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EU Leans Towards Stricter Broadband ISP Contracts and Closed Networks

Monday, November 17th, 2014 (8:17 am) - Score 765

The European Commission’s (EC) new Commissioner for Digital Economy and Society, Günther Oettinger, has hinted that he might be about to adopt a distinctly less pro-consumer position on home broadband services and open access network flexibility than the person that he is effectively replacing, Neelie Kroes.

Kroes’s original plan for a new Single Telecoms Market across Europe included, among many other things, provisions that would have required ISPs to adopt plain language contracts that would also give you more rights to swap provider, including the right to a 12-month contract if you didn’t wish a longer term and the right to have emails forwarded to a new email address after switching ISP (that last one could be tricky).

In fairness much of this flexibility is already built into the United Kingdom’s existing regulatory approach through Ofcom, although in a recent speech Gunther Oettinger signalled that being too friendly and flexible towards consumers might not be the best approach, especially if you want to encourage investment in new technologies and foster fast “broadband for all“.

The official Digital Agenda target currently aims to make broadband download speeds of 30Mbps+ available to 100% of the EU by 2020 (plus 50% subscribing to 100Mbps+).

Günther Oettinger said:

As in any policy area, the Digital Agenda challenge is to find the right balance; including between those with broadband, and those still waiting for it to come to their door.

The rules which apply to broadband contracts are a case in point. On the one hand, EU rules protect consumers, so they don’t get “locked in” with one supplier. On the other, those needing to invest to provide more broadband need a degree of predictability about revenues, and incentives to do so.

The European Parliament and Council of Ministers are currently discussing how to strike that balance. The Commission’s proposal that would offer consistent protections across the EU, including the right for broadband consumers to end their contracts after a few months. At the same time, the proposal has other important provisions to promote investment, and I am working to make sure it will soon become law.

In the first case, consumer choice is the issue; in the second it is having broadband at all. In a village – wouldn’t it be better to have the option of broadband with a longer contract, than not to have broadband at all?

Oettinger also went on to explain that much more is needed to “connect every village in Europe“, before highlighting his idea to “incentivise investment in rural areas” by allowing telecoms providers (especially infrastructure developers) to reap the benefit of their investments.

It is similar to what we are already doing in the energy sector: in some limited cases, for new pipelines, companies can be exempted from the requirement to provide competitors with access to pipelines. This is only given if they can convince the EU Commission that without that exemption the investment would not have been made,” said Oettinger.

In other words, when deploying to rural areas, Oettinger appears to be suggesting that EU State Aid rules and other provisions could perhaps be relaxed to the point where related contracts didn’t require the chosen network operator to provide rivals with open access to their network.

But that approach could be a double edged sword, one that benefits some telecoms providers while potentially weakening consumer choice. It may also upset some of the balance that has already been established under existing rules and, much as Oettinger himself says, finding the right balance is key.

Meanwhile Günther Oettinger himself has also faced some criticism for his alleged lack of experience and knowledge of the telecoms / Internet field, although such criticisms could be levelled against most politicians.

Leave a Comment
5 Responses
  1. Avatar gerarda says:

    If the restrictions applied only to rural connections I think it is a sensible suggestion. The current policy has failed for millions of people.

    1. Avatar Ignitionnet says:

      Looking at the state of may of our urban areas I’d suggest that, in some cases, overbuilding urban areas is no easier than rural ones. Quite the opposite in some cases actually.

  2. Avatar Steve Jones says:

    This is sounder closer to the US approach for NGAs. In that case, something called “regulatory forbearance” has been adopted. In simple terms, what this means is that all builders of NGAs (including incumbents) can do what they wish constrained only by competition law. For instance, there’s no requirement to provide wholesale services.

    The principle is that it encourages infrastructure investment as it allows infrastructure builders to recover costs through retail as well as wholesale revenues. In the US there is a degree of competitive constraint due to an extensive cable network. It was also part of the idea in the UK at the time of BT privatisation. That is, the cable network, and the associated telephone services, would provide for infrastructure competition. To encourage this, cable TV franchisees were granted monopolies on wired broadcast TV services. (This was long before the advent of VoD, Youtube and the like – or, of course, broadband).

    Nb. US telcos still have to provide copper circuits, but they are being rather neglected. In practice, in much of the US the practical choice is between telco and cable operators where both are available.

    1. Avatar Steve Jones says:

      “sounding” not “sounder”…

  3. Avatar Captain Cretin says:

    If the US system is so wonderful, why is their internet so awful and so over-priced; especially mobile internet??

    You thought UK mobile internet was expensive and restrictive? Go live in the US. US people on defence/technology exchanges who visit us always comment on how much better internet access is here in the UK.
    (Although their children take time to adjust from the pre-digested crap they are fed there – to the freshly prepared food they get fed here).

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