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The EU Strikes a Blow For Net Neutrality. And Against it.

Last September, the EU fleshed out its plans for a major telecom regulatory overhaul. The package of proposals, championed by EU Digital Agenda commissioner Neelie Kroes, included the very significant declaration of an EU dedication to protecting net neutrality. From a digital social justice standpoint, net neutrality is a critical right so the EU’s announced reform package was, in many ways, some very good news:

Europe Lays Out Its Most Ambitious Reform Plan Yet: No More Roaming Premiums, Enforced Net Neutrality, And More
Posted Sep 11, 2013 by Ingrid Lunden

The European Commission has over the years been chipping away at how big carriers have milked European consumers in areas like international calling charges and broadband usage for certain content. Now, in a spirit of getting the region of 28 disparate nations to behave as one, the regulators have taken their biggest swing of the bat yet: a new legislative package that proposes to cut out international calling premiums and services that offer different broadband speeds depending on the content broadcast; and on the carrier side new rules that would effectively cut down red take to make Europe into a single market.

The Commission, which formally laid out its intentions today but has been working on them for a while, is calling the plan its most ambitious in 26 years. If it gets approved, it could have huge implications not just for consumers and their big carrier overlords, but also on newer players like OTT video providers and startups offering networked services.

But whether the EC will ever manage to get big carriers and countries to agree to it will be another story. We’ve already seen lobbyists making pre-emptive attempts to scupper the proposals, with Europe forging ahead anyway. If approved, the first changes could start to take effect by July 2014.

“Further substantial progress towards a European single market for telecoms is essential for Europe’s strategic interests and economic progress,” EC president Jose Manuel Barroso said in a speech today in Brussels, “for the telecoms sector itself and for citizens who are frustrated that they do not have full and fair access to internet and mobile services.”

VP Neelie Kroes, the Digital Agenda commissioner who has long been arguing for these changes, was behind this new package. “The legislation proposed today is great news for the future of mobile and internet in Europe,” she said in a statement. “The European Commission says no to roaming premiums, yes to net neutrality, yes to investment, yes to new jobs. Fixing the telecoms sector is no longer about this one sector but about supporting the sustainable development of all sectors.”

Right now, the EC estimates that telecoms services account for 9% of Europe’s digital economy “because all sectors increasingly depend on connectivity to be globally competitive and deliver services.” The idea is that by bringing down some of these existing barriers, that percentage — and the economy — will grow. Despite many years of incremental reforms, “there is no telecoms company that operates across the whole EU, and both operators and customers face differing prices and rules,” the Commission noted in a statement today.

Here’s the run-down of some of the highlights of the new proposals, with the latest draft of the proposals, and a summary, embedded below that.

Single set of rules for carriers to follow: Those who are rolling out services across all 28 markets in Europe would need only a single authorization rather than 28.

No more roaming premiums on inbound calls: From July 2014, no more incoming call charges across the EU. Also carriers will either offer single European price plans or the ability to let consumers easily select carriers that offer calling plans outside a user’s home market. (Since 2012, carriers already have been forced to offer cheaper prices for mobile data; this builds on that.)

No more roaming call charges outbound: This applies to both mobile and fixed calls and would make the price of a call within the EU the same price as a call in your home country. (Long distance becomes the same price as local.)

Net neutrality: Making sure broadband carriers are not short-changing consumers over certain content by throttling speeds has been a long-argued issue in Europe and other parts of the world. This is the EC’s attempt to right the issue once and for all here. Carriers will not be allowed to block or slow down delivery of certain content; they will however be allowed to offer different kinds of services that allow for some streaming (such as data-intensive video) and not others. Users who feel they are getting shortchanged can walk away with no penalties, or as the EC puts it, “the obligation on providers to provide unhindered connection to all content, applications or services being accessed by end-users – also referred to as Net Neutrality – while regulating the use of traffic management measures by operators in respect of general internet access.”

The EU’s declared dedication to net neutrality was great news back in September, but after the recent US appeals court ruling striking down net neutrality in the US, a dedication to net neutrality also becomes a business opportunity because if the US wants to turn itself into the land of internet inequality there’s nothing stopping the EU from loudly pointing this out. Of course, it helps if the EU’s version of net neutrality actually results in net neutrality:

Can Europe really offer startups a better deal on net neutrality?
By David Meyer
Jan. 15, 2014 – 7:15 AM PST

Europe’s digital chief is already claiming that “newly disadvantaged U.S. startups” should move across the Atlantic — but a similar net neutrality disaster could still happen in the EU, if key proposals aren’t tightened up.

As net neutrality goes down in flames stateside…

Neelie Kroes @NeelieKroesEU

Watching US #netneutrality news. Maybe I shd invite newly disadvantaged US startups to EU, so they have a fair chance http://online.wsj.com/news/articles/…
5:35 AM – 15 Jan 2014
Appeals court strikes down FCC’s net neutrality rules

A federal appeals court on Tuesday struck down the Federal Communications Commission’s open Internet rules on Tuesday, in a ruling that could give broadband providers more room to charge content…
Wall Street Journal @WSJ
156 Retweets 54 favorites

Kroes, the European Commissioner in charge of the digital economy, has a point. The potential end of net neutrality rules is going to be really bad for U.S. consumers and startups alike (as my colleague Stacey Higginbotham has noted, the likes of Google and Netflix are actually winners in this scenario, as they have deep pockets).

However, some may dispute Kroes’s characterization of Europe as a safe haven. The Commission recently adopted proposals (that need to be ratified this year) that many see as falling short of promising true net neutrality.


“Providers of content, applications and services and providers of electronic communications to the public should therefore be free to conclude specialised services agreements on defined levels of quality of service as long as such agreements do not substantially impair the general quality of internet access services.”

In other words, ISPs should be able to charge content providers — offering, say, IPTV or videoconferencing services — for joining a new fast lane, as long as the regular internet doesn’t suffer. As network investment would probably gravitate towards that fast lane, good luck with maintaining the quality of all the other traffic over time.

One major point in Kroes’s favor is this: the European broadband scene is for the most part much more competitive than that in the U.S. – there are simply more players in most areas, making lock-in less of an issue. On top of that, another part of her telecoms reforms would ensure that people can switch provider at no penalty if they think they’re not getting a good-enough service, so there would arguably be a good incentive to keep everything running smoothly.

But that’s about consumption. On the supply side, there’s still a good deal of scope in there for replication of the scenario the U.S. now faces, with big players able to outspend the minnows and their pesky innovation, and buy their way into “free with the package” prominence. The devil is in the details, and fans of competition will be hoping for the language of the EU proposals to be tightened up before they hit the European Parliament for a vote.

So it appears that the EU’s telecom overhaul might actually protect net neutrality. But it also might just end up incentivizing telecoms to no longer upgrade their lower-cost data-infrastructure since the proposed rules would only prevent companies from offering service packages that would “substantially impair the general quality of internet access services”. Upgrading and maintaining the “general quality of internet access services” doesn’t appear to be a focus of the proposed legislation.

Net Neutrality or Business as Usual?
Still, as the above article points out, due to the highly fragmented EU telecom market – where no EU-wide oligopoly exists – market competition alone might enforce some degree of net neutrality even if the troubling loopholes persist. Hope springs eternal! Unfortunately, large players in the EU telecom market are already lobbying for exactly that kind of large scale consolidation. Large players with hopes and dreams of their own. Large players like Deutsche Telekom:

Bloomberg Businessweek
Europe’s Tech Lag and A Leg Up From Snowden
By Diane Brady January 20, 2014

Deutsche Telekom’s new CEO and the man behind Angry Birds seem to agree on one thing: the scandal over U.S. spying on allies could come at a cost to U.S. companies. At the opening session of Munich’s DLD Conference on Jan. 19, Rovio chief Peter Vesterbacka called it “the best marketing campaign for European companies ever,” forcing business leaders to think twice about storing sensitive data in the U.S. For Timotheus Höttges, who took over the top job at Deutsche Telekom a few weeks ago, the key is how they rebuild trust.

The depth of feeling around the issue signals that President Obama’s promise to rein in the National Security Agency’s reach may not be sufficient to address allies’ concerns. As Paul-Bernhard Kallen, a fellow panelist and CEO of Hubert Burda Media, put it: “Everybody has been blaming China. What is now apparent is that it’s not the old friends who are the real friends.” Kallen, whose media company hosts the pre-Davos gathering, was also joined onstage by Lutz Schüler of German cable operator Unitymedia Kabel.

Together, the four men debated what it would take to accelerate competition in the fragmented and highly regulated European market. Telecom chief Höttges argued the first step is to ease up on rules, arguing that “we’re regulated on whatever we do.” Second, he wants an environment that allows him to charge sufficient revenues to make a profit. While U.S. and European data traffic have both jumped 900 percent over the past five years, he said, that’s enabled U.S. telecoms to grow annual revenues by roughly 35 percent while European carriers’ have seen sales drop. The comparison with Asia is similar. “There seems to be a digital divide between Europe and the rest of the world,” said Höttges. With more than 200 carriers in Europe, vs. four in markets like the U.S. or China, that may not be a surprise.

One of the biggest issues for the European leaders was preferential treatment of foreign players. Unitymedia’s Schüler complained that Germany gave Netflix access but struck down efforts to create a homegrown version through a partnership with ProSieben and RTL. “The change which has to happen is deregulation,” he said. “There’s no digital brand coming out of Germany …To the Googles of this world, Deutsche Telekom is a dwarf. We all need scale.”

Kallen agreed, talking about the need for a level playing field. A website that operates out of Luxembourg, for example, can sell e-books into Germany at a negligible rate while a local producer has to charge a 19 percent sales tax. “My biggest concern is that the regulatory environment isn’t fair to all the competitors,” he said.

Note that when Deutsche Telekom’s CEO says he wants “an environment that allows him to charge sufficient revenues to make a profit,” what he’s saying is “I want to get rid of net neutrality“.

Also note that when Deutsche Telekom’s CEO declares, “to the Googles of this world, Deutsche Telekom is a dwarf. We all need scale,” what he’s saying is the EU’s telecom market needs to consolidate into an oligopoly with Deutsche Telekom near the top. And based on current industry trends, massive consolidation of the EU telecom sector into an oligopoly is probably what we should expect:

The Wall Street Journal
Europe Awaits Wave of Telecom Consolidation
Companies, Bankers Eye Takeover Targets; Telefónica-KPN Deal a Litmus Test for EU

By Sam Schechner and Eyk Henning

July 28, 2013 9:37 p.m. ET

A rising tide of deal making in Europe’s troubled telecom sector is spurring more companies to dip their toes in the water, raising hopes for a long-awaited wave of consolidation.

With Telefónica SA’s agreement last week to buy the German mobile-phone unit of Dutch telecom company Royal KPN NV in a deal worth €8.1 billion ($10.6 billion), the value of European mergers and acquisitions in the telecom sector has hit a more than decadelong high. This comes on the back of cheap financing, possible regulatory changes and executives’ fear of being left behind.

Now, with the German mobile deal representing a key test of European Union willingness to green light deals that reduce the number of players in a given country, bankers and telecommunications executives say they are already looking at other possible takeover targets.

“I think we are in the beginning of this process, of this cycle,” said Stéphane Richard, chief executive of France’s Orange, on a conference call to discuss the company’s first-half results. “As far as Orange is concerned, we are prepared to play the maximum role in this consolidation move if it really happens.”

