ETNO-GSMA contribution on the draft BEREC Report on the IP interconnection ecosystem

Building on the previous stakeholder engagements, ETNO and the GSMA would like to provide some further views on the draft BEREC Report on the IP interconnection ecosystem.

As a preliminary remark, we welcome that draft BEREC’s report assesses IP interconnection from a holistic ecosystem perspective – including peering, transit and on-net CDNs – acknowledging the change in the market dynamics. We also generally appreciate BEREC’s efforts to collect primary data from a variety of stakeholder groups to establish an overview of the current practices of Internet Access Services (IAS) providers in the IP interconnection ecosystem between peering, transit and on-net CDNs. Although, improvements regarding the length of the consultation and the impartiality in the data collection process would be required. Further to this, in order to have a complete picture it would be important to match data from Content and Application Providers (CAPs).

Concerning BEREC’s analysis, we would like to highlight the following shortcomings and conclusions:

• We disagree with the finding that seven years after the last report in 2017, the sector is facing an evolution rather than a revolution. This is particularly true considering that this report also covers trends until 2030. As stated in the associations’ response to the draft BEREC report on the entry of large content and application providers into the markets for ECN/ECS, the market for digital infrastructure is undergoing massive changes and the dynamic and interaction in the internet ecosystem is developing with high speed. The risk to the open internet is huge. Big CAPs act independently of their competitors in the internet ecosystem through concentration, controlling more and more the open internet. CAPs only invest in transport and interconnection, not in the expensive delivery networks including access networks.

• BEREC is conducting an isolated analysis of the IP-IC market, without taking into account the impact of large CAPs in the global internet ecosystem, discarding factual and potential market failures. We believe the situation of the global joint impact of CAPs becoming vertically integrated, gaining market power across the whole Internet value chain, further leveraging into adjacent untapped markets and gaining market and bargaining power, should be taken into consideration in this report, as it could change some of its conclusions.

• The draft report ignores the fact that the interconnection market was originally developed as a market between operators (peers) functioning under the bill-and-keep philosophy. CAPs, however, are not peers offering an expansion of the addressable market. The relationship between large CAPs and integrated ISPs has evolved from a symbiotic coexistence to a pure business-to-business (“B2B”) relationship. None of the services which are provided by CAPs are feasible without the infrastructure of an integrated ISP as these bring the two market sides (CAPs on the one hand and end-user on the other side) together. Network operators are typically not inclined to provide IP data transport services on a settlement-free basis to a network with a significant traffic asymmetry which is especially the case between CAPs and ISPs traffic.

• BEREC does not acknowledge the market power of large CAPs orchestrating “must have content”. It also ignores that the negotiating position of ISPs is constrained by competition with other ISPs (end-users can choose among several ISPs / routes by which to access their end-users) and by an asymmetric regulatory framework (telco operators are subject to access obligations on the end-user side, and to non-discrimination obligations imposed by the OIR in relation to the content provider side). Failure to consider this, puts into question the credibility of the market analysis.

We elaborate more in the attached file. For any doubts about its content, please contact Maarit Palovirta (palovirta@etno.eu), Senior Director of Regulatory Affairs at ETNO.