Could Europe's Net Neutrality Legislation Cause a Comms Car Crash?
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, , Editor-in-Chief, Light Reading