The fallout could eventually be a deep—and executives say overdue—shakeout in Europe’s patchwork telecom industry. Across the EU, well over a hundred mobile and fixed operators in 28 countries are owned by over 40 major groups. That compares with just four big mobile operators, and an increasingly consolidated cable business in the U.S.

Market conditions are making consolidation easier. Fragmentation and competition have pushed down profits and share prices. Shares in European telecom companies in the Stoxx 600 index have fallen by more than 74% since February 2000. In that time the broader Stoxx 600 index has declined by only 22%.

Antitrust policy at the EU’s executive arm, the European Commission, and within some European countries has been an obstacle to in-country consolidation. In France, for instance, a fourth mobile operator launched just last year, and the head of the country’s antitrust watchdog made clear in March that he would block any deal that reduced the number of actors.

But that may be starting to change elsewhere. Last year, Brussels approved the takeover of an operator in Austria, bringing the market from four operators to three—albeit with hefty conditions.

Now another EU commissioner, Neelie Kroes, is proposing new continentwide rules for the telecom sector that are aimed in part at encouraging cross-border competition. The proposal, which is still being discussed, “should support the case for consolidation,” analysts from HSBC said in a recent note.

Telefónica’s German deal would provide perhaps the biggest test yet of the new wave. “If this deal goes ahead and gets validated by Brussels, you give the green light to four-to-three deals in other countries,” said Frederic Boulan, a telecommunications analyst at Nomura International PLC.

“We have too many players in Europe,” Telefónica Chief Operating Officer José María Alvarez-Pallete said last week on a conference call to discuss results. “Consolidation is going to happen.”

Snowden Affair or Business As Usual?
We’ll clearly have to wait and see how much consolidation is in store for the EU telecom, but it’s obvious that the EU telecom market is facing some major changes in coming years. Some of those changes will no doubt have been catalyzed by the Snowden affair. But, business being what it is, a lot of those changes will also be driven by business as usual:

NSA Scandal May Help Build Cyber-Barriers
By Susan Crawford Dec 27, 2013 8:00 AM CT

The smooth flow of online communication and commerce between Europe and the U.S. is at risk of interruption, thanks in part to naked opportunism on the part of European telecommunications giants. If the governments involved fail to keep online barriers between the continents low, the Internet’s potential to be an engine of global economic growth will be constrained.

Take Deutsche Telekom AG (DTE) (DTE), the largest provider of high-speed Internet access and wireless services in Germany and the largest telecommunications organization in the European Union. To expand, the company will have to acquire additional communications companies; in order to do so, it hopes to free itself from the German government’s 32 percent ownership in the company. It has also expressed a desire to diversify into non-telecommunications lines of business, such as technical-services delivery.

The snooping scandal at the U.S. National Security Agency may help Deutsche Telekom achieve both these goals. T-Systems International GmbH, the company’s 29,000-employee-strong distribution arm for information-technology solutions, has been losing money selling systems-integration and data-processing services. Now, in response to customers’ loss of trust in American services, Reinhard Clemens, T-Systems’ chief executive officer, says he wants to refocus the company on providing cloud services.

Deutsche Telekom has also proposed to help Europe avoid NSA surveillance by creating “Schengen area routing,” a network for the 26 European countries that have agreed to remove passport controls at their borders. This network would supposedly allow these nations to securely exchange data among themselves. Conveniently, the Schengen area does not include the U.K., which is now known to be closely cooperating with the NSA.

Deutsche Telekom undoubtedly thinks that it will be able to collect fees from network operators in other countries that want their customers’ data to reach Deutsche Telekom’s customers — and that the company has the market power to raise those tolls ever higher. As things stand, networks already try to avoid Deutsche Telekom’s wires when routing Internet traffic to German customers because the company refuses to swap traffic on a no-payment basis — the common practice of competitive carriers around the world.

With hundreds of lobbyists in Berlin, Deutsche Telekom can see to it that if any German legislator is asked what to do about the NSA problem, he or she will respond with “Secure routing of traffic.” Surely this secure Schengen area routing would be even smoother if Deutsche Telekom owned more of the telecommunications operators involved.

Meanwhile, European telecom regulators, anxious to help European companies avoid the risk of being bought up by Verizon Communications Inc., AT&T Inc. or Carlos Slim, the Mexican wireless monopolist, are encouraging consolidation — with Deutsche Telekom’s full support. “Now is the right time” for consolidation, Deutsche Telekom Chief Executive Officer Rene Obermann said in November.

Regulators are being told by the telecommunications incumbents that European communications will be more secure when fewer operators can work together to raise electronic barriers at the borders.

The more things change the more they stay the same it seems. Still, changes of some sort appear to be on the way for the internet as we know it and it remains very unclear what shape the telecom overhaul will finally take this year. So stay tuned EU internet users! Although it might take years of industry consolidation to discover the real fate of net neutrality in the EU so you may not want to stayed tuned via online streaming services. That could get expensive.


10 comments for “The EU Strikes a Blow For Net Neutrality. And Against it.”

  1. What’s that? The Comcast-Time Warner Cable merger may heighten calls for net neutrality? Uh, yeah, let’s hope so:

    The Los Angeles Times
    Comcast-Time Warner Cable deal may heighten calls for net neutrality

    By Dawn C. Chmielewski This post has been updated as indicated below

    February 13, 2014, 3:28 p.m.

    Comcast Corp.’s $45.2-billion bid to acquire Time Warner Cable would expand the reach of the nation’s largest residential Internet provider into one-third of America’s broadband households.

    The digital land-grab is likely to serve as a rallying cry for those who advocate government regulation over broadband providers.

    The U.S. Court of Appeals in Washington struck down the FCC’s net neutrality rules earlier this year, in a case brought by Verizon Communications Inc. The ruling would allow Internet providers to impose fees on companies like Netflix to give priority treatment to the movies and TV shows it streams across its network.

    Comcast agreed to abide by the principle of net neutrality — meaning, it would treat all online traffic equally and not give preferential treatment to its own video — as a condition of its 2011 acquisition of NBCUniversal.

    The consent decree, which is designed to protect competition, extends through the end of 2017. Time Warner Cable would also be subject to these same terms, if the merger is consummated.

    NScreenMedia founder Colin Dixon said Comcast has found a way to give its online movie and TV streaming service, Xfinity StreamPix, a competitive edge over rivals like Netflix. The service, which costs $5 a month, is not subject to the data-use limits Comcast imposes on its high-speed Internet customers.

    “This is Comcast preferring its video service on broadband over other video services,” Dixon said. “That itself could well make regulators start looking at this much, much more closely.”

    Updated at 4:42 p.m.:

    Comcast Executive Vice President David Cohen said Comcast is experimenting with data-use thresholds in markets including Chattanooga, Tenn., and in Atlanta. Services that subscribers access via the Internet – including Netflix and Hulu, a streaming TV service that is one-third owned by Comcast’s NBCUniversal group, are counted against this cap. But StreamPix taps into Comcast’s private network, and doesn’t run the meter.

    “We’re not discriminating against services we don’t own,” Cohen said. “Because many of the services we do own also count against the data usage thresholds.”

    Netflix Chief Executive Reed Hastings talked about the importance of preserving net neutrality during the company’s fourth-quarter earnings call last month with investors.

    “A domestic [Internet Service Provider] now can legally impede the video streams that members request from Netflix, degrading the experience,” Hastings wrote in a message to investors. “The motivation could help get Netflix to pay fees to stop this degradation. Were this draconian scenario to unfold … we would vigorously protest.”

    James McQuivey, a digital media analyst with Forrester Research, doubts Comcast would “throttle” or slow the streaming of online video from subscription services like Netflix — especially as it faces heightened regulatory scrutiny.

    But the Comcast-Time Warner Cable merger would signal a different competitive threat.

    “Comcast has ambitions that reach beyond its footprint, likely beyond the Time Warner Cable footprint as well,” McQuivey said. “Meaning that Comcast will eventually invest in its StreamPix streaming service to be a direct Netflix competitor.”

    “We’re not discriminating against services we don’t own…Because many of the services we do own also count against the data usage thresholds.” That’s a phrase that Americans are probably going to be hearing from media executives with increasing frequency going forward.

    So should EU residents also begin fearing this phrase too? After all, the threat to US net neutrality created by the preferred treatment Comcast gives its StreamPix service sounds rather similar to the warnings issued after the EU’s proposed changes. But if yesterday’s vote on net neutrality in the EU’s Civil Liberties, Justice and Home Affairs (LIBE) Committee is indicative of what to expect, many of those troubling loopholes in the EU’s proposed overhaul might be closing:

    Fourth vote on the telecom single market: a strong call for net neutrality in Europe
    5:18pm | 13 February 2014 |
    by Raegan MacDonald, Estelle Masse, Jon Fox

    Yesterday, the Civil Liberties, Justice and Home Affairs (LIBE) Committee of the European Parliament voted on Digital Agenda Commissioner Neelie Kroes’ Telecom Single Market proposal. The initial proposal from the European Commission included provisions that put network neutrality at risk across Europe. Access welcomes yesterday’s vote in the LIBE Committee, which addressed several of the problematic provisions and proved its commitment to protecting the internet as a platform for free expression and innovation.

    The LIBE Committee adopted a definition of “specialised services” that prevent new forms of discrimination online by ensuring that such services will not lead to the creation of a two-tiered internet. LIBE rejected the original proposal by the European Commission which would enable telecommunication companies to create arbitrary tolls limiting access to internet services. In practical terms, this would create a “fast lane” for a few privileged internet services, while other content and services are left to languish in the “slow lane”. Moreover, members of the LIBE Committee blocked Internet Services Providers (ISPs) from limiting connection speeds, quality of service, as well as blocking online applications and services.

    The LIBE Committee also put forward a proposal that brings greater legal clarity to users by changing the word “freedom” to “rights”. The “freedom” to choose among services would enable ISPs to offer a wide variety of confusing services that ultimately do little to protect user rights online. This minor change in wording significantly raises the level of protection for users’ rights. Last but not least, following the example of the Culture and Education Committee (CULT), LIBE introduced an excellent definition of principle of net neutrality being described as the “key driver of the unprecedented innovation and economic activity in the digital age”.

    Regrettably, the text adopted by the LIBE Committee leaves two harmful loopholes in breach of the E.U. Charter of Fundamental Rights and the Treaty of the European Union. First, the proposal allows the use of traffic management measures, such as throttling, for national security purposes which are outside of the scope of competence of the European Union. Second, the proposal empowers ISPs to conduct law enforcement activities on their own initiative outside the rule of law.

    Final obstacles to net neutrality in the European Parliament

    Four of the five European Parliament’s Committees tasked with amending the Commission’s proposal have now voted. These four votes, meant to advise the lead Industry, Research and Energy (ITRE) Committee as it make its final decision later this month, were broadly supportive of net neutrality. However, as of now, it is unclear which direction the ITRE Committee is leaning towards in regards to defending network neutrality in Europe.

    ITRE’s draft report prepared by the conservative Member of the European Parliament, Pilar del Castillo Vera, includes provisions that would empower telecommunications companies to engage in discriminatory practices online. Access, together with EDRi, provided an analysis of the ITRE draft report highlighting provisions that would undermine users’ online rights. Interestingly, the text adopted yesterday in the LIBE Committee was led by a fellow conservative party member, MEP Salvador Sedó i Alabart, who has worked constructively to put forward provisions that would guarantee an open internet across Europe.

