Big telcos' profits rise on flat turnover

The big UK telcos (in which I now include Sky as a multi-platform operator) are doing well - BT's pension deficit is eroding fast, it has increased profit on lower turnover, and its shares are bumping along. It is a relatively well-managed utility rolling out VDSL at a satisfactory rate. Virgin media, the cableco, is turning over almost £4b/annum but still making net losses. Meanwhile Sky is making £878m/annum based on a slightly higher revenue than BT (about £6b), revealing how nicely their wholesale business is doing pre-regulation. Between them they have cash flow of over £15b, and only BT Wholesale is really price-regulated.
Sky is having something of a High-Definition TV windfall, getting customers to pay significant premiums for HD channels. In the UK, Sky gets away in its duopolistic market with its HD premiums of £10/month ($16CAN) for 18 channels plus sports/movies. To a Canadian, this looks odd - Canada (Videotron in Montreal) gives 37 HD channels (including the main French language sports channel for hockey, and 2 movie channels) for $3/month (under £2), and the HD boxes cost no more than $200 (though listed at $300, stores are discounting).
It will be fascinating to see how ESPN and BT Vision compete with Sky and Virgin - but given Sky's marketing ability, bundling of Tivo-type services and 8m customer base, they may be able to resist price cuts and approach that magic "special offer" (sic) $99US/month including broadband that Comcast is presenting to its customers as a bargain! Of course as Sky gives away basic broadband with a puny 2GB cap, it does provide some value compared to Comcast - in LLU areas.

Magnificent post by Internet-thought on telco CEOs

Required reading - especially parts on why telco execs pretend to be competing with Google and Apple to justufy their huge salaries for running a utility (ahem, like regulators who pretend not to be regulating utilities), then invest in IT service companies because they screwed up content (Endemol, movie companies, web portals):
"IT-services companies are the construction companies of the digital age. IT companies are just like your local builders. They are lying, thieving, unprofessional, shoddy bastards you can't do without. Everything would be better if you could Do It Yourself, except that you don't have the time and the expertise and you've seen too many DIY projects fail horribly. So you hire a bastard IT-company (builder). Really there is no difference between a construction company and an IT company. Both make life hard for the customer and the supplier. An IT company is always faced with a customer who underestimates the work, but who still rather pays someone else to do it, than do it themselves. So whoever the customer chooses, it is generally the one with the second lowest price. This is the guy who didn't calculate all the contingencies well, but was at least able to name some to comfort the customer, who knows there will be contingencies. Then the customer and the supplier set off on a perilous journey of over expectation for both the end product and end profit. Half way through they know the journey is impossible and neither are going to get what they want. For the remainder of the journey they fight over all the extra work that needs to be done. In the end neither is happy, both claim they paid too much and got too little etc. So low margins, high hassle. And this is the market telcos want to get into, because somehow it fits their high margin business.."

Win-win-win: Amazon describes FRAND

I have always enjoyed Amazon's forays into net neutrality - and since 2006, they have argued for negative net neutrality, as have I. Now Paul Misener argue for FRAND - allcomers can access higher QoS so long as that does not slow regular traffic. How does that work? Simples - increased capacity to match that new QoS traffic. Its exactly what I described in the book, and if it is to happen, its not just Amazon who will celebrate.
"Why should one Web site be able to pay for better performance when others do not or cannot pay? The answer is simple: the improved performance of this Web site has not come at the expense of any other Web sites, and the same enhancements were available to everyone else. One site paid for performance enhancement, but others didn't suffer degradation. If paid performance enhancement for some content is equally available and does not degrade the performance of other content, then it should be permissible. And, following this principle, in addition to moving, leasing private lines, and edge caching, Internet content providers (and consumers) should be able to purchase "quality of service" or "managed services" from network operators on the same basis--equal availability and no harm to other content. At a recent conference, this approach to Net neutrality was described, and another speaker remarked that, at a completely full network bottleneck, it is impossible to favor some content without degrading other content. This is right, but only in a static network, i.e., one that is not growing."

Ofcom speech analysis: video QoS yes? Skype-blocking no?

