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EU Mobile Operators Demand Facebook and Google to Pay Up or be Restricted

Posted: 09th Dec, 2010 By: MarkJ
net neutrality network cableSeveral major European mobile operators, including Orange (France Telecom, Everything Everywhere), Telecom Italia, Telefonica ( O2 ) and the Vodafone Group, have raised the Net Neutrality issue (principal of treating all internet traffic as equal) again by demanding that popular websites, such as those from Google, Facebook, Skype and Apple, pay for the privilege of being seen on their networks.

It's a well known fact that Mobile Broadband data usage has come perilously close to outstripping revenue, which in fairness is predominantly due to mobile providers offering "unlimited" data access to consumers at lower than economically sustainable levels.

uk ofcom 2010 internet usage vs revenue

However, rather than raise prices, some operators have told Bloomberg that a better solution would be to simply charge popular internet websites and services to use their networks.

Telefonica SA CEO, Cesar Alierta, said:

"[Google and Yahoo!] use Telefonica’s networks for free, which is good news for them and a tragedy for us. That can’t continue."

France Telecom's CEO, Stephane Richard, added:

"We are progressively going to switch from the unlimited approach that has been the trademark of our industry to something which is more sophisticated."

Naturally this issue has caused concern right around the world, with a few operators even hinting that access could be restricted to content providers who refused to pay up. That's unlikely to please their customers.

However, websites and online services already have their own bandwidth bills to pay and many, such as Skype, wouldn't be able to survive if hundreds of operators from around the world suddenly started banging on their door, like a Digital Mafia, looking for free cash.

Giuseppe de Martino, the legal and regulatory director of Dailymotion, said:

"Currently about 40 percent of our expenses go to networks anyway -- servers, peering, our content delivery network, and other resources. If telecom operators want us to share in their expenses, perhaps we should talk about sharing subscription revenues as well."

Indeed customers already pay a monthly fee and this often includes a usage allowance for data, which might make consumers question why operators are trying to charge content providers for a service that they have already paid to access.

Just imagine the outcry if an operator suddenly limited access to Facebook or Google because they had refused to pay. Popular content is what makes the internet worth using in the first place and many customers would leave if they couldn't access what they wanted.

Last month the UK government ruled that there wasn't enough evidence of anti-competitive practices for them to introduce new regulation (here). However it did say that consumers "should be able to access any legal content or service" and that any restrictions would need to be "set out in detail".

Communications Minister, Ed Vaizey, said:

"My first and overriding priority is an open internet where consumers have access to all legal content. Should the internet develop in a way that was detrimental to consumer interests we would seek to intervene.

People are already entitled to choose the speed of their connection, but we’re not saying one ISP should be able to prioritise one provider’s content over another and I don’t support the commercial decision to downgrade a rivals site."

In fairness we are talking about mobile operators here and not fixed line broadband ISPs, the latter of which apparently has good capacity. By contrast mobile operators are a long way behind and their infrastructure is still playing catch-up. However consumers still expect to use their Mobile Broadband connection in an identical way to fixed line connectivity.

It's also worth remembering that Mobile Broadband only really became popular in the UK between 2007 and 2008, after Three (3) launched the first truly consumer affordable 1GB+ data allowance packages and USB Modems (Dongles). Ironically one of the reasons they did this was because the operator had plenty of 3G capacity to spare and mobile phones were only just figuring out how best to make use of it.
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