Net Neutrality

DT Risks Net Neutrality Backlash With 'Unlimited' Plans

Deutsche Telekom has taken the lead from its T-Mobile US subsidiary and introduced an unlimited streaming service allowing German customers to watch movies and listen to music without eating into their monthly data allowances.

From April 19, the StreamOn service will available free of charge to customers on a range of the German operator's MagentaMobil tariffs, said Deutsche Telekom AG (NYSE: DT) in a statement.

The feature does not, however, mean that customers can access any streaming application they like without using up data allowances -- companies have to sign up to Deutsche Telekom's partner program before their services are included in the no-limits deal.

Deutsche Telekom's critics are likely to see this as a violation of rules on net neutrality, which are intended to prevent network operators from giving preferential treatment to particular web services.

Deutsche Telekom did not respond when asked whether the scheme would be allowed under net neutrality legislation. But in emphasizing that "anyone can become a partner" in its statement on the new offering, it is perhaps hoping to assuage any regulatory concern.

"There is no restriction: Any provider of legal audio and video content can become a partner," said Michael Hagspihl, the head of consumers for Telekom Deutschland, Deutsche Telekom's domestic business unit. "The StreamOn partnership is open to any interested party."

Certain authorities and net neutrality advocates may take a dim view of the plans, however. A similar offering from T-Mobile US Inc. -- unashamedly branded Binge On -- has proven extremely controversial across the pond, although President Trump's administration seems determined to scrap some of the net neutrality legislation introduced during the past few years. (See T-Mobile's Unlimited Plans Aim at the Big Two.)

Moreover, European Union rules on net neutrality appear to be less restrictive than regulations that were put in place by US officials while Barack Obama was still president.

Companies that have signed up to the StreamOn scheme so far include Amazon.com Inc. (Nasdaq: AMZN), Apple Inc. (Nasdaq: AAPL), Netflix Inc. (Nasdaq: NFLX), Sky and YouTube Inc. Unsurprisingly, Deutsche Telekom's own Entertain-branded TV offering is also on the list of partners.

That so many big brands are members will inevitably provoke even more jitters among net neutrality's most ardent supporters, who fear that smaller players could eventually disappear unless regulators enforce the very strictest rules on net neutrality.

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But the availability of a range of premium content offerings seems bound to entice consumers in the German mobile market.

It is also a sign of the pressure that service providers are under to burnish their offerings. Despite a 2014 merger between network operators Telefónica Deutschland GmbH and E-Plus Service GmbH & Co. KG , competition in the mobile market remains fierce, with Deutsche Telekom and Vodafone Germany battling for market leadership. (See Eurobites: Telefónica Gets EC Green Light on E-Plus Deal.)

While Deutsche Telekom continues to generate higher service revenues, Vodafone closed the gap in the final quarter of 2016, reporting stable revenues as Deutsche Telekom's declined by 0.3%, according to the German incumbent's own data.

Operators have been forced to add more to their service offerings to attract and retain customers, but spending continues to fall. Deutsche Telekom's last set of financials shows that monthly average revenue per user for more lucrative contract customers dropped from €22 ($23.5) in 2015 to €21 ($22.4) last year.

As a result, even though the operator saw its mobile customer base in Germany grow by 3.7% in 2016, to about 41.8 million, mobile service revenues fell by 0.6%, to about €6.7 billion ($7.2 billion).

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

Gabriel Brown 4/5/2017 | 10:29:24 AM
StreamOn and On and On... In view of the massive success of BingeOn, StreamOn seems worth a shot.

It's interesting how T-Mobile US launched the service as a challenger operator to win customers switching from other networks -- a classic disruptive play. In Germany, DT is the dominant player, with a good spectrum holdings, and is the premium brand.

I'm surprised we have not seen more of these offers outside the U.S.
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