Your guess might be better than mine - what do you think of this passage from Ed Richards' UCL speech last week? The speech is particularly interesting elsehwere than in this bit, which obviously had to be bland to conform to the ongoing consultation. Its certainly less interventionist on openness and interoperability than the European Commissioner whom he followed:

Here in the UK, there have been no formal complaints about anti-competitive discrimination, although there have been a number of modest disagreements between content/service providers and ISPs/mobile operators. It is in this vein that we do not currently see a compelling reason for preventing, ex ante, all forms of discrimination using our sector-specific regulatory powers. But if genuine problems of anti-competitive practices in relation to traffic management emerged, we would of course have the ability to intervene applying our full range of ex post competition powers as appropriate. 

This allows us to take a measured approach, allowing certain practices – such as permitting operators and ISPs to set differentiated quality of service – which may prove beneficial to consumers, but which could be caught by a blanket prohibition, whilst at the same time being able to take effective action to curb any genuinely anti-competitive practices that may emerge. Although the evidence at this stage suggests a blanket prohibition is undesirable, our initial stance in this debate is that consumer transparency must be guaranteed wherever traffic management occurs. Consumers need to have information available to them. They need to know what policy their internet provider applies, and how this affects the service they receive. In a competitive market, they can then exercise choice including this criterion. Developing some basic principles around transparency, and ensuring that operators and ISPs comply with these principles, is consistent with our broader functions and duties as a sector regulator.

I take it that they'll allow traffic management for video in most circumstances - maybe with a spat with Sky -  but if leant on by Brussels will stop outright VOIP blocking by the mobiles (who instead would have to compete with Skype by offering digital voice as a differentiated premium product). Small mercies for consumers, it looks like there will be greater attention paid to transparency of practices at least. That is all - expect more from the EC if anyone.

Electrification and Soviet Power Part II - or why we're all the same?

Dave Burstein crunches the new OECD figures - which show that most of the G7 has 25-30% broadband despite huge differences between cable market shares (e.g. DSL market share 13% Canada, 11% US, 16% Belgium and 29% France). So if we're all the same, what's all the argument about?
Well, first its about catch-up - most of those countries with very little cable have achieved remarkable competition on the DSL line up to now. Most cable countries have not done much on DSL competition. Italy and Spain lag far behind at 21% but did not start the race until years later. So whereas Germany, US and Canada were the only players in the game in the late 1990s, within 10 years the UK and France have got ahead. The even better examples are countries with cable and competition in DSL - the Far East, Scandinavia, Netherlands, where penetration is much higher. And one other thing...
Competition brings speed. Cable can achieve 50-100 Mbps faster and cheaper than DSL can roll out VDSL. But then another leapfrog can occur where DSL is upgraded to FTTP - as in Japan, and we soon have Gigabit Ethernet. Is this moving from battery power to AC electrical grids, or something much less important? Cloud enthusiasts say the former, copyright holders the latter, and the truth will, as Mao said, not be known for several hundred years. But would you move backwards in speed in your workplace or university environment? Thought not.
You might get some answers at the 38th Telecoms Policy Research Conference panel on broadband strategies 1-3 October. Try this session with Eli Noam and Rob Frieden in particular, plus this EU-Korea-Japan discussion - and say hi for me, its the first I have to miss for a few years (honeymoon calls).

Chile: net neutrality and parental filters in one Bill

Chile has been debating its new Internet law for three years and 4 months and it finally passed on 14 July, amending its Telecommunications Law. While I know very little about the debate, clearly universal access to broadband is key to development for a middle-income country with such a diverse geography as Chile, as the Minister stated at the passing of the Bill.

The law lays out five duties on ISPs (Google translate):

1. Prohibition to interfere, to discriminate or to interfere in any way with content, applications or services unless they are proven measures to ensure the privacy of users, virus protection and security of the network;
2. provide parental control service;
3. provide clients with written evidence to correctly identify the contracted service (transparency);
4. ensure user privacy, virus protection and network security, and
5. ensure access to all types of content, services or applications and offer a service that does not distinguish between content, applications or services. It also prohibits activities that restrict users' freedom to use the content or services unless at the specific request of users. 

