RD329 - ETNO response to the Commission consultation on the Open Internet and Net Neutrality

For ETNO the economic context of the open internet debate includes:

• The European ICT sector requires major investment in next generation fixed and mobile high-speed networks in the coming years. The European Commission’s Digital Agenda sets ambitious targets for the availability of high-speed broadband by 2020.
• Commissioner Kroes has repeatedly stressed the need for a regulatory framework which promotes private investment in next generation networks characterised by both high speed and high quality. Investment in these smart broadband networks in Europe crucially depends upon network operators’ freedom to innovate and develop new business models in the market in line with EU competition and consumer protection rules.
• Starting from strong market positions in other areas of the internet, internet-based content and service providers increasingly operate in electronic communications services (ECS) markets. Openness and quality of internet-based services in many cases depend on both network operators’ and internet players’ behaviour.
• Any analysis of internet openness therefore has to take into view the internet economy as a whole, not just isolated parts of it. Otherwise, EU policy risks aggravating distortions of competition caused by the application of different regulatory regimes to electronic communications network operators on the one hand and internet content and application providers on the other. This is particularly the case in the field of ex-ante market regulation, consumer protection and data protection.

ETNO shares the Commission’s objective of internet openness

• ETNO members are committed to an open internet where consumers and business customers are able to access the content, applications and services of their choice in line with their individual preferences.
• To date the European approach to the open internet and net neutrality has put competition and effective consumer choice at the heart of the debate.
• ETNO encourages the Commission to maintain this fact-based and future-proof approach to the open internet and, at the same time, to extend its analysis to the economic model of the internet as a whole.

Openness is best served by competition, transparency and consumer choice, based on the revised EU regulatory framework for electronic communications

• Fixed and mobile broadband markets in the EU are highly competitive, providing effective choice for end users. In line with the revised EU regulatory framework, ETNO members are committed to providing transparent and meaningful information regarding any limitations of the internet access service offered to end users, further strengthening consumer choice in this field.  
• The EU ex-ante regulatory regime for ECS, while overly rigid in some aspects, underpins competition by providing for access and non-discrimination obligations for dominant network operators, constraining market power in internet access markets. Such ex-ante safeguards are unknown for other parts of the internet as well as for broadband markets in the United States, where net neutrality is most hotly debated.
• Internet openness also implies that end users should be able to benefit from differentiated offers for internet access in line with their individual preferences, and operators should be free to develop such offers similar to undertakings in any other area of the internet. Any anti-competitive practices by a market dominant undertaking should be addressed by the competent authorities, whether at the network layer or other layers of the internet value chain.

Network management is indispensable to prevent network congestion and allows new offers tailored to individual customer needs

• Network management is an indispensable tool to control network congestion in view of rapidly increasing IP data traffic volumes. Network management is for example used to prioritise quality-sensitive applications over other, less demanding applications. This is done without looking into the actual content that is transmitted and does not affect citizens’ fundamental rights such as the freedom of expression. 
• Network management allows service differentiation in the form of offers for specified quality. Economic incentives for a more efficient use of network capacity are urgently required to ensure the long-term sustainability of the internet. Differentiated tariffs, based on capacity and/or quality of service (QoS) responding to individual customer needs, can create such incentives.
• In addition, economic arrangements for the transport of IP traffic should better reflect its value, encouraging a more efficient use of the network, especially as concerns those applications which generate the bulk of internet traffic.

The ability of network operators to provide managed services is key to preserve broadband as a platform for innovation

• Operators’ managed services have a positive impact on the development of the internet access service. They drive take-up of high-speed broadband by consumers and the deployment of fast and very fast broadband networks, which in turn provide faster access to the internet.
• In the future, innovative services which require a managed QoS-environment, such as distant healthcare applications, cloud computing or 3D television will complement the internet access offer for consumers or business users. The ability to provide such services should not be limited by regulatory constraints other than those foreseen in the SMP-regime of the EU electronic communications framework and competition law.

A competitive market for internet access ensures quality of service for end users

• The imposition of minimum quality of service requirements by national regulatory authorities (NRAs) should be considered as an ultima ratio intervention under the revised EU framework. End users are protected by competition from any significant degradation of ‘best effort’ internet quality.
• Imposing minimum quality of service on a network of networks such as the best effort internet appears inherently difficult and is likely to distort competition. ETNO concurs with the initial finding by some NRAs not to consider minimum QoS intervention before having explored existing competition tools and consumer transparency.

Policies towards the internet should favour freedom of expression, collaboration and civic engagement

• ETNO Members do not exercise control over the actual content transmitted and will not engage in any censorship or favour or disfavour any type or form of communication on the internet because of the views expressed therein.
• In view of maintaining an internet environment that fosters free speech, collaboration and civic engagement, the EU should maintain current policies towards internet intermediaries and not attribute network operators a controlling role with respect to the content of electronic communications.