Not another presentation on net neutrality · Net neutrality*: a couple of definitions Sources:...

Not another presentation

on net neutrality

Iván Rejón & Alfonso Aguado

Strategy, Marketing & Com

Observatorio Industria 4.0 | 2016 | Page 3

Ericsson at a glance

39,000

23,700

66,000

2.5 billion

1 billion

180

116,000

Subscribers

managed by us

Subscribers

supported by us

Services professionals Employees

Countries with customers

R&D Employees

Patents

In R&D

247 B. SEK Net Sales

32,8 B. SEK

NETWORKS

Create one network for

a million different needs

IT

Achieve business agility

with transformative IT

MEDIA

Delight the TV

consumer every day

INDUSTRIES

Connect industries for

business acceleration

Full year 2015 figures


Ericsson at a glance: 140 years OF INNOVATIONBorn in a garage?

Sources: Google


Ericsson at a glance: 140 years OF INNOVATION…, we were also born in a garage 140 yr ago

Sources: Google


…, and we invented:


INDEX

This session is structured in 3 blocks

1. A complex and controversial topic

2. De-constructing Net Neutrality

• Digital ‘laws’

• Market: a new normal

• Regulation and the basics

• Market asymmetries

3. Towards a level playing field

• Ericsson vision


INDEX

A complex & controversial

topic


OLD stuff? The concept predates the current debate

Sources: Wikipedia. * Pacific Telegraph Act of 1860

…, existing since the age of the telegraph. In

1860, a US federal law* was passed to

subsidize a telegraph line:

messages received from any individual, company, or corporation, or from any telegraph lines connecting with this line at either of its termini, shall be impartially transmitted in the order of their reception, excepting that the dispatches of the government shall have priority ...

In 1888, A. B. Strowger, suspecting his loss of

business was caused by a telephone operator

redirecting his business calls to a competitor,

invented a switch

that effectively removed human interference of

telephone calls


+3,560,000 results on Net neutrality on the web

Sources: Google


…, highly biased, passionate

Sourc

es: G

oogle


…, and ideological discussions

Sourc

es: G

oogle


Sources: Slideshare; Martin Geddes

• Stochastic

• Emergent

• Random(ness)

• (Non)Deterministic

• Semantics

• Probabilistic

• Statistical Multiplex(ing)

•

•

•

•

•

•

•

Neutral(ity)

Discrimination

Throttling

Priorit(isation)

Violation

QoS

Speed

Meaningless & vague Meaningful & scientific

Not based on rational & scientific grounds


Net neutrality*: a couple of definitions

Sources: Wikipedia, BEREC

is the principle that ISPs and governments

regulating the Internet should treat all data on the

Internet the same, not discriminating or charging

differentially by user, content, website, platform,

application, type of attached equipment, or mode

of communication.

(Wikipedia. *Coined by Columbia University media law professor

Tim Wu in 2003)

refers to a debate about the way that ISPs

manage the ‘traffic’ carried on their networks when

data is requested by broadband subscribers**

from providers of content, applications or services

as well as when traffic is exchanged between end-

users.

The best effort internet is about the equal treatment of

data traffic being transmitted over the internet, no matter

what it contains, which application transmits the data,

where it comes from or where it goes.

(BEREC 2016, * 'end-users' under EU law)


Sourc

es: G

oogle

…, but different flavors

• Discrimination in limited

conditions, eg. preventing

spam, malware, or illegal

content ensuring privacy

and security (CL),

exceptions for congestion,

security, spam, or legal

reasons (NL)

• Reasonable (and

transparent) trade-offs

between the requirements

of different applications

(eg., low latency and low

jitter: voice and RT video),

rather than neutral

transmissions regardless

of applications

• Paid-prioritization of

bandwidth / sponsored

data agreements can

induce optimal user

welfare

• Enforcement based on

other laws, eg., anti-

competitive practices,

'commercially

reasonable' practices

Sources: Wikipedia

Full neutralityDiscrimination based

on type of data

Individual prioritization

without throttling or

blocking

No direct enforcement

‘Strong’‘Weak’