The details are laid out in Memorandum 8874 to the President, detailing ISPs' duties.

a) May not arbitrarily block, interfere with, discriminate against, hinder or restrict the right of anyone on the Internet to use, send, receive or provide any content, application or service over the Internet legal and any other activity or use made legal across the network.

However, [ISPs] may take the measures or actions needed for traffic management and network management ... provided that this not designed to perform actions that affect or could affect competition. 

b) No law may limit a user to enter or use any class of instruments, devices or appliances on the network, provided they are legal and that they do not damage or harm the network or service quality. 

c) They must offer, at the expense of users who request services, parental controls for content that violate the law, morality or decency, if the user is informed in advance and clearly and precisely about the scope of such services. 

d) To be published on its website, all information on the features offered Internet access, speed, link quality, differentiating between domestic and international connections, as well as the nature and service guarantees.

Article 24 I. - For the protection of the rights of Internet users, the Ministry, through the Secretary, shall punish infringements of the legal or regulatory obligations associated with the implementation, operation and performance of network neutrality [using] the procedure referred to in Article 28a of Act No. 18 168, General of Telecommunications. 

J. Article 24 - A regulation will establish the minimum conditions to be met by providers of Internet access service on the obligation to maintain and update published on its website information regarding the level of the service, to include routing criteria, access speeds available, or oversold level of aggregation of the link, link availability in time and reset time, the use of management tools or traffic management, as well as those factors specific to the type of services offered and corresponding to international quality standards of general application. Also, the regulations will establish the actions to be considered restrictive practices to freedom of use of content, applications or services provided through the Internet, according to the provisions of Article 24 H. 

This is very obviously legislation to enshrine net neutrality, and is a world first (though all 27 EU countries must follow by May 2011) - of course how it is enforced will be critical.

.

Response to EC consultation on 'Open Internet and Network neutrality in Europe'

Not surprisingly, I tend towards the co-regulatory rather than self-regulatory, and consumer transparency rather than 'where are the dead bodies?' approach towards net neutrality. The full submission is here. Here's a flavour:

The European Commission is to be congratulated on its broad terms of reference for its ‘Public Consultation on the Open Internet and Net Neutrality in Europe’, acknowledging the role of an open and interoperable Internet for the future of digital innovation in the knowledge economy. This is very well captured in Commissioner Kroes’ Speech 10/300 at Open Forum Europe 2010 Summit: 'Openness at the heart of the EU Digital Agenda' Brussels, 10th June 2010. My response attempts to map my answers to both the specific questions and the overall framework for interoperability and transparency set out by Commissioner Kroes in this and other public speeches.

This broad consultation stands in stark contrast to the very limited telecommunications economics oriented consultations conducted by the UK Ofcom[1] and other national regulators within the BEREC consultations. This reflects the paucity of network neutrality information supplied by most national governments as published in the 15^th Implementation Report[2].  The issues surrounding network neutrality are far too broad to be captured by such narrow approaches, and the consultations carried out by BEREC members are therefore unlikely to produce useful outcomes from the perspectives of COM(2010) 245 and the European Union’s Digital Strategy.

---

[1] http://chrismarsden.blogspot.com/2010/06/draft-reply-to-ofcom-network-neutrality.html

[2] http://chrismarsden.blogspot.com/2010/05/uk-to-ec-no-net-neutrality-issues-that.html

Now back to the book...

