European parliament adopts 'net neutrality' law (Update)

April 3, 2014 by Toby Sterling

The European Parliament voted Thursday to stop Internet providers from charging for preferential access to their networks—a step cheered by consumer groups and startups but bemoaned by the telecommunications industry.

The bill on "net neutrality" forces Internet providers to treat all traffic the same regardless of its source. That will prevent major telecom and Internet providers such as Vodafone or Deutsche Telekom from reserving the best of their network for their own services, or selling the lions' share of bandwidth to big companies like Google and Netflix, while leaving a slower Internet for everyone else.

European Commission Vice President Neelie Kroes, who proposed the bill, hailed Thursday's 534-25 vote as "historic." She said it will help "to get rid of barriers and to make life less expensive" for consumers.

Small companies, consumer groups and online freedom activists cheered Thursday's vote.

"The beauty of this is that everybody with a laptop and an Internet connection can conquer the world," said Wienke Giezeman of the Amsterdam startup WappZapp, which offers a personalized video service.

But large European telecommunications companies protested, warning of dire consequences if net neutrality is enacted in all European countries. So far, only the Netherlands and Slovakia have adopted strong national net neutrality legislation. The telecoms companies say they are increasingly operating at a disadvantage to their counterparts in the United States, where a similar law was shot down this year.

"Europe's telecoms operators are facing decreasing revenues ... compared with operators in the U.S. and Asia," said the GSM Association, an industry group for mobile phone companies.

To become law, the bill must be approval by EU leaders, likely at a meeting in October, and a flurry of lobbying is expected before then.

"Europe's big telcos will not take this Parliament vote laying down and will now bring out the big guns," said John Phelan of the European consumer rights organization BEUC.

He predicted the telecommunications companies will argue the reform package would cause them grave financial damage but added "there is scant evidence to that effect."

"It's a narrow market dominated by big players whose yearly revenue is increasing exponentially," he said.

Etno, an industry group of European telecommunications network operators, said the law will hurt consumers' access to not only online medical services and education but "would also affect existing services such as IP-TV, tele-presence and Virtual Private Networks for businesses."

Chairman Luigi Gambardella predicted "a dangerous situation in which the European digital economy will suffer and EU businesses will be put in a difficult competitive situation with respect to other regions."

In the U.S., net neutrality rules imposed by the FCC were struck down by a court in January. The following month, Netflix struck a deal with Comcast to pay for preferential treatment of Internet traffic bearing its film streams.

Netflix had complained Comcast had left it little choice but to pay or see the quality of its service deteriorate. Comcast shot back that Netflix should pay because it uses so much bandwidth. According to estimates by the Canadian Internet monitoring firm Sandvine, Netflix and Google's YouTube together account for about half of all U.S. Internet traffic.

Thursday's bill will also forbid Internet providers from blocking or hindering companies that compete with their own voice and messaging services, such as Microsoft's Skype and Facebook's WhatsApp.

Roaming charges that mobile phone users pay when traveling in other countries will also be banned within the European Union by 2016.

Etno estimates that telecommunications companies will lose 7 billion euros ($9.6 billion) in operating profits through 2020 as a result. Consumers, however, should benefit.

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5 / 5 (1) Apr 03, 2014
Netflix had complained Comcast had left it little choice but to pay or see the quality of its service deteriorate. Comcast shot back that Netflix should pay because it uses so much bandwidth.

Correction: Comcast customers are the ones using the bandwidth to view Netflix - bandwidth that Comcast is charging for monthly but doesn't want people to use so Comcast wouldn't have to deliver what they've already signed and sold.

That's the real reason why telecoms don't like net neutrality. They want to sell you high speed DSL and make you pay for high speed DSL, but they don't want you to use your high speed DSL because then they'd have to actually upgrade the network to match.

Comcast in particlar uses a lot of cable DSL, which means the customers are daisy-chained along the same cable and share the same bandwidth. You put 100 households along the same wire and you save a lot of money, and you also create a network congestion problem when everyone tries to watch Netflix.
5 / 5 (1) Apr 03, 2014
So the situation is simply that Comcast double dips. First they sell bandwidth to their own customers, and then they charge other companies money when Comcast customers access their services using that bandwidth.

And the terminology used is deliberately confusing as well. The telecoms like to muddle the distinction between bandwidth and data, and use data caps to charge people more for downloading more data, or to make them use their connections less on the argument that it's using up the limited "bandwidth".

But "bandwidth" really means the speed of service they've sold to the customers and not the amount of data they transfer using it, so it's their own fault that the network is congested. They've sold too much bandwidth and built too little of it.

And this is what the European telecoms want to emulate as well.

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