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Could Europe's Net Neutrality Legislation Cause a Comms Car Crash?

Ray Le Maistre

Europe is one step away from introducing net neutrality rules and abolishing mobile roaming fees between member states of the European Union (EU). And according to one seasoned industry analyst, that means Europe is one step away from communications sector disaster.

The European parliament has voted through the Connected Continent telecom regulation that was proposed in September 2013. That set of rules, designed to create a unified European market for communications services, includes the abolition of roaming charges, the introduction of net neutrality rules (any efforts to ban or block Internet traffic or degrade services/applications will be outlawed), greater customer transparency over contracts, and coordinated spectrum licensing. Now the Connected Continent only has to be approved by the Council of Ministers to be ratified, which is likely to happen during the second half of this year. (See this European Commission announcement.)

On paper, the Connected Continent rules look like a consumer charter. In reality, it is ill thought out, contradictory, and could cause the collapse of Europe's mobile services market, according to John Strand, an independent industry analyst who has been tracking and consulting on the mobile sector since it was in short trousers.

Strand notes that the loss of roaming fees will lead to a decline in infrastructure investment by the operators, and ultimately affect services. But that's just one negative.

He also notes that by scrapping roaming fees, European Union residents would, in theory, be able to buy SIM cards in a country where the service charges/contracts are cheap and then use those services in other countries, where the charges are higher, creating an uneven market. Strand calls this "mobile arbitrage," and he believes "it will become a lucrative speculative market for financial traders, some operators and some MVNOs, however perverse and unintended by the EU."

The European Commission has taken note of this potential scenario, and will include rules against excessive use of such tactics. That means mobile service usage needs to be monitored (by the service providers?) and policed. Strand says how this will be achieved is not specified, but that, in one way or another, customers will need to be monitored and anyone found to be abusing the system would be blocked.

Strand concludes that this means operators, or some other body, will be asked to monitor traffic (something the European Union has criticized the NSA for doing) and block certain users, all as part of the same set of rules that bars service providers from blocking traffic and affecting service delivery. "The EU has created a blatant hypocrisy with net neutrality and roaming. On the one hand it has expressly prohibited blocking and degradation on internet traffic with net neutrality, but it has opened the door to an new monitoring and blocking regime with roaming," he notes, clearly with fire in his belly.

His full set of observations and views can be found here.

Strand has a point. The measures are no doubt well intentioned but it does appear that the details and logistics have not been thought through, and could have damaging ramifications for Europe's communications sector that, as we have pointed out previously, could alter the communications landscape of the region. (See Continental Shift.)

This looks like it could be a slow car crash for Europe. It looks like it's too late to apply the brakes but some air bags could still be inflated. It's clear the mobile operators will continue to use all manner of scare tactics ("we won't have any money to invest, we'll have to ramp up the roaming charges for visitors from the US and elsewhere outside the EU so that our children can eat" etc) in an effort to prevent the Connected Continent measures gaining final approval, but there do seem to be some very large holes in the current plans that need to be worked on to find and deliver a middle ground.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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User Rank: Light Beer
4/22/2014 | 5:25:29 AM
Net Neutrality
Net Neutrality is ok as long as dedicated networks for demanding users and applications are not outlawed. This applies to multiple site industrial development, science applications and to machine to machine communication. A more general SDN approach will allow for a multi carrier, multi domain "neutral" network for the normal user, while dedicated virtual networks will be reserved for demanding and paying high performance users.
User Rank: Light Beer
4/8/2014 | 4:34:51 AM
Re: Fear of change, nothing more
Absolutly agree, I'll also be happy to drive such 90HP Mercedes models instead of some "Made in China" 90HP car, as they must be same price, both. Same for three-willer choices...
User Rank: Light Sabre
4/8/2014 | 4:16:42 AM
Re: Fear of change, nothing more
I'm quite happy with 90 HP. If you need 200 HP (for whatever reason -- I don't really want to know), then you will pay more than I have to. And someone else will take a 50 ccm three-wheeler for the lowest price.

Which proves my previous point: differentiated offer as a base for different prices. (Regardless of where you live in the EU.)

User Rank: Light Beer
4/8/2014 | 4:03:25 AM
Re: Fear of change, nothing more
It's look like that all cars in Europe with  200 HP  have to have same price regardless manifacturer.
User Rank: Light Sabre
4/6/2014 | 6:50:25 PM
Re: Talk of Chaos and Collapse is unlikely imminent
I would also tend to think the "sky is falling" scenario is a bit overblown. Things will even out, and probably in the long run benefit customers and companies. It's just a case of change is hard to accept, but change gives new opportunities as well.
User Rank: Light Beer
4/6/2014 | 6:48:28 PM
Re: uneven market
You're deeply uninformed. Say in Poland signing in for postpaid is not regulated. Anyone can sign in by giving a passport.

Anyway the trick would be that you use somebody's infrastructure without paying for it. Let me explain. Take Livonia - a small country to get full country coverage you need to spend X as compared with multiple the X for any other country.

Then you sign up in Livonia for Operator A, take a SIM to any other country (take France for the sake of argument) and enjoy unlimited voice & data for 15EUR/month. 

Would Operator A be interested in monitoring/banning you? No - because you use French infrastructure and pay them. I would even guess that they would offer free SIM shipping everywhere in EU.  

Of course they would need to beef up their billing and MSC. But compared to RAN rollout those are peanuts. 

French operator, on the other hand, has build their infrastructure pays engineers to maintain the network Y times more than in Livonia, an sees no income from the usage. 

For the market to even out - you would have to even also the average salary and the size of the country...
User Rank: Light Sabre
4/5/2014 | 2:22:30 PM
Re: Combine or not to combine?
It sounds to me like although the point here is to eliminate roaming charges, all that this will do is create more expensive wireless services in the long run.

Having to actively monitor services from the wireless providers perspective is going to cause more oprational expenses.

No one likes roaming fees. But no one likes more expensive wireless bills either. The situations seems like a dismal one altogether. 
User Rank: Light Sabre
4/4/2014 | 5:54:35 PM
Could Europe's Net Neutrality Legislation Cause a Comms Car Crash?
@Francoman, so you see this as being a natural evolution of the EU and the markets that have already formed?  Thus, no big deal (ie Car Crash)?

I agree on the monitoring - I don't see that as a big issue within the EU.
User Rank: Light Beer
4/4/2014 | 3:19:56 PM
Talk of Chaos and Collapse is unlikely imminent
Unified EU Telecom standards for Net Neutraity will likely cause rate hikes in some EU countries inorder to even out the playing field. EU will likely emerge as  stronger and more unified.  Fears of monitoring are highly exaggerated.
User Rank: Light Beer
4/4/2014 | 1:32:15 PM
Re: Fear of change, nothing more
I saw changes in the F1 regulations almost on a yearly basis and the game still goes on. OK, maybe it's an exagerated comparison, but to some extent ... the good old operators which are hardly independent anymore, but part of investment funds that own the same brand throught Europe, have restrictions on operator selection preference aborad - they are basically asking money for using the same network in the end ... As a customer I am pretty happy with the decision
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