Canadian net neutrality: Geist critique

In the course of his submission to government on an open approach to the digital economy, Michael Geist offers his expert view on the omissions in the CRTC approach to net neutrality enforcement: 
The Canadian Radio-television and Telecommunications Commission issued its much-anticipated Internet traffic management ruling in 2009, better known as the net neutrality decision. The case attracted national interest as the CRTC established several key requirements for Canada’s Internet providers. These included new transparency obligations that forced ISPs to disclose their network management practices, such as why the practices were introduced, who will be affected, when it will occur, and how it will impact users’ Internet experiences (down to the specific impact on speeds). The CRTC also opened the door to complaints about network management practices by establishing a test that any harm to users be as little as reasonably possible.
Eight months later, there have been complaints about the carriers’ failure to comply with the disclosure requirements and concerns that some traffic management practices may not be consistent with CRTC requirements. For example, Rogers and Cogeco continuously throttle all upstream P2P traffic. Both providers admit that the limits on their service occur on a 24 hour, 7-day basis, regardless of whether the network is actually experiencing any congestion. Cogeco claims “it is [our] experience that congestion created by P2P can occur at any time within a 24-hour period.”  This may be true, but the failure to limit throttling activities to instances of actual congestion is surely grounds for a CRTC complaint. While Bell limits its throttling practices to specified periods, its defined period is so broad that it too may be the target of a complaint. Bell discloses that its throttling practices, which target upload and download traffic, runs from 4:30 pm to 2:00 am.  By covering nearly half the day, the company could face questions about whether the policy limits harm as much as reasonably possible.
The CRTC’s net neutrality guidelines garnered well-deserved plaudits, yet the true test will be whether the guidelines will be enforced effectively.  The government can advance the issue in several meaningful ways without necessarily tabling net neutrality legislation.  
Critics of the CRTC approach rightly note that the onus falls to consumers to compile evidence of traffic management practices that run afoul of the commission's test and file complaints.  When asked about the issue in the House of Commons, Industry Minister Clement stated that he is "watching those providers very closely and I do not want to see a situation where consumers are put at risk in terms of their access to the Internet." He can go several steps further by asking the CRTC to conduct regular compliance audits of ISP traffic management practices and by providing financial support to consumer groups who wish to conduct their own investigations.
The federal government also can play a significant role in establishing neutrality for wireless Internet access.  The CRTC acknowledged that many of the same issues arise in the wireless context and that it expects wireless carriers to follow the same guidelines.  Within the next two years, the federal government will conduct another spectrum auction as part of the digital television transition.  The government could incorporate net neutrality requirements directly into the bidding process, effectively mandating neutrality into new wireless services."

Who needs traffic management? Can US follow Canada?

Dave Bustein notes the recent CRTC decision on net neutrality rules applying to mobile, and asks whether the US can achieve similar transparency while questioning whether upstream congestion is actually very manageable: "Comcast currently throttles far fewer than 1% of users and then only to a speed of 7 megabits, faster than most DSL connections. They rarely do that for more than 15 minutes. If that were clearly disclosed, most of the criticism would disappear. But there is a problem if a carrier slows down, for example, Netflix streaming video. The current “complete information” doesn't let me distinguish. How often are users throttled? How much are they slowed down? Typical disclosure hides what we really need to know. Dale Hatfield, are you listening? The minimal Comcast throttling is possible because they have essentially solved the p2p upstream congestion issue. Comcast top technical people have described how they've made inexpensive upgrades to 10-20 megabits from the 2 megabits of older systems. Explaining why they are moving slowly on DOCSIS 3.0 bonding, 4 CTO-level execs told Cable Show audiences they have essentially no upstream congestion these days."

DG COMP: interoperable and open Internet is key to freedom to innovate

Commissioner Almunia is thinking the same as Kroes: its the open Internet, stoopid!

"The market for online content in Europe is a shameful anachronism, and the distribution of content online across the entire European Union is expensive and difficult. This market fragmentation deprives us of scale and the lack of scale deprives us of business... we must not confuse threats to the creators of content and threats to the current intermediaries...For instance, it is a combination of competitive markets in infrastructure and open standards that fostered the development of « cloud » services. And the internet would not be the success it is today, had it not been built on open, interoperable standards and protocols. These brought the « freedom to innovate » to everyone, from the largest multinational to the self employed mom in her garage. It was impossible to predict the many ways internet services would develop and it took an open environment to have the very successful – and unexpected - services that we have today. Not any one company could have dreamt them all. There are many ways society might seek to lower the cost of innovation. An internet based on open standards has proved to be a very effective platform for innovation."