…, intertwined with other complex issues, contaminating the debate

Privacy and confidentiality

Competition

Accessibility and universal serviceInteroperability

Consumer protection

Security and emergency services

Portability

Copyright

Information freedom


…, and prone to ‘structural’ contradictions and inconsistencies

Imposition of neutrality

obligations to online

intermediaries (eg., anonymity)

other regulations are

requiring them to be more

proactive in content

management, prioritization

and editing


De-constructing Net neutrality


PACE OF CHANGE

1875 20001975

10

30

15 yr

50 b connected devices

25 yr

5 b connected people

100 yr

1 b connected places

20

40

Con

ne

ctio

ns (

b)

2020Source: Ericsson


Exponential pace of disruption

Source: BCG,

Techcrunch, Wikipedia

0

Whatsapp

Instagram

Mobile phone

Telephone

WWW

iTunes

Facebook

Apple App Store

Candy Crush

Pokémon Go 25 days

1 yr, 3 m

2 yr, 2 m

2 yr, 4 m

3 yr, 4 m

4 yr, 6 m

6 yr, 5 m

7 yr, 5 m

16 yr

75yr

July, 6th 2016

2012

2008

2010

2009

2004

2003

1990

1979

1878

Time to reach 100 million users


1991: Total Cost $3054.82

2015: Smartphone $299.00

Combinatorial -new propositions


Combinatorial -New corporate leaders

Source: The Economist, Statista, * as of August, 1st

The Age of Tech: Market cap of the most valuable companies


Combinatorial -New corporate leaders tech BEASTS

Source: The Economist, Statista, * as of August, 1st

The Age of Tech Beasts


Source: CNMC. Orange includes Jazztel from Q3 2015. Movistar includes DTS from Q2 2015.

Vodafone includes Ono from Q3 2014

A ‘new normal’In Spain the market has destroyed €9,7 b in the last six years

2009 2010 2011 2012 2013 2014 2015e

+12%

+6%

-6%

-7%

Jazztel

Ono

Yoigo

Orange

Vodafone

Movistar

CAGR

DTS

-5,2

Revenues (€ b)

35,0

25,4

-8,9

8,0

14,0

-10%

+8,1%%

-19,8%

-9,5%

CAGR

EBITDA (€ b)

2009 201220112010 201420132008

Source: AMETIC


New patterns• Eg. #1: explosion of

MBB traffic

• Eg. #2: shift from fixed to mobile viewing, from linear TV to streaming

New demands• Eg. #1: from a

fragmented offering to convergent bundles

• Eg. #1 improve coverage to be captured

• Eg. #2 differentiate app coverage

• Eg. #3 poor digital experiences lead to frustration and erode NPS

New expectation

A ‘new normal’In four acts

New attitudes• Eg. #1: emergence of

new segments

• Eg. #2: important reduction of piracy


A ‘new normal’New patterns. 1) traffic explosion

Monthly mobile consumption

Monthly mobile traffic

47%CAGR

2 GB 18 GB

1 EB 6.7 EB

2016 2021

X9Growth

200

300

400

500

600

700

800

900

1000

200

5200

10200

15200

20200

25200

30200

35200

40200

45200

Q4 2012 Q4 2013 Q4 2014 Q4 2015

x2

Monthly traffic per connection

Source: CNMC, Ericsson Mobility Report, Cisco

Fixed (MB)

0

Mobile (MB)

x1.5

0

2014 2019

4% 10%

Mobile traffic as % of total IP traffic

X2.5Share


BASE: Population aged 16-59 with broadband at home who watch any type of TV/Video at least weekly in Spain.

*3 years moving average ¼, ½, ¼

0%

25%

50%

75%

100%

2010 2011 2012 2013 2014 2015

TV Desktop Laptop Smartphone Tablet

TV

& Desktop

Smartphone,

tablet & Laptop

41% think it is very

important to watch their TV and Video content wherever

they are

~65%watch TV & video

on their smartphones,

increase of >135% since 2012

Source: Ericsson ConsumerLab

Weekly TV/video viewing time, per device

A ‘new normal’New patterns. 2) from fixed to mobile media experience


BASE: Population aged 16-59 with broadband at home who watch any type of TV/Video at least weekly

in Spain 3 years moving average ¼, ½, ¼ (self reported)


% of people watching different media at least once per day

A ‘new normal’New patterns. 2) from linear to streaming video consumption

>50%watch streamed

on-demand

each day

up from >30%

in 2010

Scheduled linear TV

Recorded linear TV

0%

25%

50%

75%

100%

2010 2011 2012 2013 2014 2015

Streamed on demand video

(YouTube, short clips, movies,

TV series and programs)


A ‘new normal’New demands. 1) from a fragmented offering to convergent bundles

0

1

2

3

4

5

6

7

8

9

10

Q12012

Q32012

Q12013

Q32013

Q12014

Q32014

Q12015

Q32015

2P

3P

4P

5P

Source: CNMC

Opportunities &

Challenges

› Content rights

› Data monetization, beyond

pure connectivity (eg.,

games, alarms, etc.)

