Net Neutrality Debate Holds up EU Telecom Laws Revision

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As European Union lawmakers close in on a way to reshape telecom laws for the Internet age the issue of net neutrality remains a sticking point in the way of a deal.

The term net neutrality was coined in the U.S., and typically applies to rules that would prohibit broadband providers from blocking or slowing Web content from competitors.

Some companies in the U.S. fear that a lack of neutrality will result in a two-speed Internet, where telecom companies prioritize some Internet traffic over others, in a way that suits their bottom line but not necessarily the interests of users and competitors.

The debate has spread to Europe because of the current revision in telecom rules, specifically the so-called universal service directive, resulting in intense lobbying by telecom groups and Internet companies.

The issue occupied much of the negotiations Tuesday among the European Commission, the European Parliament and the national governments of the 27 member states of the E.U.

Telecom Commissioner Viviane Reding played down the issue during an interview with IDG after that meeting.

"It is an issue in the U.S. but we don't have that problem here and we don't want others imposing this discussion on us," she said in a thinly veiled attack on the industry lobbyists.

She said there is healthy competition now in the E.U. telecom market and pointed to the Commission's annual snapshot of the market published Wednesday as evidence of this.

"Competition is the answer to this question. Here citizens have a choice of telecom supplier," Reding said, adding that if a telecom operator did prioritize traffic in a way the consumer doesn't approve of then the consumer will switch.

The Commission's review of the sector showed that last year more than 20 million people switched telecom providers, taking their phone numbers with them. More than 84 million subscribers have switched providers since 2003, when it became possible to do so and still keep the same phone number.

This contradicts a study released last week by Internet firms including Google, Yahoo and eBay subsidiary Skype, which showed that only a minority, of between 7 percent and 15 percent of consumers, would actually consider switching providers.

If one of the former telecom monopolies, for example Deutsche Telekom, did start prioritizing traffic to the detriment of a rival like the Internet telephony firm Skype, then competition rules would kick in, sparking an antitrust probe, Reding said.

But this is no comfort to Internet companies.

"A small internet firm would have disappeared long before the conclusion of an antitrust case," said one executive from an Internet firm who asked not to be named. "Competition rules aren't sufficient even if they did apply to non-dominant firms. There have to be other safeguards," he said.

Google, Skype, PriceMinister, Yahoo, and DailyMotion said as much in a statement issued Thursday.

"Existing competition law and transparency for consumers alone will not be enough to keep the Internet open," they said. "Parliament's and member states' support for crucial provisions is essential in order to safeguard end user rights," they added.

Malcolm Harbour, one parliamentarian involved in the final negotiations of the new rules, dismissed these concerns as "hysterical."

Reding expressed some sympathy for his position. "He is trying to keep an equilibrium between the freedom of the Internet and free access to information on one side and a solid telecom backbone on the other," she said.

But privately the Commission shares some of the concerns of the Internet firms. "It is clear that competition rules aren't enough," said one person close to Reding.

The lawmakers return to the negotiating table on Monday in a final attempt to hammer out a compromise on this and a small handful of other issues that remain to be settled.

Failure to reach a compromise then will make it difficult to agree the law changes ahead of European Parliament elections in the summer, causing a delay of at least six months.

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