European Consultation on net neutrality - draft answers Part 2

Question 11: What instances could trigger intervention by national regulatory authorities in setting minimum quality of service requirements on an undertaking or undertakings providing public communications services?

There are several answers to this question, which we can separate into contraventions by ISPs of what I term net neutrality ‘lite’ and ‘heavy’.

‘Lite’:

1. Blocking of Skype/VOIP products – this is especially true of mobile networks which have made no secret of fairly widespread blocking. See Madison River (2005) FCC compliance order.
2. Blocking of P2P – when protocols or programmes are blocked rather than a general throttling for peaktime traffic management, this is directly discriminatory. See Comcast (2008) FCC compliance order.
3. Blocking or throttling of video traffic whether delivered by CDN (Akamai or YouTube for instance) or P2P or streaming – which is also discriminatory as in Case 1. See BBC iPlayer/BT (2009), Turkey/YouTube (ongoing) or Norwegian case (2006) for examples.
4. Blocking or throttling of more general traffic classes at hand-over point between ISPs – see AT&T/SouthWesternBell [all now merged under brand ‘AT&T’] (2006) merger consent order.
5. Note all these cases represent blocking and throttling at either end-user or hand-over points. It is significantly harder to analyze hand-over point discrimination for affected parties.

‘Heavy’

1.      The questions here concern the nature of ‘unreasonable’ delays in upgrading non-premium (i.e. 99.999% of Internet ) traffic.

2.     It should be de facto unacceptable ISP behaviour for throttling to be introduced for more than a minor part of each day – perhaps 6 hours. Many ISPs now throttle for much of the business day and the evening peak with no break, e.g. 10am-11pm with a 2-hour mid-afternoon break (Virgin Media terms of May 2010).

3.      It is also clear that the consultation on Universal Service needs to make very clear that this universality must be to open Internet access, not throttled access to premium services first, and Internet second.

4.     To discourage continued ISP under-provisioning of bandwidth requires two strengthened regulatory interventions:

[a] to prevent misleading advertising and mis-selling based on that deceptive advertising, not simply within generally weak consumer protection law and even weaker advertising self-regulation, but also in General Conditions of ISP licences;

[b] to remove bandwidth bottlenecks which are generally no longer in the local loop (where ADSL2 is increasingly common at least in urban and semi-urban exchanges, and DSLAM cost is decreasing as Moore’s law drives down processing costs). This indicates increased NRA concentration on backhaul costs which are still typically the monopoly or near-monopoly of the incumbent with SMP. Both duct-sharing and functional separation can eventually act as incentives to drive down costs in a competitive market, as well as Ethernet LAN products and other NGA backhaul products, but NRAs appear spectacularly misinformed or misguided as to the exponentially decreasing costs of providing such backhaul, instead allowing themselves to be sidetracked by incumbent pension fund deficits and other issues.

The Commission must make plan in its forthcoming NGA Communication that the cost of backhaul remains the key cost for ISPs and it is this that drives short-termist throttling strategies rather than longer-term investment in bandwidth.

Question 12: How should quality of service requirements be determined, and how could they be monitored?

One of the more effective actions by Ofcom has been its joint exercises in testing Internet speeds with Samknows and this should be examined at EU level. However, as a lawyer rather than network engineer, I defer to those with specialist knowledge in this area. I caution that a body of technical experts to determine such factors must always be co-regulatory rather than self-regulatory (as the US approach appears increasingly).

Question 13: In the case where NRAs find it necessary to intervene to impose minimum

quality of service requirements, what form should they take, and to what extent should there be co-operation between NRAs to arrive at a common approach?

Quality of Service minimum levels are the only way for independent application and service developers, and their financiers, to be confident that their innovations can be received by consumers. A single European market in Internet innovation depends on a common minimum QoS standard. That is surely obvious to all. Failure to create a single minimum – above which NRAs are of course welcome to set higher standards, particularly in higher-speed regions within countries – would jeopardize the single European market and signal to venture capital to look elsewhere for entrepreneurs to support.

Question 14: What should transparency for consumers consist of? Should the standards

currently applied be further improved?