    It is clear that Ms. Del Castillo’s recommendations on the future of the open internet differ from those proposed by many other members of the European Parliament, including those of her own party. The European People’s Party, Ms. Del Castillo’s own political party, has made strong calls for the adoption of net neutrality principles into E.U. law (see here and here). It is then unclear whose interests Ms. Del Castillo is representing, the public’s or telecom’s.

    So it’s looking like net neutrality is probably going the way of the white rhino in the US but it could still hang on in the EU. So not all of the net neutrality news these days is ominous, especially the news coming out of the EU…although that part about the EU ISPs getting the power to conduct law enforcement activities on their own initiative outside the rule of law sounded kind of ominous.

    Posted by Pterrafractyl | February 13, 2014, 10:49 pm
  2. The potential merger of Comcast and Time Warner is understandably raising quite a few questions about the impact the creation of such a massive a telecom behemoth could have on US consumers. Another question raised by this merger: what’s going happens to the telecom sector employees when their industry gets even closer to becoming a monopoly?

    The Techtopus: How Silicon Valley’s most celebrated CEOs conspired to drive down 100,000 tech engineers’ wages

    By Mark Ames
    On January 23, 2014

    In early 2005, as demand for Silicon Valley engineers began booming, Apple’s Steve Jobs sealed a secret and illegal pact with Google’s Eric Schmidt to artificially push their workers wages lower by agreeing not to recruit each other’s employees, sharing wage scale information, and punishing violators. On February 27, 2005, Bill Campbell, a member of Apple’s board of directors and senior advisor to Google, emailed Jobs to confirm that Eric Schmidt “got directly involved and firmly stopped all efforts to recruit anyone from Apple.”

    Later that year, Schmidt instructed his Sr VP for Business Operation Shona Brown to keep the pact a secret and only share information “verbally, since I don’t want to create a paper trail over which we can be sued later?”

    These secret conversations and agreements between some of the biggest names in Silicon Valley were first exposed in a Department of Justice antitrust investigation launched by the Obama Administration in 2010. That DOJ suit became the basis of a class action lawsuit filed on behalf of over 100,000 tech employees whose wages were artificially lowered — an estimated $9 billion effectively stolen by the high-flying companies from their workers to pad company earnings — in the second half of the 2000s. Last week, the 9th Circuit Court of Appeals denied attempts by Apple, Google, Intel, and Adobe to have the lawsuit tossed, and gave final approval for the class action suit to go forward. A jury trial date has been set for May 27 in San Jose, before US District Court judge Lucy Koh, who presided over the Samsung-Apple patent suit.

    In a related but separate investigation and ongoing suit, eBay and its former CEO Meg Whitman, now CEO of HP, are being sued by both the federal government and the state of California for arranging a similar, secret wage-theft agreement with Intuit (and possibly Google as well) during the same period.

    The secret wage-theft agreements between Apple, Google, Intel, Adobe, Intuit, and Pixar (now owned by Disney) are described in court papers obtained by PandoDaily as “an overarching conspiracy” in violation of the Sherman Antitrust Act and the Clayton Antitrust Act, and at times it reads like something lifted straight out of the robber baron era that produced those laws. Today’s inequality crisis is America’s worst on record since statistics were first recorded a hundred years ago — the only comparison would be to the era of the railroad tycoons in the late 19th century.

    Shortly after sealing the pact with Google, Jobs strong-armed Adobe into joining after he complained to CEO Bruce Chizen that Adobe was recruiting Apple’s employees. Chizen sheepishly responded that he thought only a small class of employees were off-limits:

    I thought we agreed not to recruit any senior level employees…. I would propose we keep it that way. Open to discuss. It would be good to agree.

    Jobs responded by threatening war:

    OK, I’ll tell our recruiters they are free to approach any Adobe employee who is not a Sr. Director or VP. Am I understanding your position correctly?

    Adobe’s Chizen immediately backed down:

    I’d rather agree NOT to actively solicit any employee from either company…..If you are in agreement, I will let my folks know.

    The next day, Chizen let his folks — Adobe’s VP of Human Resources — know that “we are not to solicit ANY Apple employees, and visa versa.” Chizen was worried that if he didn’t agree, Jobs would make Adobe pay:

    if I tell Steve [Jobs] it’s open season (other than senior managers), he will deliberately poach Adobe just to prove a point. Knowing Steve, he will go after some of our top Mac talent…and he will do it in a way in which they will be enticed to come (extraordinary packages and Steve wooing).

    Indeed Jobs even threatened war against Google early 2005 before their “gentlemen’s agreement,” telling Sergey Brin to back off recruiting Apple’s Safari team:

    if you [Brin] hire a single one of these people that means war.

    Brin immediately advised Google’s Executive Management Team to halt all recruiting of Apple employees until an agreement was discussed.

    In the geopolitics of Silicon Valley tech power, Adobe was no match for a corporate superpower like Apple. Inequality of the sort we’re experiencing today affects everyone in ways we haven’t even thought of — whether it’s Jobs bullying slightly lesser executives into joining an illegal wage-theft pact, or the tens of thousands of workers whose wages were artificially lowered, transferred into higher corporate earnings, and higher compensations for those already richest and most powerful to begin with.

    Over the next two years, as the tech industry entered another frothing bubble, the secret wage-theft pact which began with Apple, Google and Pixar expanded to include Intuit and Intel. The secret agreements were based on relationships, and those relationships were forged in Silicon Valley’s incestuous boards of directors, which in the past has been recognized mostly as a problem for shareholders and corporate governance advocates, rather than for the tens of thousands of employees whose wages and lives are viscerally affected by their clubby backroom deals. Intel CEO Paul Otellini joined Google’s board of directors in 2004, a part-time gig that netted Otellini $23 million in 2007, with tens of millions more in Google stock options still in his name — which worked out to $464,000 per Google board event if you only counted the stock options Otellini cashed out — dwarfing what Otellini made off his Intel stock options, despite spending most of his career with the company.

    Meanwhile, Eric Schmidt served on Apple’s board of directors until 2009, when a DoJ antitrust investigation pushed him to resign. Intuit’s chairman at the time, Bill Campbell, also served on Apple’s board of directors, and as official advisor — “consigliere” — to Google chief Eric Schmidt, until he resigned from Google in 2010. Campbell, a celebrated figure (“a quasi-religious force for good in Silicon Valley”) played a key behind-the-scenes role connecting the various CEOs into the wage-theft pact. Steve Jobs, who took regular Sunday walks with Campbell near their Palo Alto homes, valued Campbell for his ability “to get A and B work out of people,” gushing that the conduit at the center of the $9 billion wage theft suit, “loves people, and he loves growing people.”

    Could similar informal agreements like this arise in the telecom sector? Could there already be one in place? It certainly didn’t sound like it was too hard for an industry giant like Apple to pressure smaller competitors to agree to secret wage suppression. And, more generally, what other sectors of the economy might be experiencing similar wage scams as ownership in America continues to concentrate at the top?

    Posted by Pterrafractyl | February 15, 2014, 6:46 pm
  3. Some potentially big news on the US net neutrality front, although its unclear if it’s good news: The FCC has decided not to reinstate the net neutrality rules that were overruled last month. Instead, anti-competitive behavior will be dealt with on a case-by-case basis. So it’s sort of sounds like an industry-friendly ‘net neutrality-lite’:

    Ars Technica
    FCC won’t appeal Verizon ruling, will regulate ’Net on “case-by-case basis”
    Wheeler keeps “common carrier” threat on the table in case ISPs misbehave.

    by Jon Brodkin – Feb 19 2014, 11:44am CST

    The Federal Communications Commission will not appeal a court ruling that overturned the FCC’s anti-blocking and anti-discrimination rules, Chairman Tom Wheeler announced today. Instead of trying to reinstate rules that prevented Internet service providers from blocking or disfavoring Web services such as Netflix and YouTube, the Commission will try to regulate anti-competitive behavior on a “case-by-case basis.”

    Verizon succeeded in overturning most of the Open Internet Order, the FCC’s net neutrality regulation, when its suit saw the US Court of Appeals for the District of Columbia Circuit strike down major portions of the regulation last month. The ruling left the FCC room to operate, though. The commission could reinstate its anti-blocking and anti-discrimination rules if it reclassified Internet providers as telecommunications services governed by Title II of the Communications Act, also known as “common carriers.”

    Essentially, the ruling suggested that the FCC under previous Chairman Julius Genachowski screwed up the Open Internet Order by imposing common carriage rules on ISPs without declaring ISPs to be common carriers. But the new chairman, Wheeler, doesn’t plan to reclassify broadband. He noted that the court decision affirmed the commission’s belief that Section 706 of the Telecommunications Act of 1996 should “empower it to promulgate rules governing broadband providers’ treatment of Internet traffic.”

    However, rules justified by Section 706 can’t be identical to common carriage rules. Consumer advocates, including former FCC Commissioner Michael Copps, urged the commission to reclassify broadband providers, saying straightforward rules are needed to prevent ISPs from discriminating against services that compete against the ISP’s own video and voice offerings. For example, an Internet service provider like Verizon could either block traffic from Web services like Netflix or degrade Netflix traffic unless the video provider paid for a faster path to consumers. Verizon notably offers its own TV service.

    Wheeler said he will “keep Title II authority on the table” and that it “remains a part of the Communications Act, [and] the Commission has the ability to utilize it if warranted. Accordingly, the Commission’s docket on Title II authority remains open.” That seems to be a warning to Internet providers that they will face reclassification if they misbehave.

    Because of the ability to regulate using Section 706 and the threat of reclassification, Wheeler said, “The commission will not initiate any further judicial action in connection with the Verizon decision.” Section 706 says the commission must encourage deployment of advanced telecommunications capability to all Americans, and that to achieve the goal it can enact measures that promote competition and remove barriers to infrastructure investment.

    Using Section 706 authority, Wheeler said he will draft new rules. Here is the key passage from Wheeler’s written statement:

    I intend to ask my fellow commissioners to:

    Enforce and enhance the transparency rule. The Court of Appeals has affirmed the Open Internet Order’s transparency rule, which requires that network operators disclose how they manage Internet traffic. This is more significant than many people may realize. We should consider ways to make that rule even more effective. For example, an explicit purpose of the rule is to afford edge providers the technical information they need to create and maintain their products and services as well as to assess the risks and benefits of embarking on new projects.
    Fulfill the “no blocking” goal. The DC Circuit recognized the importance of the Open Internet Order’s ban on blocking Internet traffic, but ruled that the Commission had not provided sufficient legal rationale for its existence. We will carefully consider how, consistent with the court opinion, we can ensure that edge providers are not unfairly blocked, explicitly or implicitly, from reaching consumers, as well as ensuring that consumers can continue to access any lawful content and services they choose.
    Fulfill the goals of the non-discrimination rule. We will carefully consider how Section 706 might be used to protect and promote an Open Internet consistent with the DC Circuit’s opinion and its earlier affirmance of our Data Roaming Order. Thus, we will consider (1) setting an enforceable legal standard that provides guidance and predictability to edge providers, consumers, and broadband providers alike; (2) evaluating on a case-by-case basis whether that standard is met; and (3) identifying key behaviors by broadband providers that the Commission would view with particular skepticism.

    Wheeler was appointed by President Obama to lead the FCC last year. Previously, he was a venture capitalist and a lobbyist for the cable and wireless industries, having led both the National Cable & Telecommunications Association (NCTA) and Cellular Telecommunications and Internet Association (CTIA).

    FCC could model new rules on its data roaming policy

    An FCC senior official who is familiar with Wheeler’s thinking discussed the chairman’s plans with reporters today. The official said Wheeler instructed his staff to draft a proposal that fulfills nondiscrimination goals and that there could be something for the Commission to vote on in a few months.