› Superior customer

experience

› Simplification and

operational efficiency

Number of packaged services, by type


A ‘New Normal’New attitudes. 1) emergence of new market segments


0%

25%

50%

75%

100%

16-19 20-24 25-34 35-44 45-59 60-69

Scheduled linear TV

Recorded linear TV

Streamed on demand video

(YouTube, short clips, movies,

TV series and programs)

BASE: Population aged 16-69 with broadband at home who watch any type of TV/Video at least weekly in Spain

[Showing: Use once per day or more, self reported]

% of people watching different

media, per age


BASE: Population aged 16-59 with broadband at home who watch any type of TV/Video at least weekly in Spain

% of total TV-time by age group,

per device

0%

25%

50%

75%

100%

16-19 20-24 25-34 35-44 45-59

TV Desktop Laptop Smartphone Tablet

TV screen

& Desktop

Smartphone,

tablet & laptop

65%

of all TV/video

viewing hrs spent on

a mobile device

screen among

teenagers

8 out of 10 teenagers

watch streamed

content, compared to

2 out of 10 aged 60-

69


Source: Ericsson

Base: Spanish on-demand (streaming & downloading content) users (948 users out of 1000)

% of users of streaming and on demand services

(2011 vs. 2015)

Some factors

› Availability of a diverse

and differential offering

› Competition of OTT

services (pure and

hybrids)

› Competition between

CSPs: quality, price

1416

252522

10

1918

752

3229

9

452

Ora

nge

TV

Ja

zzb

ox

Vo

da

fon

e

Vid

eoclu

b

Ca

na

l+ Y

om

bi

Mo

vis

tar

Vid

eo

clu

b

Pirate

P2P

Pira

te

str

ea

min

g

Mi T

ele

A3

Pla

ye

r

We

b

TV

5/C

ua

tro

96

Yo

uT

ub

e

We

b R

TV

E

842011

2015 55 pp.

A ‘new normal’New attitudes. 2) pirates of last resort?


App coverage

› +50% of ‘power’ and

video-centric app users

report issues

› consumers build

perceptions of network

performance based on

how well their video

streaming apps perform

› the proportion of users

who are satisfied with

using apps drops by

half when moving from

outdoor to indoorSource: Ericsson ConsumerLab,

Base: Smartphone users in Brazil, India, Japan, South Korea, the UK and the US

Percentage of smartphone users who have

stopped using apps due to bad coverage

A ‘new normal’New expectations. 2) from ‘coverage’ to app coverage


A ‘new normal’New expectations. 3) poor digital experiences leads to frustration and erode NPS

Mobile delays comparable to

watching a horror movie

1= Max

0

0.8

0.6

0.4

0.2

.., heart rate

increases 38%

+38%

If mobile videos take > 2s to

load, NPS may drop by at

least 4 points

No

delays

Delays

+4.5

-4

Impact on NPS



Source: Press clippings, OpenSignal

‘in 2020, 97% of Spanish households will have

fiber… 4G coverage will reach 100%. The digital

divide won’t longer exist. We will be the only

country with digital services in every corner’ (L. M. Gilpérez, CEO Telefonica España)

Spain: #1 in the EU in terms of

fiber subscribers

A ‘new normal’…, while fostering the deployment of high performance NGNs


New

consumption

patterns

Decoupling

between

revenues and

traffic

Customer &

Brand

experience,

Simplicity

Platforms,

Disruptive

models

Agility, Talent, ...

