EU Parliament discusses network neutrality

A new regulatory regime for access to what has been termed Next Generation Networks (unified carrier networks for multimedia broadcasts, data and voice over IP) is being discussed by the European Parliament. It could reduce the risk of loss of network neutrality by rewarding competitors who jointly invest in new networks.

At present, telecommunications providers and research institutions are developing a large number of different concepts for the networks of the future. Experts fear that due to high investment costs, companies may start blocking access via the internet to more cost-effective solutions available from their their competitors. The basic premise of network neutrality recommends that access - be it via device types, types of communication, contents, addresses or platforms - remain unrestricted. In addition, communication must not be compromised by other communication streams and specific types of data traffic must not be prioritised. In the US, a considerably more restrictive parliamentary bill to legally guarantee network neutrality is currently being discussed.

At present many large US broadband providers and some European carriers want to fund their high speed networks by charging content providers for assured or super high-speed data transmissions and wish to gain more control over the use of their networks – for example, by blocking or artificially slowing down P2P data traffic. On the other hand, companies like Amazon.com, Google, Microsoft or Yahoo who advocate network neutrality, fear that a class-based network will obstruct new business models. Their concern is that telecommunications groups and cable TV providers may intend to split the internet into either expensive luxury transmission lanes accessible via toll stations, on the one hand, or to bumpy cart tracks, on the other.

The solution now discussed by the European Parliament does not guarantee absolute network neutrality and initially aims at making sure that sufficient network investment is possible in a competitive environment. Fibre optic networks offer the comparatively highest transmission capacities. Party of European Socialists (PES) rapporteur Catherine Trautmann says, regulatory procedures are currently not designed to actually promote investment, ensure competition and promote availability in rural areas, calling for the concept of Next Generation Networks to be included in the structure of the new regulation. She says that, on the one hand, competition in the new markets needs to be maintained, but on the other, there has to be enough incentive for using the network. According to Trautmann, along with frequency spectrum management, this is one of the most important strategic topics in the telecommunications sector.

The rapporteur doubts that the goal of having several high performance fibre optic networks compete against each other is "feasible or economically viable" in all countries and areas. She therefore thinks that an open network concept, with shared investment and legally regulated discrimination-free access, is required. If the investment risk can't be shared, the regulator should ensure that all operators who wish to have access make an "adequate" investment contribution. They could, for example, contribute to the cost of cable installations in buildings. The legislator could also regulate access to cable ducts, masts, rights of way or interior cabling. Alternatively, joint investment could be encouraged, demand could be bundled and de-cartelisation regulations could be expanded to include the new networks.

Sharing investment risks was first proposed by PES rapporteur Erika Mann. She explains that the access regime developed for existing networks reduces the incentive for investing in new networks. She says a new regime incorporating dynamic elements, like risk sharing, or investment contributions, would create new incentives for investment. Mann also calls for the ex ante regulation of the broadband market, especially for cable networks and Next Generation Networks, to be suspended if a competition for infrastructures already exists. This competition does not even have to exist on a nation-wide basis but can be present on a regional level. This differentiation, which would make the ex ante regulation of the market redundant for example in urban areas with two providers, as a result, could also promote the development of broadband services in rural areas.

However, the proposal now discussed in the European Parliament does not prevent competitors who cannot, or will not, contribute to the cost of investment to be excluded from access. Therefore, rapporteur Reino Paasilinna of the socialist PES parliamentary group, explicitly called for the universal service guideline to stipulate that member countries are to be responsible for guaranteeing discrimination-free access to services between networks, in other words for network neutrality. In this context, regulative authorities are to be entitled to determine minimum service quality requirements. The commission will decide this week. The regulation is already planned to be adopted at its first reading in July.

(Christiane Schulzki-Haddouti)