The means to achieve this is a consumerist intervention to prevent ISPs advertising ‘Internet access’ when they actually provide ‘special access’ to premium services.

A further means to provide true consumer transparency is to force ISPs to advertise not their ludicrous laboratory-feasible maximum speeds, but their true and provisioned MINIMUM speeds.

If they have 24mbps backhaul and service a maximum 800 customers from one exchange, then they should advertise ‘minimum bandwidth’ as 24576/800 = 30.7kbps.

Even here, they must caution that the 24mbps is a theoretical maximum and not all customers can access 30kbps at peak times.

An example should be included – “at peak times, you may not always be able to access web-based email”.

Question 15: Besides the traffic management issues discussed above, are there any other

concerns affecting freedom of expression, media pluralism and cultural diversity on the

internet? If so, what further measures would be needed to safeguard those values?

Traffic management is censorship at its most basic, whether conducted by private or public bodies. This does not mean it is necessarily or always bad – filtering spam for customers has been the default position for most ISPs for half a dozen years. However it clearly affects fundamental rights to privacy (consider the PHORM experiment in behavioural advertising using Deep Packet Inspection) and freedom of expression (including the right to receive information via the protocol of one’s choosing – e.g. via P2P or streaming).

The monograph I published earlier this year considers the wider details in more detail in its final Chapter 8. See:

Marsden (2010) Net Neutrality: Towards a Co-regulatory Solution, Bloomsbury Academic: London.

See also my latest article on the subject:

Marsden, Christopher T. (June 8, 2010) Network Neutrality and Internet Service Provider Liability Regulation: Are the Wise Monkeys of Cyberspace Becoming Stupid? Available at SSRN: http://ssrn.com/abstract=1622324

Comments welcomed?!

European Consultation on net neutrality - draft answers

The EC consultation is much broader than Ofcom's - anyone care to compare the Dutch and ARCEP consultations too?
Here's some draft answers for the EC:

PUBLIC CONSULTATION ON THE OPEN INTERNET AND NET NEUTRALITY IN EUROPE

Responding to the consultation by 30 September 2010.

Policy Development Unit (B1), BU33 7/40

DG Information Society and Media

Email: INFSO-NETNEUTRALITY@ec.europa.eu

Question 1: Is there currently a problem of net neutrality and the openness of the internet in Europe? If so, illustrate with concrete examples.

Yes, declared by operators themselves, reported by end-users, noted by content providers (e.g. Norwegian state broadcaster, Skype VOIP on mobile, BBC iPlayer throttled by British Telecom, Deutsche Telekom threats to throttle video and so on).

These are recorded in great depth in my blog e.g. http://chrismarsden.blogspot.com/2010/03/telefonica-and-d-telekom-aggressively.html

Where are the bottlenecks, if any?

End-user acess but also at handover points between ISPs.

Is the problem such that it cannot be solved by the existing degree of competition in fixed and mobile access markets?

Yes, because it is ISPs as a class that fear commodization by content providers and prosumers. This point eliminates the attempts by Ofcom and others to portray the problem as one of market entry and Significant Market Power – it is a problem caused by the n-sided market. ISPs can act as roadblocks or traffic cops, but they cannot innovate or provide solutions for end-users. Putting a cash register on the consumer Internet is a zero-sum game that ISPs win, but that everyone else loses (consumers, prosumers, content providers, innovation in the digital economy, society through net public welfare losses).

Question 2: How might problems arise in future? Could these emerge in other parts of the

internet value chain? What would the causes be?

The major problem may not lie with end-users but with traffic management as between ISPs. This is more likely where there are wide disparities in traffic volumes – e.g. ISP A hosts a Content Delivery Network (CDN) for a video provider and has much more outgoing traffic, ISP B is almost entirely a consumer ISP and thus receives more incoming traffic. In this situation, ISP B (which might be the wholesale arm of the former incumbent, or a mobile operator) will throttle at the handover point, not at the end-user’s connection. Its an obvious incentive problem and the forensics required to track and prove any discrimination are fiendishly difficult using 2010 technology.