    New rules for home broadband might establish a minimum level of service that ISPs must furnish to “edge providers,” companies like Netflix that provide Web services to home and business Internet users. The FCC official said the court ruling suggested that the FCC might be able to create a no-blocking rule that requires a minimum level of service. But when asked whether Wheeler will propose a no-blocking rule using its Section 706 authority, the official said it’s too early to say because the new rules haven’t been written.

    While the official didn’t specify exactly how the new rules will achieve the no-blocking and no-discrimination goals, he said they may be similar to the FCC’s data roaming requirements, which Verizon Wireless unsuccessfully challenged. Those rules require wireless carriers to provide data roaming to other carriers “on commercially reasonable terms and conditions.”

    The data roaming rules create a binding requirement that carriers must offer commercially reasonable terms, provide guidance to help monitor whether terms being offered are reasonable, and lets the Commission decide on a case-by-case basis whether competition has been harmed, the official said.

    Wheeler also said he plans to solicit public comment with a new docket titled “Protecting and Promoting the Open Internet.” He will also “[h]old Internet Service Providers to their commitment … [to] continue to honor the safeguards articulated in the 2010 Open Internet Order.” That’s a reference to an NCTA statement that “[t]he cable industry has always made it clear that it does not—and will not—block our customers’ ability to access lawful Internet content, applications, or services.” Additionally, Comcast agreed to abide by no-blocking and no-discrimination rules until 2018 in exchange for approval of its merger with NBCUniversal.

    Case-by-case regulation is ineffective, skeptics say

    Senior Staff Attorney John Bergmayer of consumer advocacy group Public Knowledge has previously warned that case-by-case regulation is ineffective. “We’re in a bad place with net neutrality right now because the FCC got itself tied up in a knot with subtle lawyering,” Bergmayer wrote. “Instead of building on its successes as a telecommunications regulator, it tried to come up with a ‘third way.’ I’m skeptical that yet more subtle lawyering—a fourth way or a fifth way—is going to save us.”

    Public Knowledge CEO Gene Kimmelman released a statement today, saying, “While skeptical that the FCC’s initial focus on section 706 will yield meaningful results, we are encouraged to see that the FCC plans to keep its ‘reclassification’ proceeding open.”

    Consumer advocacy group Free Press today said, “The FCC can’t protect free speech and prevent discrimination under the so-called Section 706 authority discussed in today’s announcement. Last month’s court decision made that crystal clear. Section 706 doesn’t work for Net Neutrality or any of the FCC’s stated policy goals. If the agency really wants to stop censorship, discrimination, and website blocking, it must reclassify broadband as a telecommunications service under Title II of the Communications Act. The FCC’s reluctance to reverse its past mistakes is extremely short-sighted.”

    Posted by Pterrafractyl | February 19, 2014, 2:32 pm
  4. Well here’s an important opportunity to make lemonade out of lemons: Talking Points Memo has a piece written by Johnothan Taplin, one of the people behind ‘The Annenberg Center Principles for Network Neutrality’, a 2006 proposal that turns out to be very similar to actual net neutrality rules published by the FCC last week. Taplin’s 2006 proposal involved making a ‘two-lane’ internet where services dependent on more bandwidth are allowed to pay ISPs for that extra bandwidth beyond what was considered neutral and sufficient standard. In the new FCC ruling, ISPs are going to be allowed to block content from providers that don’t pay the ISP a “commercially reasonable” fee.

    This two-lane approach understandably has many outraged over what could be the death of the internet as we know it. If ISPs can start throttling content for those that don’t pay the fee, the internet of the future could be effectively dominated by content generated almost exclusively by the media giants because smaller competitors will simply not be able to pay the necessary fees to get the needed bandwidth. That should be a pretty terrifying future scenario for just about anyone that isn’t a media oligarch.

    But as Jonathan Talpin points out in him piece below, the original 2006 proposal his group developed included another key factor that was supposed to make the system actually work and not end up allowing a handful of players dominate online content going forward: The two-lane internet scenario only works if there’s robust competition for broadband internet access. In other words, if ISPs get to work out special deals with content providers they also have the power not to accept those deals. And if an ISP is the the only ISP in town, that ISP can act like a local content monopoly provider. So if you want to see this two-lane system work, you’d need to ensure ALL markets have robust broadband competition.

    And what could ensure that kind of robust competition across the US? Well, municipalities could start doing what Chattanooga, TN is doing and offer broadband internet access as a municipal service. That would certainly guarantee some degree of ISP competition. But here’s the problem: The cable industry has spent decades lobbying states to ban the set up of municipal broadband, with 20 states now preemptively banning what Chattanooga did. So, at Jonathan Taplin points out, if the FCC is serious about killing net neutrality, shouldn’t municipal broadband become a basic expectation? After all, the big fears about two-lane internet model is that it gives the biggest media giants and ISPs even more market power than they already have. If the media giants get to break the internet in the US, shouldn’t municipal broadband be part of the deal? Or is it going to be a typical ‘all oligopoly, all the time’ kind of marketplace?

    TPM Cafe
    Behind The FCC’s New Rules On Two-Lane Internet Speeds

    Jonathan Taplin – April 28, 2014, 12:11 PM EDT

    In February 2006, at a time when almost nobody was thinking about the future of broadband and network neutrality, we gathered a group of stakeholders at the Annenberg School for Communications to try to work out some common sense rules for the future. We had groups like Public Knowledge, former Federal Communications Commission (FCC) officials, telecom and content company executives and some of the brightest academic thinkers about networks. Over the course of a day and a half we came to a consensus and published The Annenberg Center Principles for Network Neutrality.

    With the exception of Xeni Jardin at Boing Boing, almost nobody paid any attention to them. Imagine our surprise when this week we got indications that the FCC would publish a set of rules that adhere fairly closely to our principles.

    Since the news on Wednesday, both activists and editorial pages have pushed back strongly against the FCC’s plans to create a fast lane for video streaming sites. I think the opponents of the plan misunderstand the future of Over The Top (OTT) video services and what it will take to make them viable.

    Our approach in 2006 was to make sure that Internet Service Providers (ISPs) provided a basic access broadband service that was totally neutral and sufficient to carry the most standard video protocols such as YouTube. In 2006, we thought that was 1.5 megabytes per second (MBPS); today that should be 5 MBPS.

    But in an era when Netflix is planning to deliver 4K ultra high-definition video to the television, an ISP may need to deliver up to 100 MBPS, assuming that more than one TV is on in the home. Clearly someone is going to have to pay for the investment to deliver such a service and in seeking a compromise between the OTT players such as Netflix, Amazon, Apple, Google and the Internet Service Providers, the FCC is creating a path toward sharing the investment costs to deliver the next generation of TV services.

    What will prevent companies like Comcast from abusing this system is real competition in the home broadband market of the kind we see in the mobile marketplace.

    Last month, the new FCC Chairman, Tom Wheeler released a statement on “Open Internet Rules” in the wake of a Federal Appeals Court decision on Network Neutrality. In a section on enhancing competition, he wrote, “one obvious candidate for close examination was raised in Judge Laurence Silberman’s separate opinion, namely legal restrictions on the ability of cities and towns to offer broadband services to consumers in their communities.”

    In the case to which Wheeler is referring, Verizon vs. FCC, Silberman suggested that the FCC’s primary obligation was to promote competition and remove barriers to infrastructure investment. Those barriers have been constructed by the cable and telco incumbents and their lobbyists, who have convinced over 20 state legislatures to pass bills barring municipalities from entering the broadband market. Judge Silberman described these laws as providing “an economic preference to a politically powerful constituency, a constituency that, as is true of typical rent seekers, wishes protection against market forces.”

    So perhaps the FCC should rule that such local preemption is illegal and states cannot prevent cities or companies like Google Fiber from competing in the broadband market. Then, as part of its merger approval decision, Comcast would pledge that it and its lobbying arm, the National Cable and Telecommunications Association (NCTA), would refrain from opposing the FCC decision.

    If that happened, the kind of broadband innovation we are seeing in cities like Chattanooga, Kansas City and Austin could spread throughout the country.

    Yes, perhaps the FCC should ban all that industry lobbying that ruled out municipal services.

    Or, if that doesn’t work, perhaps there are other options to ensure competition in the US’s media market in a new non-net-neutral world? After all, it isn’t just a near monopoly in the ISP market that consumers need to be worried about. It’s also the fact that companies like Comcast might end up owning both the content creators as well as the content distribution channels, raising some very alarming possibilities in the era of an unequal internet.

    So what could those options be that help prevent the giants from taking over the internet? How about instead of banning municipal broadband we ban media giants instead? Just bust them up! While breaking up a media giant might seem like a Herculean task, it’s a real option (just ask Argentina. So should the end of net neutrality also end the era of the media super-giants? Bigger isn’t always better.

    Posted by Pterrafractyl | April 28, 2014, 5:39 pm
  5. http://finance.yahoo.com/news/german-parliament-cuts-ties-verizon-132154762.html

    German parliament cuts ties with Verizon in wake of spying row

    June 27, 2014 9:21 AM

    BERLIN, June 27 (Reuters) – Germany’s lower house of parliament has joined the government in cutting ties with U.S. telecoms firm Verizon Communications Inc, in reaction to a scandal last year over U.S. government spying and allegations firms were handing over data.

    Posted by GK | June 29, 2014, 2:39 pm
  6. FYI, the EU’s net neutrality laws just got the kiss of death:

    The Verge
    Angela Merkel argues against net neutrality, calls for special access fast lane

    By Dante D’Orazio
    on December 6, 2014 11:22 pm

    German Chancellor Angela Merkel has laid out her vision for the future of the internet, and net neutrality proponents won’t be pleased. In comments on Thursday in Berlin, Merkel argued for a two-lane internet. One lane for “special,” high priority service, and another that’s meant to resemble the internet as it exists today.

    While supporters of net neutrality argue that it is key to the continued growth of the internet, Merkel believes just the opposite. She argues that fast lanes are necessary for the development of new, advanced uses of the internet, like telemedicine or driverless cars. According to Merkel, without guaranteed, fast-access internet connections, such innovations won’t come to market.

    It’s not clear how such a two-lane system would be implemented or regulated. For instance, it’s unknown if there would be limits on what sort of companies could pay for access to fast-lane internet. A report from Frankfurter Allgemeine cites sources inside the German government who say that on-demand internet video streaming services would be among the companies that would be able to pay for access for high-speed service.

    The European Union currently mandates true net neutrality, though discussions have been underway for the future of internet regulation. Merkel believes that her position is a middle ground, but the idea that the general traffic lane will operate under net neutrality depends entirely on how much bandwidth it receives from internet providers. If the main traffic lane isn’t fast, and any company can opt for fast-lane access, companies will likely find it necessary to pay up for direct access just to compete — the exact opposite of net neutrality.

    Ok, so special services like self-driving cars, telemedicine and “on-demand internet nideo straming services” (Netflix) will be able to access the “fast lane”. And presumably lots of other websites that pay. And Merkel is apparently pushing a ‘middle ground’ idea that “If the main traffic lane isn’t fast, and any company can opt for fast-lane access, companies will likely find it necessary to pay up for direct access just to compete — the exact opposite of net neutrality.

    “If the main traffic lain isn’t fast, and any company can opt for fast-lane access, companies will likely find it necessary to pay up for direct access just to compete””. Bye bye EU net neutrality.

