BT and Vodafone UK Reiterate Desire to Make Netflix etc. Pay

The Net Neutrality debate (i.e. protecting the open internet from abuse by UK broadband ISPs and mobile operators) reared its head again today after BT and Vodafone both put their names to a new statement by the European Telecommunications Network Operators’ Association (ENTO), which was signed by 16 telcos’ CEOs.

In case anybody has forgotten, the existing Open Internet Access Regulations – as softly enforced by Ofcom and the 2016 Open Internet Code, essentially means that providers should not impose excessive restrictions against legal internet traffic and must treat almost all of it equally (e.g. they shouldn’t favour specific services, such as by blocking or slowing access).

However, there are some exceptions to this, such as for when providers need to impose general traffic management measures, court ordered blocks or security measures (e.g. anti-virus/spam filtering). Ofcom is currently reviewing the guidelines (here and here) to better consider recent changes, such as the advent of network slicing in 5G networks (the current guidelines make it difficult to harness this) and the post-Brexit landscape of legislation.

At the same time some of the biggest providers, particularly those with strong interests in the content (e.g. TV) space, have never fully given up on their desire for more flexibility. This was underlined last year by BT’s call for greater freedom (here). One aspect of this has been the now ancient calls for internet content providers (that could cover everything from websites to Netflix etc.) to pay internet access providers to help carry their content.

The current rules prevent this because they stop ISPs from favouring content sources based on who pays them the most money, which might in turn lead to a degraded experience for other users (e.g. slowing the quality of Netflix or YouTube on certain tiers). This typically helps to ensure that excessive access controls over content don’t result in a walled garden style internet experience.

The latest statement from ENTO, which has a clear vested interest in this area, reiterates their desire to see a change that would require content providers to pay ISPs. The access providers have in the past argued that this could also make their broadband and mobile packages cheaper (or at least reduce future price hikes), but this overlooks the fact that content providers would also need to raise their prices to compensate.

Extract from ENTO’s Letter – Signed by 16 Telco CEOs

A sustainable, thriving internet ecosystem is in the interest of all European citizens and it relies on the achievement of the EU goals. Timely action is a must: Europe missed out on many of the opportunities offered by the consumer internet. It must now swiftly build strength for the age of the metaverses.

For this to happen, and to be sustainable over time, we believe that the largest traffic generators should make a fair contribution to the sizeable costs they currently impose on European networks. We must ensure that Europe does not suffer from scarcity of digital infrastructure.

A fair contribution would benefit first and foremost consumers, as it would help enable faster and more inclusive roll-out, bringing more coverage, resilience and quality. It would also benefit SMEs, who recently voiced the need for tech companies to “adequately contribute” to roll-out: 5G and fibre are key to SMEs’ competitiveness. In addition, a fair contribution would send a clear financial signal for streamers in relation to the data growth associated with their use of scarce network resources. This could generate significant energy savings and help achieve net zero, both of which are so important at this time. Finally, we expect it also to benefit tech companies, who rely the most on massive network upgrades, as we move to an age of open and connectivity-enabled metaverses.

This is why we strongly welcome the statements by EVP Vestagerviii and the consultation announced by Commissioner Thierry Bretonix. It will lay the ground for a solid legislative initiative that effectively addresses the matter. We support a timely calendar that allows Europe to deliver by the end of the current Commission mandate. In addition, we are respectful and fully supportive of the need to uphold the EU Open Internet principles: consumers must continue to enjoy all lawful content and applications available on the Internet.

Inclusive roll-out requires the full telecom sector to stay mobilised. For this reason, we believe that the fair contribution should be addressed to all telecom providers who are committed to achieving the EU digital goals – no matter whether they are small or big, traditional or alternative.

We stand ready to continue supporting EU institutions as they work to create the conditions for delivering a successful green and digital transition, enabled by timely policy action.

The letter relates to future EU policy, but the fact that the CEO’s from BT and Vodafone have signed it, as well as Ofcom’s ongoing review, give it relevance for the UK too, while at the same time showing that the biggest industry players across Europe continue to harbour the same mindset as they held a decade ago – back when Net Neutrality policy was first being formed by the UK Government.

At this point it’s worth remembering that demand for broadband and mobile data services would not exist without internet content providers (e.g. YouTube, Netflix, websites etc.). Some ISPs may complain that the increase in related data usage from these services and others raise their costs, but that’s the nature of the beast (cost of doing business) and should ideally continue to be reflected in the prices we all pay as end-users.

The statement also strays into somewhat quirky territory by suggesting that forcing content providers to pay a “fair contribution” to ISPs that carry their traffic would also “generate significant energy savings.” We assume this must be some reflection of greater efficiency in the CDN/caching (content delivery) path, but we’re yet to be convinced that such savings, if they can be realised, would be all that “significant“.

In our view, the existing rules, while imperfect, have generally worked well to keep the balance fair and the internet open (as it was always intended to be). We should point out that many smaller and medium-sized ISPs support this position too.

The ISPA, which represents UK ISPs from a much broader cross-section of the market, told Ofcom earlier this year that the “core principles of the UK’s net neutrality framework have worked well” and they see “no significant or sustained concerns” that would warrant “a more restrictive interpretation of net neutrality rules.”

Finally, we should point out that the scope of Ofcom’s current review, which seems to be taking longer than expected, is limited in that it is intended to inform their work in monitoring and ensuring compliance with the existing rules, and the operation of current guidance on complying with the existing rules. But any changes to the core rules themselves would be a matter for UK Government and, ultimately, Parliament.