..., other players

better satisfy new

demands

..., the telco

industry has

entered a non-

profit zone

..., digital

platforms capture

a

disproportionate

share of value

..., the binominal

brand – service is

the new

engagement

driver

..., successful

competition

requires new

capabilities

change

#1

change

#2

change

#3

change

#4

change

#5

A ‘new normal’The telco-ecosystem faces some structural changes that torpedo their traditional business model


A ‘new normal’The decoupling between revenues, CapEx and traffic growth

50

60

70

80

90

100

110

120

0

25,000

30,000

35,000

40,000

15,000

20,000

10,000

5,000

201320112010 2012 2014 20162015 20192017 2018 2020 2021

Telco revenues (left)

Telco CapEx (left)

Monthly data traffic (right)

100

100

Revenue, CapEx and traffic growth (2010=100)

Source: Ericsson, Ovum

69

54

34,300


Arthur D. Little

Key competitors variables

No operator can justify

continuing to invest if it cannot

foresee acceptable return on

capital: Vodafone+Ono, Orange

and Yoigo have ROCE well below

cost of capital (10-12%)

A ‘new normal’…, compromising their viability


A ‘new normal’A profitability puzzle: the example of US

Source: PPI

1. AT&T -16.7%

2. Verizon -14.4%

3. Exxon Mobil -44.1%

4. ETE +74.2%

5. Chevron -42.6%

6. Walmart -9.7%

7. Alphabet -8.8%

8. Comcast +28.0%

9. Exelon +79.5%

10. Duke Energy +41.4%

Change in CapEx in H1 2016

Top 10 Investment Heroes

1. Telecom/Cable 48.1

2. Energy production/Mining 33.8

3. Internet/Technology 30.8

4. Utility/Energy Distribution 27.5

5. Transportation 15.3

6. Automotive/Industrial 12.9

7. Retail 8.5

Total 176.9

High Investment Sectors

(2015, $ b)

1. AT&T 18.7 2. Verizon 16.6 3. Exxon Mobil 11.04. ETE 9.4 5. Chevron 8.6 6. Walmart 8.5 7. Alphabet 8.4 8. Comcast 8.4 9. Exelon 7.6 10. Duke Energy 6.6 11. Apple 6.4 12. American Airlines 6.2 13. Phillips 66 5.7 14. Microsoft 5.6 15. Amazon.com 5.5 16. GM 5.4 17. ConocoPhillips 5.1 18. Intel 4.819. Union Pacific 4.7 20. FedEx 4.5 21. Time Warner 4.4 22. Ford 4.0 23. EPP 3.8 24. GE 3.5 25. Freeport 3.4

Raking by company

(2015, $ b)

‘Investment Heroes’ because

their capital spending is

helping raise productivity

and wages across the

country(PPI)

…, it seems possible that

the prospect of continued

regulatory upheavals is

influencing capital

investment (PPI)


Source: Visio Mobile

$1.3 b (2011)

Appleapp store cost

$9.5 b (2011)Developers investment

How Apple uses developers to drive external investment

$233 b (2015)

iOS device sales

We run the App Store just

a little over breakeven

Peter Oppenheimer, Apple

CFO 7x

25x

A ‘new normal’Platform business model economics are far superior


Source: Statista, NetmarketShare, eMarketer

A ‘new normal’…, but lead to quasi monopolies

Global Mobile OS

market share

(Q2 2016)

Other

IOS

86%

Android

1%

13%

Global Mobile

search market share

(Q3 2016)

Bing

Google

Yahoo94%

Other

Baidu

4%

US video visits

market share

(Q3 2016)

US mobile ad revenue

market share

(Q3 2016)

8%

Bing

Hulu

Netflix

Other

Youtube

77%

19%Yahoo

TwitterFacebook

Other

Google

32%


[ Tim Wu. Feb. 2003 ]

• Design principle/'Neutral

platform'

• Last mile

• Right of users to access

content, services, applications

of their choice

• Operator should not interfere

with users’ use but can 'police

what they own'

• A hard rule only if necessary (ok

if operators uphold the principle

on their own)

Regulation & the basicsNet neutrality Trojan Horse

[ 1700s ] Ben Franklin reorganizes

postal service to operate as

a common carrier

[ 1800s ] Telegraph regulated as

common carrier

[ Late 1800s ] Telephone regulated as

common carrier

[ 1934 ] Telephone Carrier regulation

transferred to FCC

[ 1966 ] Computer Inquiries Initiated

[ Late 1990s ] Open Access Proceedings

Network Neutrality,

Broadband

Discrimination.