    Also keep in mind that Angela Merkel is advocating further telecom consolidation across the EU and the new EU Digital the number of major players is going to shrink. So, again, Bye bye net neutrality:

    Financial Times
    Lex in-depth: European telecoms

    Competition and surfeit of providers mean Europe’s telecoms groups must consolidate

    November 18, 2014 8:22 pm
    Alan Livsey and Robert Armstrong

    The door is open. Europe’s telecoms need only step through it. Jean-Claude Juncker, the president of the European Commission, wants a single market in digital communications to spark growth in employment and output. This cannot happen without increased investment from the telecoms industry. So the commission, with support from German Chancellor Angela Merkel, is looking favourably on consolidation of the sector. The idea is to increase the returns on, and therefore the incentive to invest in, infrastructure. This regulatory regime change could set off economically transformative events if the industry’s leaders show imagination, initiative and flexibility.

    The first domino fell this summer, when the third and fourth largest players in the German market, Telefónica’s O2 and KPN’s E-Plus, received approval for a merger. In an unusual move, the commission declared itself the proper authority to determine whether the merger was anti-competitive and pushed the deal through over the objections of the country’s anti-monopoly authority.

    The industry has endured vicious competition, particularly in mobile, for several years. Consumers have enjoyed low tariffs but mobile revenues in the markets have fallen by 18 per cent since 2008. Profits (at the level of earnings before interest, taxes, depreciation and amortisation) have been even worse, down 22 per cent. Return on capital employed in mobile has been cut almost in half in the same period, according to New Street Research.

    There is potential for consolidation. Seven of the largest European markets have more than three large players in mobile – the threshold beyond which competition tends to become irrational. France, Italy and the UK stand out as intensely competitive markets in which deals are likely to occur.

    Consolidation within European countries, by improving the returns on infrastructure investment, should bring Mr Juncker’s dream of better 4G and broadband access closer to reality: a single European telecom market that ignores borders. Groups operating in Europe, such as Vodafone, are effectively holding companies that operate in different markets. A true pan-European telecoms market requires a regulatory rethink. Meanwhile, Europe’s telecoms companies must do their part and consolidate.

    “The idea is to increase the returns on, and therefore the incentive to invest in, infrastructure”. LOL! That sure sounds like consolidation and lots of “fast-lane” fees is the order of the day so get ready for the sloooow laaaane once this process is complete. When the number of large players in each market drops to three or less just watch the throttling begin. Crappy “slow lane” service that push website owners into buying “fast lane” access is going to be a big new profit generator.

    As long as the special fast lane is limited to a handful of special activities, you can have a tiered internet without killing net neutrality. But is that realistic?

    Or maybe the EU will just gut the net neutrality legislation directly.

    Posted by Pterrafractyl | December 8, 2014, 12:22 am
  7. Here’s more on the recent movement to make the EU’s new net neutrality laws a lot less neutral:

    The New York Times
    Europe Takes Another Look at Net Neutrality
    By Mark Scott
    November 25, 2014 12:16 pm

    LONDON — Just as the United States takes steps to secure people’s unfettered access to the Internet, Europe may soon backtrack on its own proposals.

    The idea of so-called net neutrality — or the concept that everyone should have equal access to all online content — will again take center stage on Thursday as politicians from the 28-member bloc meet to discuss how the rules should be put into effect across the region.

    In the United States, President Obama recently called on the Federal Communications Commission to adopt rules that would stop broadband companies from slowing down certain types of online content. The European Parliament outlined similar rules earlier this year.

    Now, though, some European lawmakers are pushing to loosen the rules somewhat, allowing companies to potentially charge for faster access to their networks.

    A draft proposal circulated among the members of the European Union, released by European Digital Rights, a Brussels-based advocacy group, would remove the strict definition of net neutrality from new European telecom legislation that is expected to be finalized sometime next year.

    The proposal, circulated by Italy, which currently holds the six-month presidency of the European Union, suggests allowing broadband and telecom companies to manage traffic across their networks (and potentially offer faster speeds to companies that are willing to pay a premium) as long as they provide a minimal level of access for all online content.

    The suggestions, which still must be worked out among individual countries, the European Parliament and the European Commission, come as the region’s Internet service providers are lobbying hard to weaken Europe’s original net neutrality proposals.

    Telecom companies like Vodafone of Britain and Orange of France are concerned that the current proposals would not allow them to charge for improved access to their networks to generate revenue that they say is needed to upgrade Europe’s Internet infrastructure.

    And even while some European lawmakers are moving to alter the region’s net neutrality proposals, others continue to push strong rules.

    “All the traffic has to be treated equally,” Andrus Ansip, the new digital chief at the European Commission, told Reuters this week when asked about the potential watering down of Europe’s net neutrality rules. “The Internet has to stay open for everybody.”

    When you read that the draft legislation would “remove the strict definition of net neutrality from new European telecom legislation that is expected to be finalized sometime next year,” but then also read that Andrus Ansip, the new digital chief at the European Commission, said “all the traffic has to be treated equally…The Internet has to stay open for everybody,” keep in mind that this article was published on November 25, over a week before Angela Merkel’s call for a two-tiered internet.

    Also keep in mind that Merkel’s vision of a fast-lane for “special services” would reportedly allow on-demand video streaming services like Netflix to sign up for the fast-lane access.

    And, finally, keep in mind that, in order implement Merkel’s new scheme, the critical amendments to the EU’s net neutrality law passed back in April that were seen as the amendments that actually enforced net neutrality in the new law are probably going to require some extensive amendmending:

    European Parliament passes strong net neutrality law, along with major roaming reforms
    David Meyer
    Apr. 3, 2014 – 3:10 AM PST

    European fans of the open internet can breathe a sigh of relief: the European parliament has passed a major package of telecoms law reform, complete with amendments that properly define and protect net neutrality.

    The amendments (PDF) were introduced by the Socialist, Liberal, Green and Left blocs in the European Parliament after the final committee to tweak the package – the industry committee – left in a bunch of loopholes that would have allowed telcos to start classifying web services of their choice as “specialized services” that they can treat differently.

    It’s a good thing the net neutrality argument didn’t sink the whole package, as it also includes new laws to eliminate roaming fees within Europe, creating a truly single market for telecoms services. Now the whole package gets passed through to the next Parliament (elections are coming up in May), then the representatives of European countries for final approval.

    In a statement, Amelia Andersdotter, the Swedish member of the European Parliament (MEP) who heads up the Pirate faction in the European Parliament, said:

    “Thankfully, a majority of MEPs has seen sense today and voted to uphold the principle of net neutrality in the EU. The proposals by the Commission, which would essentially have given large providers the all-clear for discriminating against users as they see fit, have been revised. Today’s vote would explicitly provide for net neutrality and will hopefully ensure a level playing field for all online services and users, providing for a more open internet environment in which innovation is encouraged.”


    Not all the amendments were passed by members of the European Parliament (MEPs) but the big ones got through. Amendment 234 gave a strong definition for net neutrality:

    “Net neutrality” means the principle according to which all internet traffic is treated equally, without discrimination, restriction or interference, independently of its sender, recipient, type, content, device, service or application.

    Amendment 235 gave a strong definition of specialized services, making it clear that ISPs can’t simply decide Netflix, for example, is no longer a standard internet service:

    “Specialised service” means an electronic communications service optimised for specific content, applications or services, or a combination thereof, provided over logically distinct capacity, relying on strict admission control, offering functionality requiring enhanced quality from end to end, and that is not marketed or usable as a substitute for internet access service.

    And Amendment 236 hammered that point home:

    Providers of internet access, of electronic communications to the public and providers of content, applications and services shall be free to offer specialised services to end-users. Such services shall only be offered if the network capacity is sufficient to provide them in addition to internet access services and they are not to the detriment of the availability or quality of internet access services. Providers of internet access to end-users shall not discriminate between functionally equivalent services and applications.

    According to the pro-net neutrality lobby group Access, this is all a major win except for the defeat of an article that would have clearly set out how to enforce net neutrality.

    “The Council representatives are expected to adopt a final position on the Telecoms regulation later in 2014,” Access said, referring to the representatives of member states. “Access urges the Council not to deviate from the position adopted today by the European Parliament. The Council must maintain the necessary safeguards to protect net neutrality and prohibit network discrimination in Europe. This includes ensuring that this principle can be effectively enforced.”

    Naturally, the carriers are deeply unhappy. In a statement, mobile carrier industry body the GSMA said it “recognises the efforts of Rapporteur Pilar del Castillo to develop a constructive response to the Commission’s Connected Continent proposals but believes that the overall package fails to address the key challenge of stimulating growth and investment.”

    “Network operators must be able to develop services that meet the needs of consumers and charge different prices for differentiated products,” GSMA director general Anne Bouverot exclaimed.

    Bye bye amendments 234-236.

    Posted by Pterrafractyl | December 11, 2014, 9:13 pm
  8. Here’s a peak at one possible net neutrality future for the US: Industry-crafted ‘net neutrality-lite’:

    Washington Post
    Congress wants to legislate net neutrality. Here’s what that might look like.

    By Brian Fung December 19, 2014

    Republicans in Congress appear likely to introduce legislation next month aimed at preventing Internet providers from speeding up some Web sites over others, in hopes of changing the tone of a critical debate over the future of the Web, according to industry officials familiar with the plans.

    The industry-backed proposal would preempt efforts by the Federal Communications Commission to draw up new rules for Internet providers. While key details of the proposed bill are still being hammered out, the legislation would attempt to end a debate over the FCC’s power to regulate net neutrality, or the idea that broadband companies should treat all Internet traffic equally, said the people familiar with the plan who declined to be named because the talks were private.

    The industry officials said they are discussing details of the proposal with several Republican lawmakers, whom they declined to name. The officials also said the proposal is being backed by several large telecommunications companies, which they also declined to name.

    One important piece of the proposed legislation would establish a new way for the FCC to regulate broadband providers by creating a separate provision of the Communications Act known as “Title X,” the people said. Title X would enshrine elements of the tough net neutrality principles called for by President Obama last month. For example, it would give FCC Chairman Tom Wheeler the authority to prevent broadband companies from blocking or slowing traffic to Web sites, or charging content companies such as Netflix for faster access to their subscribers — a tactic known as “paid prioritization.”

    But those new powers would come with a trade-off, the people said. In exchange for Title X, the FCC would refrain from regulating net neutrality using Title II of the Communications Act — a step favored by many advocates of aggressive regulation, including the president, they said.

    FCC officials declined to comment for this story.

    Broadband providers have strongly opposed aggressive net neutrality rules, arguing it would stymie the industry’s growth. But in recent months some industry officials have said they were open to the same net neutrality principles advocated by Obama, highlighting a sliver of potential common ground between Internet providers and net neutrality advocates. In a blog post last month, Comcast said it it opposed blocking or slowing traffic to Web sites, along with paid prioritization. AT&T made similar arguments in June.

    “We oppose the concept of fast lanes and slow lanes on the Internet,” wrote Jim Cicconi, an AT&T policy executive, in a blog post.

    The Internet service providers’ statements offer a potential opening for a legislative compromise, one that seeks to clarify the FCC’s authority to preserve net neutrality while avoiding a showdown over Title II.

    “Consensus on this issue is really not that far apart,” said an industry official, who spoke on condition of anonymity because the talks were ongoing. “There’s common understanding that rules are needed to protect consumers.”