Question 3: Is the regulatory framework capable of dealing with the issues identified,

including in relation to monitoring/assessment and subsequent enforcement?

No – even though it is a step forward on consumer rights.

Question 4: To what extent is traffic management necessary from an operators' point of

view? How is it carried out in practice? What technologies are used to carry out such traffic management?

[1] ISPs must filter spam and content that is otherwise malicious – this is widely accepted and for the vast majority of consumers and their ISPs, it is uncontroversial. It generally requires only shallow packet inspection to check headers in datagrams.

[2] Deep Packet Inspection for behavioural advertising and mandatory filtering on behalf of public policy objectives (cf. Malmstrom draft Directive, UK Cleanfeed/CAIC list, Nordic suicide-watch sites) are highly damaging to privacy and responsibility of end-users, and outright break the end-to-end principle.

Question 5: To what extent will net neutrality concerns be allayed by the provision of

transparent information to end users, which distinguishes between managed services on the one hand and services offering access to the public internet on a 'best efforts' basis, on the other?

Very little – in fact, effective transparency will result in consumer outrage at the throttling of their legitimate traffic and calls for more regulation will follow.

Question 6: Should the principles governing traffic management be the same for fixed and mobile networks?

Yes, of course. Otherwise, the same distortions will appear that have jeopardized mobile termination for voice calls over the past 20 years. That experience was disastrous – do we want to repeat it? 

Question 7: What other forms of prioritisation are taking place? Do content and application providers also try to prioritise their services? If so, how – and how does this prioritization affect other players in the value chain?

CDNs, as noted above, are a content provider response to lags and jitter in Internet delivery, but also to costs associated with ISPs’ hosting of their services. Content providers are by no means all equal.

Question 8: In the case of managed services, should the same quality of service conditions and parameters be available to all content/application/online service providers which are in the same situation?

Yes, subject to FRAND rules that would reinstate our long historical experience of common carriage. These are public communications networks, after all.

May exclusive agreements between network operators and content/application/online service providers create problems for achieving that objective?

Yes, clearly. Toll roads affect state roads significantly, by diverting investment and overcharging so preventing optimal traffic loading.

Question 9: If the objective referred to in Question 8 is retained, are additional measures

needed to achieve it?

Yes, NRAs need to be encouraged by the CEC to engage with operators in discussing what FRAND rules will look like, as in an interconnection RIO.

If so, should such measures have a voluntary nature (such as, for example, an industry code of conduct) or a regulatory one?

It must be mandatory – whether co-regulatory or regulatory.

Question 10: Are the commercial arrangements that currently govern the provision of access to the internet adequate, in order to ensure that the internet remains open and that

infrastructure investment is maintained? If not, how should they change?

No – peering agreements between Tier 1 and other ISPs are subject to a very large degree of discrimination. It is long overdue that regulators shone a light into the opacity of this area, which has not been effectively examined since WorldCom/Sprint in 2001.

Canada Day: CRTC confirms traffic management rules apply to mobile too!

From Ars Technica: "Last week, Canadian regulators decided that ISPs all have to play by the same traffic management rules, regardless of the technology they use to deliver the bits. This makes tremendous sense, as opposed to the technology-centric approach taken previous by Canada (and still used in the US). Canada's FCC equivalent, the Canadian Radio-television and Telecommunications Commission (CRTC), laid down the rules for wireline ISPs last year, but at the time did not address whether they applied to mobile operators. Wednesday, CRTC confirmed they apply the same traffic management framework to mobile Internet access.

Internet traffic management must not be "unjustly discriminatory nor unduly preferential." Management must "be designed to address a defined need, and nothing more." Outright blocking of content is prohibited, and so is any "delay" technique in which content is "slowed down to such an extent that it amounts to blocking." Content that is not time-sensitive, such as most P2P traffic, can be delayed. Time-sensitive traffic, on the other hand, cannot be messed with at all, as any delay "amounts to controlling the content and influencing the meaning and purpose of the telecommunications in question." Investment, not traffic management, "is a fundamental tool for dealing with network congestion and should continue to be the primary solution that ISPs use."

Ofcom might note?