Journal of

Telecommunications

and High Technology

Law, Vol. 2, p. 141,

2003


US/ FCC’s Internet Policy Statement

2005• BB users are entitled to run Web

apps/services of their choice & connect

their choice of legal devices to the

network

US/ FCC’s 2010 open internet rules• Basic rules: transparency, no blocking

and no unreasonable discrimination.

• For mobile broadband providers, the no

blocking rule applied only to the blocking

of lawful websites, or applications that

competed with mobile operators’ voice or

video telephony services. The no

discrimination rule applied only to fixed

providers

Regulation & the basics It all began in 1999 – last millennium…

Cable ‘walled garden’ fears

• Mergers: cable TV/broadband

companies

• AT&T/MediaOne and

AOL/TimeWarner

24 May, 1999. AOL, WorldCom and other

Internet companies

• …, urged federal authorities to bar cable

operators striking exclusive deals on

high-speed Internet service

• Internet providers want to be sure that

consumers will enjoy the same open

access to their services via cable

networks that they now have over phone

lines,...'

.


Regulation & the basics Legislation & ‘Economy'

Do States regulate private infrastructures ?

Private property is the

ownership, control, employment,

ability to dispose of, and

bequeath land and other forms

of property by persons and

privately-owned firms

Digital technology, if

unshackled from ownership

restrictions and payment

requirements is a powerful

means for creating a more

egalitarian society

What

prevails ?

Not

so new ?

Pacific Telegraph Act of 1860

(US federal law passed to subsidize a telegraph line): …, messages received from any individual, company, or corporation, or from any telegraph lines connecting with this line at either of its termini,

shall be impartially transmitted in order of their reception excepting that the dispatches of the government shall have priority (…)*

Source: An act to facilitate communication between the Atlantic and the pacific states by electric telegraph, June 16, 1860-


Regulation & the basicsNet Neutrality in USA

[Open Internet Order] Feb. 2015Protecting and Promoting the Open Internet, GN Docket

No. 14-28, Report & Order on Remand, Declaratory

Ruling, and Order, 30 FCC Rcd. 5601 (2015)

The FCC’s order does not regulate Internet

interconnection, but it reserves the right to intervene on

a case-by-case basis

No Blocking: [Internet Service Providers ('ISPs')] shall not block

lawful content, applications, services, or non-harmful devices, subject

to reasonable network management.13

No throttling: [ISPs] shall not impair or degrade lawful Internet traffic

on the basis of Internet content, application, or service, or use of a

non-harmful device, subject to reasonable network management.14

No paid prioritization: [ISPs] shall not engage in paid prioritization.

'‘Paid prioritization’ refers to the management of a broadband

provider’s network to directly or indirectly favor some traffic over other

traffic . . .'15

• FCC adopted on Feb 26th the new Open Internet order. To enable the imposition of strong non-discrimination rules,

the FCC also reclassified fixed and mobile broadband providers as ‘common carriers’, enabling their regulation under Title

II of the Communications Act of 1934

• However, the Order will not apply a full utility-style regulation on ISPs (as implied by this reclassification), expressly

excluding the imposition of any rate or tariff regulation, last-mile unbundling, burdensome administrative filing

requirements or accounting standards

• If, there is a future legal challenge and the courts confirm this reclassification, it will allow for the first time a thorough

substantive legal examination of the merits of strict open internet rules


Regulation & the basics Regulatory approach in EU

Commission

Non-binding

Declaration

Dec 2009

Commission

Non-intervention

Communication

Apr 2011

Commission

Non-binding

Recommendation

May 2012

From …Objective Non intervention Light-touch

EU (28/27)

Binding

TSM regulation

Nov 2015

…, toRegulation

Commissioner Kroes spoke

out against anti-competitive

blocking/throttling of internet

traffic on May 30, 2013

Telecoms Single Market

(TSM) Regulation entered

into force on Nov 29, 2015

End-users should be able

to access and distribute

information, or run apps/

services of their choice

Annex to the EU 2009

regulatory framework for

electronic communications

Recognized the need for

traffic management. End

user's experience is not

disrupted by congestion

Time to see how EU 2009

regulatory framework

works in practice

BEREC/Com. Report:

20% of mobile internet

users face restrictions in

their ability to access VoIP

Recommendation to

improve transparency for

end users


Regulation & the basics Net neutrality in EU

• Is NN directly imposed in all member states? Yes

The Regulation 2015/2120 applies directly. Member states do not have to transpose it into national law.

