© Cullen International SA 2013 Why Net Neutrality Matters? Veronica Bocarova – Cullen...

© Cullen International SA 2013© Cullen International SA 2013

Why Net Neutrality Matters?

Veronica Bocarova – Cullen International

Protecting consumers and beyond

Infofest, Montenegro - September 29, 2014


What is net neutrality?

© Cullen International SA 2013

All electronic communication passing through a network is treated equally – independent of

Content

Application

Service

Device

Sender address and

Receiver address

Implies that the treatment is independent of end user and content / application / service provider

(BEREC, September 2010)

What is net neutrality?


• … the scope is still being definedWhat is net neutrality?


From consumer perspective...


Is inequality always bad?


Restrictions and competition

http://www.google.hr/url?sa=i&rct=j&q=travelling+with+a+dog&source=images&cd=&cad=rja&docid=C34NZnw-hTH-FM&tbnid=V50KplpB-in8UM:&ved=&url=http://thedogwanderer.wordpress.com/&ei=v-jdUa6FMumC4gTCxYDgDA&bvm=bv.48705608,d.bGE&psig=AFQjCNHzw4ILM5_ose5fUmorwjh38Dx54w&ust=1373583936176703


What is the moral of this story?

Where some see a case for restrictions, others see a

market failure and opportunity to do business



Underlying assumptions of the happy story

Competition

Transparency

Low switching costs

or



• 2009 – 2012 Net neutrality in the EU

No proper debate during the review in 2007 – 2009

Binding regulation limited to

transparency and switching obligations on operators

possibility for NRAs to set minimum Quality of Service (QoS)

April 2011: Commission Communication on net neutrality

No reason for regulatory intervention as long as there is:

competition

transparency

low switching cost: number portability + contract duration

"any lawful content, any lawful application, any lawful device,

and any provider"

2008 auction of 700 MHz: “open devices and applications”

August 2008: FCC Comcast order

October 2009: FCC proposal on binding net neutrality rules

non-discrimination

transparency on network management practices

same rules for fixed and mobile networks

April 2010: Annulment of FCC Comcast order by the court

August 2010: Google-Verizon proposal excluding wireless ISPs


Competition


Competition – how?

Fixed networks

retail markets not susceptible of being regulated

increased focus on bundled offers (broadband/TV)

EOI, ERT and TRT...

Mobile networks

retail markets not susceptible of being regulated

mobile access only regulated in a few countries under SMP

mobile access regulated ex ante in recent M&A cases


Transparency


• 2009 EU FrameworkTransparency

Providers should specify in their contracts:Limitations for access to and/or use of services and applications Applied traffic management techniques and their influence on service quality

Inform subscribers about:Any change to conditions limiting access to and/or use of services and applications


Transparency – how?

Whether you use the internet for daily browsing and sending emails, downloading movies and music or HD streaming and online gaming, Sky Broadband has something for everyone.

If you’re not sure which of our broadband products is right for you, take a look at our comparison table to find the best option to suit your lifestyle.

Compare Sky Broadband

• Data limits and prices

http://www.sky.com/shop/broadband-talk/broadband-compare/



Coverage map showing existing and planned deployment of 4G-coverage in Sweden

• Network coverage

http://www.telia.se/privat/support/tackningskartor



Network coverage guarantee – a free test of network coverage during 14 days

• Network coverage

http://www.telenor.se/privat/kundservice/abonnemang/tackningsgaranti.html


Transparency – how?• Increased demand for mobility

Increased demand for mobility and mobile coverage

Demand not always matched by infrastructure in place, even

though strong roll out of LTE and enhanced 3G and 2G networks

Operators coverage maps not in conformity with reality

Code of conduct for fair and transparent coverage maps was

adopted in April 2014 (initiative by PTS and Consumer Agency)


Switching


Switching

EU level obligations

Maximum contract duration: 24 monthsMinimum duration of 12 months should be available

Withdrawal from contract without penalty if contractual conditions have changed

Number portability: within one working day

• 2009 EU Framework


Minimum QoS


NRAs should be able to:

Set minimum QoS levels on providersto prevent degradation of service or slowing down of traffic across networks

Notification to the Commission and BERECCommission can comment on internal market aspects(no explicit role for BEREC)NRAs should take Commission’s (non-binding) recommendations or comments into ‘utmost account’ before making a final decision


Minimum QoS• 2009 EU Framework


• 2013

“I want you to be able to say [to your constituents] that you saved their right to access the open internet, by guaranteeing net neutrality”.

(May 30, 2013)

“A safeguard for every European, on every device, on every network: a guarantee of access to the full and open internet, without any blocking or throttling of competing services.”

