principle of Open Internet is defined as the enabling of Internet users to access the content, applications and services of their choice. It is therefore closely linked to the principle of Net Neutrality, meaning the ability for consumers to access and distribute information or run applications and services of their choice.

But an Open Internet also closely linked to competition among network, services and content providers, as it implies that each provider have the opportunity to test the value of its projects in the online marketplace. The door shall remain wide open for the next big company that will shake the online world. One must not forget that back in the 90’s, in the heydays of the internet, search engines as AltaVista and Yahoo were as popular as Google is now. Google outran them due to users’ preferences. And it must be guaranteed that consumers will be able to know about and use other services in the future if they prefer so.

Therefore, as competition and the principles of an Open Internet and Net Neutrality serve and benefit ultimately the consumers, competitors are not the main aim in themselves. Although they undeniably benefit from that protection, any confusion between the interests of consumers and of competitors shall be avoided.

Google shall not be prevented from improving its own services because its competitors are not as successful or are unable to keep up. So the suggestion of German justice minister Heiko Maas for Google to reveal its ranking algorithm in order to be more transparent appears as senseless.

What must be guaranteed is that users are informed of the existence of the competing websites, their relevance to the search, and are given the possibility to access them, thus providing users with a genuine choice between competing services. This must be the core of the European Commission’s assessment regarding the further concessions it might demand from Google in the future.

References   [ + ]

1. See Case 27/76 United Brands Company and United Brands Continentaal BV v Commission [1978] ECR 207, paragraph 65, and Case 85/76 Hoffmann-La Roche & Co. AG v Commission (1979) ECR 461, paragraph 38
2. See Case 322/81Michelin, ECR 3461 (1983) paragraph 57
3. You can better understand the proposal from the screenshots as shown here

The biaised path of Net Neutrality

Net Neutrality

Net Neutrality?

Network neutrality or Internet neutrality, commonly referred as ‘Net Neutrality’ is a principle according to which all the data trafficked on the Internet should be treated equally by governments and service providers, without discrimination, restriction nor interference.

It means that Internet Services Providers (ISPs), although their management systems enable them to prioritize, block, filter out content, artificially slow and degrade specific network traffic, shall not make a distinction nor charge differentially the different types of traffic, i.e., independently of the sender, receiver, user, content, device, service, site, platform, application, etc.,…

Net Neutrality is, therefore, an important element of an open Internet. Not only does it allow an easy and fast access to information, it boosts as well entrepreneurship through the creation of online services, such as Google, Facebook, Dropbox, Twitter, Skype, just to mention a few, who were able to develop online and freely compete with existent services. The direct and ultimate beneficiaries of all these innovative ideas and the competition it entails are, undoubtedly, the consumers.

So, having these benefits into consideration, what is the problem?

Well, there is indeed a reverse of the medal. Requiring broadband providers to treat equally all traffic makes networks less profitable. For that reason it can discourage investment in network infrastructures and the consequent beneficial innovation in favor of online services.

Managing the proper balance between these diverging interests represents an unsteady pathway, as well demonstrated by the tumultuous efforts at the EU level regarding the adoption of the regulation laying down measures to achieve a European single market for electronic communications.

On September 2013, the European Commission, represented by the former Commissioner for the Digital Agenda, Neelie Kroes, proposed an important legislative package, which contains the new rules for the telecoms industry, intended to achieve the Telecoms Single Market (TSM), namely by ending roaming charges, guaranteeing an open Internet, coordinating spectrum licensing for wireless broadband.

One of the most trumpeted and criticized measures concerned Net Neutrality as it contained very conflicting provisions. Indeed, it foresaw that providers of Internet access services shall not restrict the freedoms of communication by blocking, slowing down, degrading or discriminating against specific content, applications or services. However, it added some confusing exceptions that could undermine the open and neutral internet.

For instance, it allowed the evident differentiation and consequent prioritization between services though the provision of

specialized service […] with an enhanced quality of service

Moreover, in order to enable the provision of specialized services to end-users, it allowed providers of content applications and services and providers of electronic communications to

enter into agreements with each other to transmit the related data volumes or traffic […] with a defined quality of service or dedicated capacity

Furthermore, it stated the possibility to apply reasonable traffic management measures according to the internet access providers’ necessities.
This would open the door for telecommunications operators granting prioritized delivery through specialized services to the players who would be willing and financially able to engage in such agreements, while deprioritizing new entrants or existing players who wouldn’t have the capacity to engage in such agreements. It would also permit mobile networks and broadband providers to block services that compete with their own offerings. This would of course impair competition and undermine room for innovation and freedom of communication as we know it on the internet.

On late April, despite the tight schedule, the lobbying frenzy of civil society and telecommunications industry and the conflicting visions that have divided the MEPs, the European Parliament adopted, in first reading, the Regulation on the TSM.

Although, along the way, it has been proposed that Net Neutrality should be defined as the principle according to which only equivalent traffic should be treated equally, allowing for different quality of service (let’s remember the proposal of Pilar del Castillo Vera (ES – EPP), the ITRE rapporteur on this dossier, in her compromise amendments), the adopted text contains substantial amendments to the EC proposal, including a rigorous definition of Net Neutrality.

The adopted text provides a framework for ‘specialized services’, which are defined, in article 2(15) of the text, as

an electronic communications service optimized for specific content, applications or services, or a combination thereof, provided over logically distinct capacity, relying on strict admission control, offering functionality requiring enhanced quality from end to end, and that is not marketed or usable as a substitute for internet access service

Moreover, specialized services can be offered only in addition to Internet access services, provided that such offers are in addition to internet access services and are not to the material detriment of their availability or quality, thus ensuring non discrimination between providers of such applications.

The concept of network management has been narrowed to where it is necessary to apply reasonable traffic management measures to prevent or minimize the effects of network congestion, provided that equivalent types of traffic are treated equally, or to implement a court order.
Due to the divergent interests at stake, this outcome has not pleased everyone. While it has been perceived as a victory by the consumers’ advocates, the communications industry representatives have been manifesting some concerns over the vote, stating that this will prevent them from being able to offer enhanced services.

Considering the cost of infrastructure upgrades to cope with increasing data demands, one might ask if consumers should expect bigger bills from telecom and cable companies.

In addition, considering the prohibition of ISPs blocking content, concerns have been raised regarding WebPages containing images of child pornography, as a court order would be required in those cases in order to deter any further sharing. To avoid the undesirable consequences of any delay, it would be important to reflect on some exceptions.

The text is currently being discussed by the Council of the European Union, which includes representatives of each member state. The meeting of ministers which took place, on June 6, in Luxembourg, demonstrated that EU Member States might be far from reaching a common position. So the big question mark concerns the possibility of the Council to deviate from the position adopted by the European Parliament.

The path that lies ahead might continue to be hazardous. And only time will tell if the necessary safeguards to protect net neutrality and prohibit network discrimination in Europe will be maintained. At this point, looking at the other side of the Atlantic wouldn’t be of much help, considering the recent decision of the Federal Communications Commission regarding commercial discrimination on the Internet.

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