• What happens with existing national NN provisions? Member states should withdraw, by Dec. 31/2016

…, any national regulation, that does not comply with the Regulation 2015/2120

• Is it clear what is expected ISPs? No. Regulation leaves a lot of scope for

interpretation

…, therefore, BEREC, which assembles the European NRAs, has released guidelines that entered into force on Aug. 30, 2016 to be applied by

NRAs on the implementation of the NN provisions

[Regulation 2015/2120] Nov. 2015Regulation 2015/2120 of the European Parliament

and of the Council of 25 November 2015 Laying

Down Measures Concerning Open Internet Access

and Amending Directive 2002/22/EC on

Universal Service and Users’ Rights Relating to

Electronic Communications Networks and

Services and Regulation (EU) No 531/2012 on

Roaming on Public Mobile Communications

Networks Within the Union, 2015 O.J. (L 310) 1

• All end-users have the right to access and distribute legal content,

applications and services of their choice

• Providers of internet access services are required to treat all traffic equally

• Reasonable traffic management is allowed. Providers may use measures

based on objective technical requirements, not commercial considerations

• Blocking or throttling is allowed. Only to block illegal content, counter a

cyber attack or deal with exceptional or temporary traffic congestion

• Services optimized for specific content is allowed. Agreements on services

optimized for specific content will be allowed where necessary, but providers

will have to ensure the general quality of internet access services. Examples:

managed IPTV and high-definition video conferencing

• 'Zero-rating' practices are not explicitly banned. Will have to be assessed

by the NRAs on a case-by-case basis to establish harm to end-users before

they can be prohibited

Next steps:Review of the Regulation: by April 30, 2019 and

every four years thereafter

(*) 14 Oct 2016 : The Dutch Parliament has adopted a revised net neutrality law


Regulation & the basics Net neutrality in EU

(*) 14 Oct 2016 : The Dutch Parliament has adopted a revised net neutrality law

Is NN directly imposed in all member states?

What happens with existing national NN

provisions?

Is it clear what is expected ISPs?

Yes …, the Regulation 2015/2120

applies directly. Member

states do not have to

transpose it into national law

Member states

should withdraw, by

Dec 31, 2016 …, any national regulation,

that does not comply with the

Regulation 2015/2120

No.

Leaves a lot of scope

for interpretation…, BEREC, has released guidelines

that entered into force on Aug. 30,

2016 to be applied by NRAs on the

implementation of the NN provisions


Regulation & the basics Net neutrality in Spain

LegislationNo specific legislation on net neutrality. (Transitory period for member states to remove any existing

measures not complying with the net neutrality provisions: Dec 31, 2016)The relevant provisions under the Universal service Directive (USD) were transposed via the Royal Decree-law 13/2012 of March 2012.

The new Telecommunications Law does not contain any additional general provision in this regard

Players and actionsSecretary of State for Information Society and

Digital Agenda (SETSI). Monitoring of the QoS in

the sector, and specific aspects such as internet

speed and other parameters Quarterly reports monitoring the quality of F and M

electronic communications services with the objectives of

facilitating transparency, guaranteeing minimum levels of

quality, regulating the inclusion of these requirements in the

contracts, and the inclusion of due compensation mechanisms

Commission for the monitoring QoS. Includes

several working groups, integrating representatives from the

SETSI, operators, consumer protection authorities and regional

governments

Players and actionsNational Authority for markets and Competition

(CNMC). Input for the annual implementation

reports - deadline for CNMC to report to BEREC

and the Commission: Jun 30, 2017BEREC guidelines for NRAs implementing the Telecoms Single

Market Regulation (TSM) net neutrality provisions entered into

force by Aug 30, 2016


Source: AT Kearney

market asymmetriesThe fact-based narrative

In the Digital value chain, …

…, (1) telcos capture about

36% of the B2C business

…, (2) but growth has migrated to

Content, Online Services

…, (3) while the Online Services and

User Interface segments show much

higher market concentration

…, (4) and capture a

disproportionate share of the value


Market asymmetriesThe gatekeepers

Services and contents Infrastructures Interfaces


market asymmetriesNN does not properly address critical asymmetries

Privacy and confidentiality of conversations

Accessibility and universal service

Interoperability

Portability Customer careSecurity and emergency

services

Source: Telefonica


market asymmetriesEU Net Neutrality Regulation..., ensure that ISPs do not monitor specific content provided by the end-users themselves, such as text, pictures and video*