(June 4, 2013)

Net neutrality in the EU


• Telecoms Single Market (proposal)Transparency

Information to be included in contracts:Actually available broadband speedsSpeed ranges, speed averages and peak hour speedData volume limitations – e.g. download caps, fair use policiesAvailable speed after limit has been reached, prices for topping up data volume, ways to monitor consumption at any time Impact on services of:Traffic management policiesSimultaneous use of specialised services with an enhanced QoS on the use of basic applications and servicesTraffic management policiesPrioritisation of certain traffic under certain circumstances


• Telecoms Single Market (proposal)Switching

Reinforced switching provisionsTermination of contract after six months without penalty (Art 28)Only reimbursement of handset subsidies, promotionsEmail forwarding (Art 30)Forward email to new address + AutoreplyFree for the first 12 months, option to extend at a chargeTacit extension of a contract (Art 28)End users to have one month to oppose AND One-month notice period (if contract turned permanent)Compensation if service parameters are not metAlso applies to actually available speedsCompensation according to national law


Blocking

Permitted as long as you are transparent:

Blocking applications ✔

Slowing down applications ✔

Charging a premium for running applications ✔

Charging for different bandwidths or data limits ✔

Charging for premium services with enhanced Quality of Service (QoS)

✔

• 2009 EU Framework


Blocking

2-3 years ago: increased share of flat rate

subscriptions with unlimited data –

on all or premium rate packages

Blockings and throttling increasingly becoming an issue

Now: offers formulated to meet demand in data volume, and calls

are often free

26% of Swedish end users have used Skype or similar service in

their mobile

60% uses video services in their mobile


Blocking

Permitted and not permitted:

Blocking applications ⊘

Slowing down applications ⊘

Charging a premium for applications ⊘

Charging for different bandwidths or data limits ✔

Charging for specialised services with an enhanced QoS

✔

• Telecoms Single Market (proposal)


Exceptions

Exceptions to net neutrality:Congestion management (but the same types of traffic have to be treated equally)Network integrity and security, including the service of the provider involved and the terminal equipment of end user Combat spamFollow a court order or other legal obligation or to combat serious crime

• Telecoms Single Market (proposal)


Is there a need for more regulation?


• Other consumer topicsIs it Net Neutrality or not?


Sponsored data link

Access to specific content outside data caps


• Facebook access outside data capFree access to Facebook on mobile


Schengen zone for Internet data


AT&T internet preferences

Click here

http://www.att.com/esupport/article.jsp?sid=KB421828&cv=803#fbid=dZxWwnQfrTG


• Austin, TexasAT&T internet preferences

When you select AT&T Internet Preferences, we can offer you our best pricing on U-verse with GigaPower because you let us use your individual web browsing information, like the search terms you enter and the web pages you visit, to tailor ads and offers to your interests.

You won't necessarily receive more ads when you are online, but those you do see may be more suited to your interests.

For example:If you search for concert tickets, you may receive offers and ads related to restaurants near the concert venue.After you browse hotels in Miami, you may be offered discounts for rental cars there.


• iPhone 4G - exclusivity agreementApple – Mobistar Belgium


• Belgian government reactionApple - Mobistar

Belgian government Bill – Jan 24, 2014

A manufacturer… cannot prevent or make difficult without legitimate technical reasons the connection of this equipment [to all networks] ….


Telcos versus OTTs...


Telcos versus OTTs


Telcos vs OTTs

Are content providers such as Google and

YouTube... free riders?


• New kind of economicsTwo-sided markets

• Two-sided markets are economic platforms having two distinct user groups that provide each other with network benefits

Credit cards: holder/shopkeepers Newspapers: subscribers/advertisers Operating systems: end-users/developers Video game consoles: gamers/developers


Two-sided markets

Broadband networks can be seen as two-sided platforms

€ €ISP


Net neutrality and peering


Transit vs. peering

Peering

Interconnection of two ISPs aiming at exchanging traffic between users of each network. Usually settlement free.

Transit

A data service provided against remuneration by an ISP to another ISP (or sometimes to an end-user) to gain access to the global Internet.


Transit vs. peering

TIER 1

TIER 2

TIER 3

= transit

= peering


versus

Requiring compensation for the provision of extra bandwidth capacity in peering agreements where there is a significant traffic imbalance is not to be considered as anti-competitive behaviour

France: paying for peering


• Comcast and Verizon

US: Netflix

Deal April 2014

Deal February 2014

Paid peering agreements: to increase the speed of delivery of Netflix services


• Three ways of taking the heat offNetflix and ISPs

Netflix offers three possibilities to ISPs to reduce the international traffic load:

public peering at 24 public internet exchanges

around the world private peering at 35 locations around the world ’Open Connect appliance’ boxes


• Open Connect applianceNetflix

Open Connect is a single-purpose Content Distribution Network, and by shifting to Open Connect, from using third-party commercial CDNs, we are able to save money and keep consumer prices low.


[email protected]


Conclusions

• Initially addressed by regulators in the US and Norway• Chile, The Netherlands and Slovenia are the only countries

which have imposed net neutrality by law • Net neutrality has not been mandated at EU level: retail competition should suffice to deal with problems. • EU focus has been on empowering consumers: transparency

and switching • New plans to put measures on blocking ad throttling into “hard law”• Emerging issue – who pays for data delivery: Over-the-top

(OTT) players versus network operators

© Cullen International SA 2013 Why Net Neutrality Matters? Veronica Bocarova – Cullen...

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