EU Telcos To UN Regulators: Divert More Money Our Way And No One's Internet Gets Hurt

from the unfortunate dept

Back in June, we wrote about the European Telecommunications Network Operators Association (ETNO) and its “proposal” to basically tax the internet, which they’re hoping the ITU will adopt later this year. The thinking here is not hard to figure out. These are old school (either state run or formerly state run) telco monopolies not used to having to compete or innovate. They look at the success of various internet companies, and get jealous and — like the big entertainment legacy players — start thinking “hey, some of that should be my money — this is unfair!” And, so they come up with schemes and proposals like this — trying to effectively get regulators to force a revenue shift from those companies that innovated and found business models that work, over to the lazy telcos who sat back, fat and happy with their monopoly, refusing to innovate. It reminds me of Andy Kessler’s description of companies that create value vs. those that lock up value. One goes out and builds something new that the market wants… and the other runs to the government and asks them to put in place policies that divert revenue to them.

With that in mind, check out ETNO’s latest proposal from ETNO for the ITU to consider (pdf) later this year. And you notice all sorts of questionable claims, all designed to basically say: we haven’t adapted, and so regulators need to force money from actual innovators into our bank accounts:

The telecommunications market and the telecoms industry as a whole is undergoing a fundamental shift. Catalysed by the availability of higher bandwidth connectivity, new applications and services are being enabled that go far beyond the traditional services of voice calling. In both the consumer and enterprise segments, services such as Voice over IP (VoIP), social networking, instant messaging and the rise of ‘apps’ have changed the way customers use their mobile and fixed connections. This development is significant and telecoms operators need to adapt and rebalance their tariff structure between voice and data services.

While broadband definitely is a key “catalyst” note how they set this up so that they can claim that it’s really all about them… and then how the “tariff structure” needs to be “rebalanced.” It’s not about how they need to rethink their own business models or innovate or anything along those lines. It’s about asking regulators to divert money that others are making to them.

The aim of the ETNO proposal is to contribute to the achievement of a more sustainable model for the Internet. ETNO is not asking for increased regulatory intervention but aims to establish a reference for commercial negotiations. The current interconnection model has some shortcomings that need to be addressed. Today there is a huge disproportion amongst revenues and a clear shift of value towards players (Over the Top players — OTT) who are not contributing to network investment. Traffic and revenue flows need to be realigned in order to assure the economic viability of infrastructure investment and the sustainability of the whole ecosystem. The revision of the ITRs offers a unique opportunity to propose high‐level principles for IP interconnection.

Yup. “More sustainable” means “more money to the telcos.” “Disproportion amongst revenues and a clear shift” towards online service providers is basically “the folks providing the services that make our connections valuable are making more money than we’d like, and we deserve some of that.” And the idea that they’re “not contributing to network investment” is a red herring. The big internet companies pay a ton for the bandwidth they use. And that money goes to the telcos. If they’re not investing it in their networks, then perhaps they should explore why. Any time you hear a company say that “traffic and revenue flows need to be realigned in order to assure the economic viability,” you know you’re dealing with a company (or industry) that has failed to adapt and is asking the government to bail them out by taking money from those who did adapt. To claim that this isn’t asking for regulatory intervention is laughable, since the whole process is one giant regulatory intervention. If this was just about commercial negotiations, this wouldn’t be an issue. They’d just go out and negotiate.

ETNO believes that the revised ITRs should acknowledge the challenges of the new Internet economy and the principles that fair compensation is received for carried traffic and operators’ revenues should not be disconnected from the investment needs caused by rapid Internet traffic growth. The ITRs should be flexible enough so as to further encourage future growth and the sustainable development of telecoms markets, while respecting the guiding principles that led to the successful development of the Internet: private sector leadership, independent multi‐stakeholder governance and commercial agreements. ETNO is certainly not asking for any change to the current Internet Governance model which is based on private sector leadership and multi‐stakeholder dialogue.

Whenever a company is asking regulators for “fair compensation,” it’s basically them saying “our business model is flopping due to changes in the market, and we need you to prop us up.” If ETNO really isn’t asking for a change in the current internet governance model, then, um, why is it asking regulators to “rebalance” things and change who gets what cut of the revenue?

ETNO wants to avoid decisions that would prevent new business models from emerging or that would hamper differentiated offers, hence limiting consumer choice. The risk of undesirable economic and technical regulation of operator rates, terms and conditions will be much higher if the development of the Internet continues to be jeopardized by the lack of sustainability and/or by the lack of end‐customer satisfaction.

ETNO members have reiterated on many occasions their commitment to an open Internet and to continue enabling consumers to access services and applications of their choice as well as being completely transparent about terms, conditions and limitations. As recognized by the European Commission, operators should not be prevented from developing differentiated offers based on customer needs, in addition to the best effort Internet. It is important to note that nobody will be cut off from the Internet as the best effort Internet will continue to exist and to evolve. New business models based on differentiated offers will ultimately create more choice for consumers.

