Keeping the Internet open, innovative and competitive

AdServing_01_FlexibilityIn the past two years we’ve witnessed various events that have had an impact on the open character of the Internet. In October 2015 European Net Neutrality rules were published, providing guidelines for regulation, but they were criticized by many as being too open and leaving too much room for uncompetitive behavior (here’s an example). In June 2015 the FCC published its US Open Internet order along the line of “no blocking, no throttling, no paid prioritization”, driving a significant change in the IP Interconnection landscape especially. In parallel, we saw ongoing consolidation on the side of the ISPs, with large ones absorbing their smaller competitors or other players in the digital value chain (e.g. cloud hosting services, “Over-The-Top” – OTT – video services) or even merging with mobile providers. Another trend we saw was the launch of services for which the related Internet traffic is not counted towards the “monthly data budget” of the customer, typically referred to as “zero rating”.

At LeaseWeb, our experience is that this consolidation increasingly leads to behavior where large ISPs don’t provide uncongested Internet access to their customers anymore but restrict (“peering”) interconnection capacity with other networks (e.g. Tier 1 backbones or content providers) in an effort to monetize these interconnects and have Tier 1 backbones and content providers contribute to the investments in the ISP’s networks. This behavior started a long time ago with large ISPs in Germany and France, for example, but we now see that pan-European ISPs are starting to behave similarly. Some of these cases have become very visible such as in the case of Dutch Ziggo customers complaining about the quality of their Netflix streams.

Competition and innovation at risk
To us this means that that an open Internet is at risk: innovative OTT and cloud services often compete with the services provided by these ISPs, so if ISPs create cost bottlenecks for the OTT content that their customers want to see, competition and innovation are at risk. A complicating fact is that the end-user will typically not blame the ISP but “the website” and just leave the OTT service and find an alternative. If ISPs include zero-rated OTT services in their offering, the discrimination between “their” and other services even becomes worse.

To contribute to protecting our customers against this trend, we have reached out to the Dutch competition authorities (ACM), Ministry of Economic Affairs, Consumer Rights Organizations (Consumentenbond, BEUC), EU Directorates and members of the European Parliament to update them on these developments and motivate them to address this. We have also joined a European alliance called Save Net Competition (www.savenetcompetition.eu) and the European Competitive Telecom Association (ECTA – www.ectaportal.com) – both of them striving for European regulation that safeguards competition. With these initiatives our focus is on educating people about the Internet ecosystem and explain how these interconnection costs can kill the business case for innovative services. In the next few months the Regulatory Framework for Electronic Communications (“European telecom law”) will be reviewed, so if regulation is the answer to the problem, now is the time to address this.

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