    While Republican aides to both the Senate and House commerce committees declined to comment on the industry’s proposal, the timing of the push is consistent with statements by top GOP lawmakers on the issue. Earlier this month, Sen. John Thune (R-S.D.), the top Republican on the Senate Commerce Committee, said he was “very interested” in drafting legislation to address net neutrality. Congress would need to act “fairly soon next year” if it wants to find a legislative fix, according to a Thune spokeswoman. Any such legislation would have to move through Thune’s committee.

    The FCC is widely expected to unveil its net neutrality proposal in February or March, leaving little time for lawmakers to introduce a bill. By unveiling their legislation before Wheeler’s draft rules, Republicans could draw momentum away from the agency, where pressure has been mounting lately for stronger action, the industry officials said.

    If Wheeler struck first with proposed rules with aggressive net neutrality rules, many Democrats would likely find it harder to support a Republican alternative. On Thursday, Democrats led by Sen. Ed Markey (D-Mass.) and Rep. Anna Eshoo (D-Calif.) sent a bicameral letter to Wheeler demanding that he act more swiftly to adopt new rules.

    Republicans may find it difficult to attract enough conservative support for a net neutrality bill that updates the FCC’s powers. Many of the most outspoken critics of the agency, such as Sen. Ted Cruz (R-Tex.) or Rep. Marsha Blackburn (R-Tenn.), ardently oppose any new regulations on Internet providers.

    But with enough bipartisan support, Republicans could quickly move a bill to Obama’s desk. Whether the president signs it could hinge on whether he could claim it as a political victory, policy analysts say. If the bill is seen as not aggressive enough, Obama will likely veto the legislation, observers said. Cast as a compromise giving the FCC wide latitude over net neutrality, the bill could pass — particularly if industry officials offer not to sue the FCC over its proposed rules, analysts have said.

    So that was the industry’s/GOP’s plan last month: put a ‘net neutrality-lite’ plan out early in 2015 to preempt the FCC and get a net neutrality deal that avoid any “Title II” regulations. And then try to get the support of the far right law makers like Ted Cruz and Marsha Blackburn who oppose any regulations at all.

    That’s the plan. It may not be an easy plan:

    The Hill
    House GOP lawmaker makes net neutrality warning

    By Julian Hattem – 01/05/15 02:30 PM EST

    Tough net neutrality rules would lead to new taxes and unnecessary hurdles for new companies, Rep. Marsha Blackburn (R-Tenn.) warned on Monday.

    In an interview on Fox Business Network, Blackburn warned the Federal Communications Commission (FCC) against writing strong rules that allowed it to regulate the Internet with the same powers it uses to police traditional phone lines.

    “I talk to those innovators every single day,” she said. “They do not want to have to fool with another federal agency. They do not want additional taxes.”

    Blackburn, who is a member of the Energy and Commerce Committee and has been a prominent critic of the FCC’s regulations, pointed to a recent study showing that reclassifying the Web so it could be treated like a utility would lead to $15 billion in new state fees, plus another $2 billion in federal charges. The study has been criticized for not mentioning a federal law that bans state and local taxes on Internet access.

    Instead of having the government write rules banning companies from slowing or blocking access to particular websites, companies should be allowed to cut deals and determine how best to reach their audience, Blackburn said.

    “It is called companies finding a way to transact business and not have the federal government mandating how they are going to transact business,” she said. “Let’s leave it to the private sector.”

    “It is called companies finding a way to transact business and not have the federal government mandating how they are going to transact business … Let’s leave it to the private sector.” That’s the thinking from elected officials like Marsha Blackburn and while the telecom industry would no doubt LOVE to have her “Let’s leave it to the private sector” approach win the day, that approach also ensures that you’ll never have the kind of bipartisan agreement needed for any sort of long-term regulatory certainty.

    So we’ll see just how much opposition to the telecom industry’s ‘net neutrality-lite’ plan. But we won’t have to wait and see if the industry and its GOP representatives will be able to unfurl its plan in Congress before the FCC develops an even tougher plan involving “Title II” regulations because that just happened:

    Los Angeles Times
    FCC Chairman Wheeler hints at shift in net neutrality rules
    By Jon Healey and Meg James

    January 7, 2015, 6:10 PM

    The nation’s top telecom regulator strongly hinted that he plans to propose more rigorous regulations on Internet service providers — setting up a potentially bitter clash with powerful cable television operators and others that offer Internet access.

    A new set of Internet regulations is shaping up to become one of the most fiercely debated issues in Washington this year as the Federal Communications Commission tries to replace the neutrality rules tossed out by a federal appeals court last year.

    On Wednesday, FCC Chairman Thomas E. Wheeler suggested that he would propose rules next month that would treat broadband Internet service providers as utilities subject to more intense regulation than they have been in the past.

    Such a move is expected to draw challenges in court from industry opponents and in Congress from the Republican majority which favors a more permissive approach and probably would try to overturn new rules or deny the agency funding to enforce them.

    Any FCC decision to reclassify Internet service providers and regulate them under Title II of the Communications Act would be a stinging defeat for Comcast Corp., AT&T Inc., Verizon Communications Inc. and other broadband providers.

    It would be a victory for President Obama and other advocates of a stringent approach to so-called network neutrality, the notion that Internet providers not favor traffic from some websites over others.

    During a question-and-answer session at the Consumer Electronics Show, Wheeler declined to provide details on the new approach, insisting that the public would have to wait until February when the proposal is unveiled.

    The five-member FCC is expected to vote on a new set of net neutrality rules on Feb. 26.

    “We’re going to propose rules that say that no blocking, no throttling, [no] paid prioritization — all that list of issues — and that there is a yardstick against which behavior should be measured. And that yardstick is ‘just and reasonable,'” Wheeler told a packed conference room at the Las Vegas Convention Center.

    Initially, Wheeler had resisted the idea of bringing Internet providers under Title II, hoping to craft net neutrality rules that continued to treat Internet providers as lightly regulated entities called information services.

    Wheeler’s original proposal would have allowed Internet providers to strike deals with content companies and online services as long as they were “commercially reasonable.”

    That approach drew support from the telecommunications industry, but many net neutrality advocates argued that it would allow broadband providers to divide their networks into fast and slow lanes. That would give deep-pocketed companies another advantage over start-ups, harming competition and innovation, they said.

    Obama forcefully jumped into the debate in November, saying the FCC should adopt strict rules that would reclassify the Internet as a utility.

    “For almost a century, our law has recognized that companies [that] connect you to the world have special obligations not to exploit the monopoly they enjoy over access into and out of your home or business,” Obama said in a video message that was received as a warning shot from the White House.

    Key GOP members blasted Obama’s call for tough regulations. But such net neutrality rules are strongly supported by most Democrats.

    Wheeler, who was appointed by Obama, said that as the FCC studied the issue, it “became obvious” that the “commercially reasonable” standard he originally proposed for judging Internet providers “could be interpreted as what is reasonable for the [Internet providers], not what’s reasonable for consumers or innovators.”

    “And that’s the wrong question and the wrong answer,” he said, “because the issue here is how do we make sure that consumers and innovators have access to open networks.”

    The better standard for judging behavior of network operators is the “just and reasonable” standard under Title II, Wheeler said.

    The latest net neutrality proposal comes as the FCC separately is reviewing two colossal media mergers: Comcast’s proposed $45-billion takeover of Time Warner Cable Inc., which would make it the nation’s dominant Internet provider; and AT&T’s proposed takeover of satellite-television carrier DirecTV, a $49-billion deal.

    The two mergers, which both need federal approval, are expected to reshape the media industry by giving more clout to the owners of the broadband networks.

    Comcast declined to comment Wednesday. However, in a filing with the FCC last month, the Philadelphia cable giant said that a utility reclassification “not only would be harmful, but also is completely unnecessary and would not accomplish the commission’s core public interest objectives.”

    The better standard for judging behavior of network operators is the “just and reasonable” standard under Title II, Wheeler said. That’s big.

    The proposed Comcast and Time Warner is also pretty damn big and it’s happening right now. A telecom anti-trust fight in the middle of the big net neutrality fight. While the merger itself might suck, the timing is awesome.

    Posted by Pterrafractyl | January 7, 2015, 8:41 pm
  9. Welcome to the latest product of the GOP’s scandal-machine: Did President Obama improperly influence FCC chairman Tom Wheeler into supporting a stronger net neutrality proposal by telling the world that he supported strong net neutrality? Reublicans want to know:

    The wall Street Journal
    House to Probe White House Role in FCC’s ‘Net Neutrality’ Proposal
    Panel to Investigate Whether White House Improperly Influenced Agency on Broadband Rules
    By Gautham Nagesh And
    Siobhan Hughes
    Updated Feb. 6, 2015 7:02 p.m. ET

    WASHINGTON—A House oversight committee on Friday said it was launching an investigation into whether the White House improperly influenced the Federal Communications Commission on its new rules for how broadband providers treat traffic on their networks.

    Rep. Jason Chaffetz (R., Utah), chairman of the House Oversight and Government Reform Committee, wrote to FCC Chairman Tom Wheeler on Friday demanding all documents and communications between the FCC and the White House or other executive-branch agencies on the issue, along with all internal discussion at the FCC.

    Mr. Wheeler on Wednesday made public the outlines of a proposal that would ban broadband providers from blocking, slowing down, or speeding up certain websites in exchange for payment.

    The plan would use strong utility-like rules to regulate broadband companies, an approach largely in line with President Barack Obama ’s call in November for the “strongest possible rules” to protect net neutrality—the principle that all Internet traffic should be treated equally.

    To implement those rules, Mr. Wheeler proposed reclassifying broadband from a lightly regulated information service to a more strictly overseen telecommunications service. Advocates of such an approach say that without such rules, broadband companies could charge tolls to websites for their fastest speeds, putting startups and smaller websites at a disadvantage.

    Mr. Wheeler had previously laid out proposals to his fellow commissioners that wouldn’t have used the public-utility route. Then Mr. Obama made his statement in November, one of a series of events outlined in a Wall Street Journal article Thursday that appeared to leave Mr. Wheeler little choice but to go with the stronger rules.

    “[R]eports indicate that views expressed by the White House potentially had an improper influence on the development of the draft Open Internet Order circulated internally at the Commission on February 5, 2015,” Mr. Chaffetz wrote.

    In his letter, Mr. Chaffetz said he is particularly interested in “how the FCC communicated with the White House and other Executive Branch agencies.”

    He also requested a briefing on the issue within two weeks. The commission plans to vote on the proposal Feb. 26.

    Other Republicans in Congress had already expressed concerns about the FCC proposal. The chairman of the House committee that oversees the FCC, Rep. Fred Upton (R., Mich.), noted that Mr. Wheeler himself said in November that the agency was independent. “Turns out that wasn’t the case then, it’s not the case now, and the White House needs to get its hands off the FCC,” he said Thursday.

    Senior FCC officials said Wednesday that reclassifying broadband puts the new rules on much firmer ground in the face of a legal challenge from the broadband industry.

    But the broadband industry and conservatives strongly opposed changing how broadband is classified, arguing it would saddle the industry with outdated regulations and depress investment in upgrading networks.<

    Mr. Wheeler’s proposal would apply the portion of the law used to regulate common carriers to broadband providers, but without invoking all of the rules designed for the old landline phone network. He specifically said the FCC wouldn’t regulate broadband prices, or force providers to lease capacity on their networks to competitors.

    But those assurances were of little comfort to the broadband industry. An industry official said the FCC plan would give the agency the authority to regulate prices, allowing future commissioners to do so if they choose.