Source: Google, my own Yahoo Mailbox. * BEREC’s guidelines on EU Net Neutrality implementation

Targeted advertising

based on analysis of

private conversations


market asymmetriesEU Net Neutrality Regulation…, between specific content, applications or services there should be nodiscrimination*

Source: Digital Trends, RT, Harvard Business School. * BEREC’s guidelines on EU Net Neutrality implementation

By concept Google’s

Pagerank algorithm ranks

content, ie., not all

content is equal

…, and Google skews

search results which give

own services priority

+45% engagement

based on pure

relevance

rather than

Google own

ranks


market asymmetriesEU Net Neutrality Regulation…, between specific content, applications or services there should be noslowing down*

Source: Wired. * BEREC’s guidelines on EU Net Neutrality implementation

Google will now favor

pages that use its fast-

loading tech

X4

times

faster

load


market asymmetriesEU Net Neutrality Regulation…, between specific content, applications or services there should be noblocking*

Source: Facebook. * BEREC’s guidelines on EU Net Neutrality implementation

Facebook has quietly

developed software to

suppress posts from

appearing in people’s

news feeds (The NYT)


market asymmetriesEU Net Neutrality Regulation…, [NN] exceptions are limited to: traffic management to comply with a legal order, to ensure security*

Source: WhatsApp. * BEREC’s guidelines on EU Net Neutrality implementation


Towards a level playing field


Source: Wikipedia

Towards a level playing field

• …, is a concept about fairness, not

that each player has an equal

chance to succeed, but that they

all play by the same set of rules

o In a game such as rugby, one team

would have an unfair advantage if

the field had a slope. Since some

real-life playing fields do in fact

have slopes, it is customary for

teams to swap ends of the playing

field at half time

• A metaphorical playing field is said

to be level if no external

interference affects the ability of

the players to compete fairly


Not

so new ?

Towards a level playing fieldOTTs in the market place

Pacific Telegraph Act of 1860

(US federal law passed to subsidize a telegraph line): …, messages received from any individual, company, or corporation, or from any telegraph lines connecting with this line at either of its termini,

shall be impartially transmitted in order of their reception excepting that the dispatches of the government shall have priority (…)

OTTs• Do not pay network costs but derive large

revenues (sale of databases to brands or

sponsorships)

• Increasing in number and an offer taking up greater

bandwidth

• Do not contribute to the national creativity policy

(giving value predominantly to international

content)

Operators• Have lessor scope for revenues (flat rating) and

higher costs associated with network investment

• Have traffic consumption that is out of line with the

reality of use and beyond expectation;

• Generate value for the production of national

content, (contributing to audio-visual development)


OTTs• Do not pay network costs but derive large

revenues (sale of databases to brands or

sponsorships)

• Increasing in number and an offer taking up greater

bandwidth

• Do not contribute to the national creativity policy

(giving value predominantly to international

content)

Operators• Have lessor scope for revenues (flat rating) and

higher costs associated with network investment

• Have traffic consumption that is out of line with the

reality of use and beyond expectation;

• Generate value for the production of national

content, (contributing to audio-visual development)

Fair

competition

Future proof framework

Same services need to fall under the same rules… end-to-end quality, emergency call functionality or any-to-any connectivity based on phone numbers are crucial when choosing services

Specific rules for communication services, where necessary, should be applied independently from the nature of the

provider but based on the characteristics of the service

Towards a level playing fieldA more balanced framework

• All OTTs’ services – as well as services

provided by telcos – being similar from the end-

users point of view, should be subject to the

same horizontal consumer protection rules

• Communication functions are routinely included

into digital services (on-line gaming, social

networks, e-commerce, CRM, e-administration,

voice or video services)