This is very close to “nice internet system you got there… you wouldn’t want anything to, you know, happen, to it, now would you?” Basically, if regulators don’t divert more money from successful internet companies to lazy telco monopolists, well, then we might just have to “jeopardize” the network.

There’s a lot more like that in there. They’re trying very, very carefully to use the language of “internet freedom” and innovation, in order to then explain why the ITU should put in place a proposal that effective forces local regulators to divert money from the companies who innovate, to the lazy monopolists. This is one of the reasons why so many folks interested in keeping the internet truly free and open are quite concerned about ETNO’s proposal. It’s not designed to benefit the internet or to encourage innovation. It’s just designed to divert money from those who innovate to the telcos who haven’t had to innovate.

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Comments on “EU Telcos To UN Regulators: Divert More Money Our Way And No One's Internet Gets Hurt”

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Anonymous Coward says:

You know usually when I read these types of proposals from industry groups I first think “yeah, that’s reasonable” until I start really considering the underlying principles and how bad they are.

Unlike this proposal, which might as well have been written in cut out magazine words pasted together with

My favorite line in the whole thing is this:

ETNO is certainly not asking for any change to the current Internet Governance model which is based on private sector leadership and multi‐stakeholder dialogue.

In other words: “Please don’t look at this blatant cash grab as yet another reason to regulate us like a utility and/or nationalize us”.

Anonymous Coward says:

so, those that have been and still are not doing anything new to enhance their services want extra money. the fact that they will then continue to sit back, thumbs up arses, brains in neutral, doing absolutely f**k all to deserve that extra money, is irrelevant. if they dont get more money, they will do whatever to disrupt the system (that has been improved by others), through pure jealousy, is pathetic. obviously, they have been taking lessons from the equally lazy and equally selfish entertainment industries. that extra money is supposed to come from those that have and are enhancing their services. if this happens, then the internet remains unharmed. the fact that there will be an immediate increase, yet again, to consumers, is beside the point? if this isn’t an open threat at extortion and blackmail, i dont know what is! and how long before there was another demand on the same lines? about as long as the demands that come from the entertainment industries again, until they ended up being paid continuously for doing nothing whilst threatening stupid politicians of the consequences (that would never happen) if the demands weren’t met. and those thick politicians would do as they are told, just like with the entertainment industries again, and the brown envelopes that happened to fall on their mats!

Josef Anvil (profile) says:

Slightly askew

After reading the article, I’m really finding it hard to understand why you would think the telcos are trying to shift money from service providers on the net to network service providers. While, I agree the ETNO is making a shameless plea for cash, I think its more than harsh to say that telcos have not innovated.

The telcos in the US have invested heavily in their networks, to the tune of billions of dollars per year, turning ATM networks into IP networks. So it’s unfair to say they haven’t innovated on the tech side. Are they lazy fat bastards? Certainly yes. Did they fail to foresee that all communications traffic would be IP based and the cost of that traffic would be driven down? Yes, they completely miscalculated that.

The telco business model had been based almost entirely on voice traffic until shortly after the dotcom bust, so now you have a legacy industry that is still trying to figure out how to charge long distance voice fees for data traffic. They flat out want more money from customers and they want the governments to command us to give it to them. In the US this was always a fantastic symbiosis, since the states were allowed to skim huge amounts of tax revenue from voice service, but taxing data traffic was off limits.

Oddly enough it does seem that Google is one company that has decided to just create its own network. Maybe Facebook and Microsoft will try to do the same.

Lord Binky says:

Oh man I love this line of thinking.
“Today there is a huge disproportion amongst revenues and a clear shift of value towards players (Over the Top players — OTT) who are not contributing to network investment. “

Yeah, every delivery service has that issue and it’s what makes the service valuable. The internet service provider is just a dumb pipe, period. Get over it or get out of the business and go into providing services over the internet, but that would require making a service worth buying so it isn’t exactly a field of expertise for telcos.

Physical postal/parcel service faces this every day, but you don’t see them charging based on how much the item shipped cost the recipient.

Imagine is UPS or FEDEX stood up and said, that’s it, people keep buying stuff from skymall, and they make a shitload of money on those purchases, but you know what? They don’t pay any additional fees than the people sending equivalent weight/size gift baskets to their friends. Skymall needs to pay more because they make more, it’s only fair since they aren’t putting more money into our delivery service.

trish says:

I love how the telcos are always asking for government handouts under the guise of ‘needing to invest in their infrastructure’. It’s not like they could use the money they chargetheir customers to improve their network. No, that money pays for Porsches and villas. The telcos willl refuse to invest in their own product because they have a monopoly, unless the government grants them free money. Because they don’t have to, they have a monopoly.

ruben (user link) says:

european telecommunications

well thought of!! great thinking of paying a tax to the business tech holders. its max capacity can be read by the people on this blog as ETNO wants to avoid decisions that would prevent new business models from emerging or that would hamper differentiated offers, hence limiting consumer choice. this customer choices should always kept in mind and should further pay aatention on it!


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