    Conservatives in Congress agreed. “The president gave a speech demanding that the FCC seize control of the Internet and treat it as a government-regulated utility. The FCC promptly turned around and behaved like an agency of the White House,” Sen. Ted Cruz (R., Texas), a member of the Senate Commerce Committee, said in an interview.

    He said that if the Internet is regulated like a utility “large corporations with armies of lobbyists will benefit and small startups will be hurt.”

    The broadband industry official expressed confidence that the FCC’s rules would eventually be reversed, either by the courts or a future FCC.

    Congressional republicans say they are particularly upset because they have been working on legislation that would achieve the same goals Mr. Wheeler has laid out for broadband regulation—that the companies cannot favor or discriminate against certain kinds of content they deliver to consumers for payment.

    The difference is that the Republican plan wouldn’t reclassify broadband as a utility under telecommunications law, as Mr. Wheeler would do. Net-neutrality supporters say the Republican draft bill as it stands would gut the FCC’s ability to regulate broadband providers on anything besides discrimination.

    As Ted Cruz warns, if the Internet is regulated like a utility “large corporations with armies of lobbyists will benefit and small startups will be hurt.” Which is, of course, why the telecom giants’ army of lobbyists spent years lobbying against net neutrality. They were clearly worried about all the damage they would do to small businesses if net neutrality passed. How noble.

    And it’s not a nobility exclusive to the American telecom giants. Europe’s telecom industry is also very clearly worried about all the abuses it would inflict on small businesses if the EU’s net neutrality proposals come into law. Or something like that:

    Europe’s telecoms heavyweights call for lighter ‘net neutrality’ rules

    By Julia Fioretti

    BRUSSELS Mon Jan 26, 2015 12:49pm EST

    (Reuters) – The European Union should not force telecoms operators to treat all the traffic on their networks equally as it crafts rules on “net neutrality”, several industry bodies said on Monday.

    The reaction comes a week after Latvia, which holds the rotating European presidency, tabled a compromise text on net neutrality, the principle that all internet traffic should be treated equally, under which telecoms operators would face strict rules on when they can intervene to manage traffic.

    Four industry bodies representing the likes of Vodafone (VOD.L), Alcatel-Lucent (ALUA.PA), Orange (ORAN.PA) and Liberty Global (LBTYA.O) called on the EU to allow them manage internet traffic to meet the different needs of all consumers.

    “It is not technologically efficient or beneficial for consumers if all traffic is treated equally. Nor has this ever been the case,” the letter, seen by Reuters and signed by ETNO, Cable Europe, the GSMA and Make The NetWork, says.

    Under the Latvian proposal, internet service providers would be obliged to treat all traffic equally, except when their networks face “exceptional … congestion”, or they are ordered to block some content by a court, or they need to intervene to ensure the security of the network.

    Providers would also be free to offer specialized services, typically at higher speed and guaranteed quality, as long as broader internet access is not impaired.

    Telecoms firms say the ability to offer specialized services is key to innovation in the digital sector, such as in the areas of connected cars and e-health, and that strict rules would only stifle that.

    But supporters of net neutrality counter that if left unregulated, specialized services could crowd out other content and degrade the quality of the Internet.

    U.S. President Barack Obama has come out in favor of strict net neutrality rules in the United States and said operators should be banned from offering paid “fast lane” deals with content companies, for example Netflix (NFLX.O).

    While the EU telecom giants are clearly concerned about a New Net Neutrality Normal emerging this year, note the fine print:

    “Under the Latvian proposal, internet service providers would be obliged to treat all traffic equally, except when their networks face “exceptional … congestion”, or they are ordered to block some content by a court, or they need to intervene to ensure the security of the network”.

    Providers would also be free to offer specialized services, typically at higher speed and guaranteed quality, as long as broader internet access is not impaired.

    Yes, under the new EU net neutrality proposal on the table, the telecom industry will be allowed to offer “specialized services” as long as the broader internet access isn’t impaired. Also, if their networks are impaired (i.e. “exceptionally” congested) they’ll be allowed to no longer abide by the net neutrality rules and can start picking and choosing how they treat different types of traffic.

    So it will be especially interesting to see how the EU telecom providers and their regulators respond when the networks are nearing maximum capacity. They can’t necessarily borrow from the “specialized services” bandwith. You don’t want your telemedicine traffic getting throttled because the latest must-stream movie came out and caused “exceptional” congestion on all the “non-specialized” traffic.

    At the same time, how much incentive is there’s going to be for the telecom to expand their “non-specialized” network capacity when they can just start throttling back when it gets exceptionally bad? Especially if a growing number of the most popular services, like streaming video, get to eventually fall under the “specialized” category. Recall that Angela Merkel suggested that the “specialized services” should be allowed to include streaming video services. Will having network traffic capacity constantly on the verge of “exceptionally” overload start making business sense if Netflix can be declared a “specialized service” (with premium prices)?

    And what if there’s a loophole in the net neutrality rules where any service offer that only provides access to one particular part of the internet (like Facebook) doesn’t fall under the rules for internet application services that mandate the equal treatment of all traffic? How might such a loophole impact the investments the telecom industry makes in the non-specialized mainstream internet? It’s a question worth asking since such a loophole might end up in the final EU net neutrality legislation:

    Norwegian Communication Authorities

    On the origin of specialised services

    Last update 29/12/2014

    Specialised services are a main topic in the important debate about net neutrality in Europe. Yet how are we to understand this concept? What does it mean in practice? Which specific services does it refer to? While looking for answers to these questions, we get to the very core of the discussion: how specialised services relate to the Internet.

    By Frode Sørensen, Senior Advisor at the Norwegian Post and Telecommunications Authority

    To start with the practical side of the discussion: these services already exist today. They consist of traditional services that have migrated to IP technology, such as facilities-based VoIP and IPTV. However, they can also be used to provide new services, and e-health seems to be the most prominent example that is being highlighted by stakeholders.

    The actual definition of specialised services is important, as it does not include Internet-based applications that are increasingly used as a substitute for traditional services. Such Internet-based applications are often termed “over-the-top” and include such things as peer-to-peer telephony (e.g. Skype) and video streaming.

    The “over-the-top” phrase indicates that there are two layers: the application layer and the network layer. The application layer is placed on top of and clearly separated from the network layer, which facilitates the development and deployment of new applications. This is the basis for the enormous innovation in content and applications on the Internet that we have witnessed in recent years.

    But where does the term “specialised services” come from?

    The beginning

    Tim Wu introduced the “net neutrality” concept more than ten years ago, and in 2005 Federal Communications Commission (FCC) launched its open Internet principles. These two events can be seen as the very first steps in the development of a net neutrality policy, though the essence of net neutrality could already be found in the Internet’s underlying functioning.

    The Norwegian Communications Authority (Nkom) was the first in Europe to establish a regulatory platform for net neutrality. Nkom based its work on co-regulation, and Norwegian guidelines for net neutrality were introduced in February 2009. These guidelines implicitly discuss specialised services and state that “if the physical connection is shared with other services, it must be clear how the capacity is allocated between the Internet traffic and the other services”.1

    In October 2009, FCC published a Notice of Proposed Rulemaking, and in December 2009 FCC introduced rules for preserving a free and open Internet. These two documents explicitly address specialised services, but do not define the term. However, the latter document refers to “specialized services, such as existing facilities-based VoIP”.2

    Net neutrality was intensely debated during the political process that led to a revised European regulatory framework in December 2009. The framework aims to promote competition among service providers, and with regard to net neutrality, transparency is emphasised as a tool to enable end users to switch providers when necessary.

    BEREC’s definitions

    In 2010, BEREC established its Net Neutrality Expert Working Group that was to study practical methods for the application of the net neutrality provisions of the European regulatory framework. Due to the emphasis placed on transparency in the framework, the first report from the group was “Guidelines on transparency in the scope of net neutrality”, closely followed by “Framework for quality of service in the scope of net neutrality”.

    The Framework for quality of service represents BEREC’s first step in the analysis of Article 22(3) of the Universal Service Directive on the prevention of service degradation. The report introduces main categories of service offers that ought to be considered by regulators when assessing the net neutrality situation in the market: Internet access services and specialised services, two services that share capacity on the end-user’s broadband connection, also referred to as “the two lanes”.

    The Guidelines for quality of service in the scope of net neutrality3 came in 2012, and introduced definitions for the service categories. The Guidelines presented a complete service model for regulatory assessment of net neutrality. The Internet access service is defined as a service that provides connectivity to the Internet, while specialised services are provided over virtual or physical networks distinct from networks constituting the Internet, but that will typically operate over the same infrastructure.

    EU legislation

    When on 11 September 2013 the European Commission published its proposal for a Regulation to achieve a “Connected Continent”, the regulatory goal of promoting net neutrality was proposed converted to a “freedom” for Internet users. The proposal contained net neutrality provisions acknowledging a service model consisting of the Internet access service and specialised services.

    In BEREC’s statement on the proposal, we read that: “BEREC welcomes the Commission’s acknowledgment of the existence of specialised services alongside and distinct from internet access services (IAS). However, BEREC believes the relevant definition does not adequately capture their provision within closed networks and so risks hindering NRAs’ capacity to apply open Internet standards to IAS and to determine the acceptable relationship between IAS and specialised services.”4

    After extensive discussion in the committees of the European Parliament, the vote during the plenary meeting on 3 April 2014 resulted in the adoption of several net neutrality provisions that strengthened the definitions of the two service categories. The wording of a number of articles was amended, to some extent in line with BEREC’s suggestions.

    BEREC expresses support for the European Parliament’s work on promoting the principle of net neutrality, and clarifies in regard to the service model that “BEREC considers that specialised services should be clearly separated (physically or virtually) from internet access services at the network layer, to ensure that sufficient safeguards prevent degradation of the internet access services.”5

    This is where the case stands after the Parliament debated it.

    Potential for improvement

    The next step of the political process is the handling in the Council. As we have seen, there still appears to be a need for further improvements to the net neutrality provisions. The “specialised services” concept is now well-known among politicians, and with the help of an even better clarification of the definition, this can be made into a precise and enforceable regulatory tool.

    There is also room for improvement in regard to the definition of the Internet access services. Any service offers that provide access to a part of the Internet (e.g. limited to just Facebook) will not be covered by the current definitions. Removing such loopholes in the text of the regulations can prevent regulatory uncertainty.

    The service model with the two service categories has been developed to provide a balanced approach to net neutrality. The model both protects net neutrality for Internet-based applications whilst allowing alternative approaches to quality of service and business models for specialised services. As specialised services are exempted from net neutrality, it is especially important that the specialised services are clearly separated from the Internet access services, so as to ensure that Internet traffic is not degraded.

    The Body of European Regulators of Electronic Communications (BEREC), made it pretty clear with their findings that specialized services and internet application services need to be either physically or virtually separated in order to “prevent degradation of the internet access services.” And that certainly makes sense although the “virtual” separation sounds like an invitation for dynamic co-mingling of specialized and non-specialized services that could discourage further investments in overall bandwidth (since they could just reallocate bandwidth from the non-specialized services over to the specialized services if the specialized service bandwidth is hitting its limit…as long as the non-specialized traffic isn’t “exception” clogged).

    But keep in mind that a loophole:

    There is also room for improvement in regard to the definition of the Internet access services. Any service offers that provide access to a part of the Internet (e.g. limited to just Facebook) will not be covered by the current definitions

    So will your ISP be able to offer you a Facebook-only service with traffic that’s exempt from the net neutrality rules while offering a separate service that cover the rest of the internet? Doesn’t that mean any single website, no matter how integrated its content is into the rest of the internet, could be considered something analogous to a “specialized service”? How does that make any sense? And yet it kind of sounds like that’s the loophole in place(unless it’s already been removed). And if that’s the case, the future of the internet could become oddly retro (The dead shall rise again).