Limited

national/regional/local

contribution

Nat./reg./local value

creation &

employment/taxes


Better access for

consumers and

businesses

Digital Single Market

Innovative services and

advanced digital

networks

Enhance the growth

potential of the digital

economy

• Unlock the potential of e-

comm.o Ending unjustified geo-

blocking

o Consumer trust by

harmonized rules

• Copyright modernization

and better access to

digital content by:• Enabling cross-border

portability

• Digital Content Initiativeo AVMSD update

o Assessment of online

platforms

• Cybersecurity PPP

• Telecom review:

encouraging investment

in connectivity

• Digitizing European

Industry o Coordination EU/Nat

Regulation initiatives

oMobilize €50 billion PP

investment

• European Cloud Initiative

• ICT Standards to ensure

interop. & facilitate uptake:

5G, Cloud, IoT, Data Techs,

Cybersecurity

• E-Government Action

Plan

Yet to come:

VAT modernization

IPRED review

Yet to come:

E-Privacy Review

Yet to come:

Data Economy initiative

Towards a level playing fieldFuture-proof EU framework will have to review current NN rules


Connectivity package:

Strategic Objectives for 2025

Towards a level playing fieldCurrent NN rules will have to be reviewed according to ECC objectives

Connectivity package:

Reforms, programs,

initiatives

1. All main socio-economic drivers should

have access to extremely high -

gigabit– connectivity

2. All urban areas and major roads and

railways should have uninterrupted

5G coverage and 5G should be

commercially available in at least one

major city in each EU Member

State by 2020

3. All European households, rural or

urban, should have access to

connectivity offering a download speed

of at least 100 Mbps

1. New European Electronic

Communication Code (ECC)

and BEREC regulation to help

build future networks

2. The 5G action plan to foster

European Industrial leadership

3. WiFI4EU (targeted voucher

scheme)


• 'Donald Trump's presidential election victory has increased the

chances that President Barack Obama's landmark net-neutrality

rules could be rolled back'

• 'Trump transition team picks regulation foe as telecom point man'

• 'Trump Could Spell Big Trouble for Broadband, Net Neutrality'

• 5 Nov 2016. Forty U.S. Internet companies, including Amazon,

Facebook, Google, and Twitter, have sent a letter to President-elect

Donald Trump with a list of policy priorities, under the banner of the

Internet Association

• Some of the proposals might align with Trump's priorities, such as 'easing

regulation on the sharing economy, lowering taxes on profits made from

intellectual property, and applying pressure on Europe to not erect too

many barriers.' Others might clash with Trump's vision, such as

maintaining net neutrality rules

Towards a level playing fieldA dynamic discussion

Source: Press clippings


Wrap-up


Wrap-upsome Myths and realities (1/2)

Layer Conclusion Myth

Infrastructure • Access policies are insufficient to spur ultra-broadband

network investment

• PPP are necessary to sustain growth in higher layers above

bare infrastructure

• Regulation can distort., eg. incentivizing short term

technologies

• Structural remedies are excessively rigid and extremely

difficult to manage (eg., UK, Canada)

Concentrated markets

always hurt the

consumer

Logic • NN can hardly achieve some of the objectives it is

supposed to address

• NN depends on a careful cost and benefit analysis, non on

ideological positions

• The ‘more’ neutral,

the better

• NN promotes

diversity in terms of

contents and apps

Source: Andrea Renda. CEPS


Wrap-upsome Myths and realities (2/2)

Source: Andrea Renda. CEPS

Layer Conclusion Myth

Platforms • Responsible cooperation with platforms may be the Best

regulatory approach

• Competition regulation has to be carefully adapted to

economic and Business dynamics of digital platforms

Online platforms

• stifle innovations and

prohibit the entrance

of other players

• ignore ‘niche’

contents

User • Internet ecosystem depends more on its e2e architecture,

stimulating freedom tan on being ‘neutral’

• Users benefit of a balanced regulatory framework: all layers

have to be considered to provide an unique user experience

• Users are willing to trade-off some privacy for innovative

and value-added services

• Users want a ‘neutral’

network

• Early standardization

is always good


Wrap-up

As NN is a highly biased,

passionate and even ideological

debate on an extremely complex

issue (technical, economic,

societal and legal)

…, we need an informed

discussion to ensure that the very

principles of NN are guaranteed:

ensure that the internet

ecosystem can continue to

flourish as an engine of

innovation and freedom of

expression

Not another presentation on net neutrality · Net neutrality*: a couple of definitions Sources:...

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