    Of course, many of these concerns over the fate of the EU digital ecosystem might be moot if one assumes extensive competition remains in the EU telecom sector and it doesn’t and up collapsing into a US-style oligopoly. Good luck with that!

    Posted by Pterrafractyl | February 7, 2015, 5:56 pm
  10. With the Comcast/Time Warner merger unfortunately still under consideration, here’s a reminder that, despite the many valid arguments against allowing the creation of a media super-giant, they aren’t all valid:

    National Journal
    Republican Fears Comcast Will Crack Down on Conservative Media
    The cable giant’s power would only grow with the Time Warner Cable deal.
    By Brendan Sasso

    April 9, 2014
    Sen. Mike Lee is worried that Comcast, which owns NBC-Universal, could discriminate against conservative media outlets.

    “Considering the well-known political leanings of NBC, I’ve heard concern that Comcast might have the incentive and the ability to discriminate against certain political content, including for example conservative content,” Lee, a Utah Republican, said Wednesday during a Senate Judiciary Committee hearing on Comcast’s planned purchase of Time Warner Cable.

    “And that capacity could be significantly enhanced as a result of this transaction,” the senator warned.

    The Federal Communications Commission used to have rules that barred cable TV providers from controlling more than 30 percent of the market. The courts have thrown out those rules, but Cohen argued that the fact that Comcast will still come under the cap is a “compelling argument” that there shouldn’t be a concern about unfair market power.

    But Gene Kimmelman, the head of consumer advocacy group Public Knowledge, argued that Comcast’s ownership of NBC gives the provider an incentive to discriminate against competing TV channels.

    James Bosworth, CEO of the cable golf channel Back9Network, also expressed concern about Comcast’s power to drop TV channels that would hurt NBC-Universal properties. The company owns its own golf-focused network, the Golf Channel.

    In addition to providing cable TV service, Comcast and Time Warner Cable are also the nation’s biggest broadband Internet providers.

    To receive permission to buy NBC-Universal in 2011, Comcast agreed to abide by the FCC’s net-neutrality rules. Those regulations require Internet service providers to provide equal access to all websites. Because a federal court struck down those rules earlier this year, Comcast is the only provider that is still barred from blocking or slowing down any websites (including conservative ones).

    Despite that obligation, which expires in 2018, Kimmelman warned that Comcast will become a gatekeeper with unprecedented control over the Internet.

    Now, given the size of the new Comcast-Time Warner behemoth and the fact that the new company both creates and distributes content, concerns about how that market power might be abused are perfectly reasonable. But concerns that Comcast-Time Warner might be biased against Republicans? Uh….that’s probably not going to be a problem:

    The Daily Beast
    After MSNBC Axes Ronan Farrow and Joy Reid’s Shows, Is Chris Hayes Next?
    As its afternoon shows hosted by Ronan Farrow and Joy Reid are canceled due to poor ratings, MSNBC is reportedly planning to replace Chris Hayes with Rachel Maddow.

    Lloyd Grove

    It was hardly a surprise Thursday when ratings-challenged MSNBC announced the cancellation of the poor-performing afternoon programs hosted by Ronan Farrow and Joy Reid after less than a year, with veteran news anchor Thomas Roberts stepping in to preside over the two-hour block from 1 p.m. to 3 p.m.

    Until a permanent replacement is named for Roberts’s 5:30 a.m. program Way Too Early, the 6 a.m. Morning Joe hosts Joe Scarborough and Mika Brzezinski will temporarily take up the slack by starting a half-hour earlier.

    But according to knowledgeable sources at the Comcast-owned cable network, Thursday’s moves were only the opening salvo in a wider programming shakeup.

    In the relatively near term, two well-placed sources predicted to The Daily Beast, Chris Hayes will be relieved of his weak-performing 8 p.m. show All In, to be replaced by the current 9 p.m. host of The Rachel Maddow Show, while a talent search is currently underway to fill the prime-time slot to be vacated by Maddow.

    An MSNBC spokesperson—who tried put a happy face on the demotions with talk of prime-time specials and “multiplatform” national reporting for the still-employed Farrow and Reid–declined to comment on the Hayes-Maddow scenario.

    In the longer term, these sources said, the Rev. Al Sharpton—a larger than life personality who attracts a 35 percent African-American audience but continues, after 3½ years of nightly practice, to wrestle with his Teleprompter–could eventually be moved from his weeknight 6 p.m. slot to a weekend time period, as MNSBC President Phil Griffin attempts to reverse significant viewership slides by accentuating straight news over left-leaning opinion.

    “Everybody in the food chain from top to bottom understands that the Olbermann era is over,” said an MSNBC source, referring to the glory days during George W. Bush’s administration when incendiary liberal Keith Olbermann regularly attracted a million viewers—many of them seeking refuge from White House and Republican talking points.

    The MSNBC source said, “Going left was a brilliant strategy while it lasted and made hundreds of millions of dollars for Comcast, but now it doesn’t work any more…The goal is to move away from left-wing TV.”

    Olbermann, who these days hosts a sports program on ESPN, made his bones by blistering Bush and feuding with Fox News star Bill O’Reilly—the No. 1 rated cable news personality–and acrimoniously departed from MSNBC in February 2011 for former Vice President Al Gore’s Current TV, from which he was fired a year later.

    Griffin–who has been forced to deal with a number of awkward personnel issues during his 7-year leadership of the cable outlet, notably the firings of Martin Bashir and Alec Baldwin for ugly verbal spewings—had high hopes for Farrow and Reid last year when he inserted their shows into the daytime lineup.

    “I’m confident the changes and additions to our lineup will strengthen the flow of our programming,” Griffin wrote in a staff memo heralding their arrival last year.

    In an interview with The Daily Beast, he was clearly smitten with Farrow, the son of Mia Farrow and Woody Allen (or Frank Sinatra, depending), then a precocious 26-year-old who was largely untested on camera.

    Still, for all its ratings troubles, MSNBC remains a reliable money-maker for Comcast, since much of its revenue is generated not by viewership but by cable subscription fees.

    Yes, Comcast has plans for changing the political orientation of the cable news landscape, but they aren’t exactly plans the GOP needs to be worrying about:

    The MSNBC source said, “Going left was a brilliant strategy while it lasted and made hundreds of millions of dollars for Comcast, but now it doesn’t work any more…The goal is to move away from left-wing TV.

    It’s worth noting that NBC Universal CEO, Steve Burke, was not only one of George W. Bush’s fundraising “Rangers”, he is also the son of Daniel Burke, co-chief of Capital Cities during the rise of Bill Casey. Before the NBC Universal/Comcast merger Steve was the COO of Comcast. And that’s all part of why it was probably always just a matter of time before Comcast decided to either kill the network outright or just completely depoliticize it to the point where virtually all of the commentary critical commentary of the GOP is oligarchs is stripped out and replaced with more news about the weather or something.

    It’s also worth noting that the guy leading this change up at MSNBC, Phil Griffin, had words about turning his network into Fox during the last MSNBC shakeup that have suddenly become rather ominous in light of recent reports.:

    The Daily Beast
    Banter With The Beast: MSNBC’s Head Honcho Phil Griffin on Admiring Roger Ailes and More
    He just shook up the network’s daytime schedule with two new hires. Lloyd Grove chats with the man in charge about his cohorts, competitors and companions.

    Lloyd Grove

    Phil Griffin’s legs are bouncing rapidly up and down, as though he’s possessed by a caged bird frantically trying to break free and take flight.

    “I’ve got to stop that. Everybody writes about that,” says the president of MSNBC, coiled behind a designer desk in his sleek, sun-dappled corner office on the third floor of Rockefeller Center. “I’m always churning.”

    The 57-year-old Griffin, who favors zippered exercise jackets over a standard-issue coat and tie, is a sports nut who frequents the gym and jogs in Central Park. He has toiled at NBC News and various sister outlets since 1984, when, in his first month as a budding producer, he accidentally scored a direct hit on a surprised John Chancellor while tossing a football during a pickup game being waged in an office corridor.

    “Not well,” he says ruefully when I ask how the distinguished former Nightly News anchorman reacted. “He didn’t quite have the sense of humor I thought he might.”

    Griffin’s undercarriage trembles at the memory—or maybe he’s simply churning again.

    The latest manifestation of Griffin’s churn is the second-place cable network’s freshly reconfigured daytime schedule, in which he has shuffled a couple of his established anchors—Andrea Mitchell and Tamron Hall—to make room for new blood. Griffin’s two new hires, Ronan Farrow and Joy Reid, are bright and telegenic personalities, but largely unproven as viewer draws, who will launch their hour-long programs at 1 p.m. and 2 p.m., respectively, on Feb. 24.

    In his office Griffin insists: “I think we’ve never had an ideology. An ideology is a single thought across all programs. We’ve never had that.” As evidence, he mentions the spirited on-air debates in 2010, pro and con, concerning whether the Bush tax cuts should be allowed to expire. “Obviously I hire people who fit the sensibility,” Griffin says. “We do stay true to facts. You have to build your argument. That’s why I call it a sensibility.”

    He continues: “If you’re a Democrat in trouble, we’re not a place where we’re going to rehabilitate you. You’re not going to get a free ride if you did wrong.” As evidence that the cable outlet is by no means a White House shill, Griffin mentions Ed Schultz’s impassioned criticisms of the Obama administration’s trade policies, and various MSNBC hosts’ more general condemnation of Obama’s use of deadly drones in Afghanistan and Pakistan.

    Of course, there are notable exceptions to the prevailing center-left zeitgeist: Morning Joe, the panel and interview show in which former Republican congressman Joe Scarborough and broadcast veteran Mika Brzezinski, daughter of Jimmy Carter’s national security adviser, preside over a multi-party conversation about the day’s developments; and The Daily Rundown, in which Chuck Todd, NBC News’s down-the-middle White House correspondent and political director, grills Washington players and provides canny analysis of their aims and motivations.

    As for Fox News, “I think they do have an ideology,” Griffin says, “because every Republican who’s in trouble goes on that network to be taken care of…They’re owned by News Corp., which is Rupert Murdoch. Roger Ailes runs it, and he comes out of the Republican Party.” Griffin adds: “That’s fine. They’ve done an incredible job over there. They’ve been very successful. They drive a lot of the conversation.”

    What if an angel descended from the cable television firmament and whispered in Griffin’s ear: “Phil, if you just change MSNBC’s sensibility to ‘right-wing Republican,’ you’ll make a billion dollars a year like Fox”? How would he respond?

    “I don’t believe the angel’s coming to me—so I don’t have to deal with that answer,” Griffin says with laugh. However, he can’t resist adding: “It’s pretty obvious what you might do.” Presumably, follow the angel’s prudent advice.

    “It’s pretty obvious what you might do.” Ominous!

    Still, it was nice to see that Senator Mike Lee is actually thinking about issues like how to ensure the public doesn’t find its access to news and information under the complete control of a handful of entities that are out to push an agenda of their own. Especially since Lee is indirectly making the case for strong net neutrality laws since one of the biggest fears of a failure to pass net neutrality laws is that telecoms will have the option to choose which websites should be sped up or slowed down. So it was nice of Lee to express such concerns, although not nice enough.

    Posted by Pterrafractyl | February 20, 2015, 12:11 am

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