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Thursday, April 03, 2014

Commissioner Kroes can Skype her grandchildren's mobiles in retirement?

On the morning of 3rd April 2014, the European Parliament did what it said it would do five years ago - enforce minimum standards on Internet Service Providers (ISPs) to stop them blocking YouTube, BBC iPlayer, Skype, Whats App and the other social media that European consumers enjoy. Specifically, it voted at First Reading to amend the European Commission-proposed ‘Connected Continent’ Regulation. Those European consumers are voters who matter - particularly given the European elections were less than 50 days away and Parliamentarians returned to Brussels to vote as the campaign starts to heat up.
But if Parliament thought it stopped discrimination by ISPs five years ago, why has it had to revisit the issue and when will net neutrality happen? The answers are both legal and political.
First, the law that was passed in 2009 allowed governments to impose net neutrality but did not ban blocking and throttling of services the ISPs dislike, unlike US regulator actions in that period (I wrote about US net neutrality for TheConversation here). As a result, many ISPs – particularly 3G mobile operators – blocked access to Skype and Whats App. They did this via surveillance of their users using techniques such as Deep Packet Inspection (DPI). This was both illegal and highly intrusive of their users’ privacy. Separate this from the truly shocking revelations by National Security Agency whistle blower Edward Snowden in the summer of 2013: this was not spying on their users on behalf of government, but spying on their users for their own commercial benefit. That benefit was to block content that competed with their own, following which they could then begin to market a ‘specialised service’ unblocked lane to companies such as Skype that might pay for the extra service. More on that later.
The political answer is that the net neutrality law of 2009 was the last act of Viviane Reding, who after 2009 became the Commissioner for Fundamental Rights – including privacy but not net neutrality. Her replacement was Neelie Kroes, who had a reputation as a tough economically literate pro-competition politician, largely because she finally got Microsoft to agree to allow a choice of browsers to PC users. That is why many choose Firefox or Chrome instead of Internet Explorer, Microsoft’s browser that killed off Netscape. You will have made your choice in the browser you are using to read this article. Contrast her success with the ridiculous efforts of her replacement Joaquin Almunia to regulate Google’s monopoly.
‘Steely’ Neelie (UK tabloid speak even reaches Brussels) was therefore experienced in fighting technology companies to give consumers choices. But she has taken five years to reach this point of strengthening net neutrality laws. Why? Take your pick of four plausible and partial explanations. First, the law passed in 2009 was only implemented in 2011 and had very little support from the member states and their regulators (such as Ofcom in the UK), whose regulated ISPs complained long and loud about it. There was not much appetite to take action. Second, the moaning to the Commission contained a germ of truth, that there was some competition amongst ISPs (for instance Virgin, BT, Sky, TalkTalk in the UK) and broadband speeds were increasing. Third, some users were downloading as much as they could, and some services were ‘bandwidth hogs’ using up a lot of the network – NetFlix is the US prime example, BBC iPlayer a good UK equivalent. Neither paid the end user’s ISP, though both paid handsomely for other parts of the network that they use.
The fourth reason is the most coherent and irrefutable. The first Barroso Commission of 2004-9 had worked in a rapidly declining European economy. The second worked in an apocalyptic economy which their actions only worsened. Much of Europe has been broke for much of the last five years, and one of the few bright spots for consumers has been cheap and improving broadband and computing. Information technology drives new business formation and productivity increases for all businesses from micro- (home workers and individuals) to macro- (multinationals depending on executive 24/7 connectivity). Broadband is a success story of sorts, but it has been bought on the cheap with limited functionality. The Asian Tigers have fibre to the building, Europe has fibre to the neighbourhood or perhaps only the town centre. If broadband ISPs need more money to invest in more fibre, that serves the macro-economic needs of recovering from the great Euro-depression. If the Barroso 2 Commission is to leave office with any dignity, then broadband and the ‘Digital Agenda’ is a large part of that.
So for all these reasons, until late 2013 there was little appetite amongst most member states or the Commissioner to enforce proper net neutrality. The option of action was ignored by all but two member states: Slovenia and deliciously the Netherlands, Kroes’ own country. Citizens and consequently Parliamentarians in the Netherlands had been furious at the former monopoly KPN spying on users with DPI, then blocking access to the virtually free Whats App (ask a teenager or student about this texting/voice application for mobiles). They passed a net neutrality and privacy law in 2012, implemented in 2013. Kroes actually threatened to take legal action against the Netherlands government for daring to protect net neutrality rights for its citizens.
Then in summer 2013, she pretended to have a conversion on the Euro-political road to not bombing Damascus. She would abolish international roaming – a crowd-pleasing policy that was also handed down by her predecessor Reding – and enforce a ban on blocking or throttling apps like Skype, Whats App and the iPlayer. But – and it is a huge but – she planned a quid pro quo for the big former monopoly ISPs. She would allow them to partition the Internet into a ‘specialised service’ lane and a slower lane. Imagine dial-up as a dead-slow-and-stop country lane, basic broadband as a dual carriageway or trunk road with many periods of congestion, and fibre as the autobahn with no speed limits. The idea was that to bring the autobahn to most users, the services that clogged up the trunk roads would be relegated to the slow lane on the autobahn unless they paid the ISPs.
It is this that caused most of the controversy in Parliament on 3 April 2014. The Green/Pirate and socialist groups voted to restrict the ‘specialised service’ definition to real separate services. The Liberals eventually joined them, with Netherlands Liberals in D66 overcoming Denmark Liberal objections. Huge lobbying took place on both sides, with consumer groups and content owners (such as broadcasters and Google) lobbying for this restrictive definition, and ISPs of all flavours lobbying against, the Commission joining the ISPs in that lobbying. (The UK had a strange local issue with many MEPs voting with the telecoms lobby, because they worried about extra-legal censorship of foreign child pornography sites by the Internet Watch Foundation would be forced onto a proper legal footing by the amendments).
The ISP lobby lost on 3 April. That does not mean there is a new law, though many journalists and Twitterati thought that. It means that the First Reading vote imposed the restriction on this great ‘specialised service’ loophole. The ISP lobby reacted furiously, claiming that they would overturn the restriction or otherwise would not build the autobahn: “We are confident that the upcoming work of the EU decision makers will acknowledge such risk and will embrace the spirit of the Commission’s original proposal, confirming that the EU seeks solutions for growth, and not populist measures”. They claimed that “far-reaching restrictions on traffic management, which would make an efficient management of the network almost impossible, resulting in a lower quality internet for all.”
So what happens next? The law as voted upon will be presented to the governments in the Council of Ministers, the European Commission will refine their answers, and there will need to be an agreed text for a Second Reading vote in the European Parliament and possibly a Conciliation Committee between the governments and new Parliament in late 2014 or early 2015. This happened back in 2009, as well. The Barroso Commission may still be around until March 2015, because the decision to replace it has to await a new President of the European Parliament, and that may be politically contentious. Then, if the institutions do finally agree, the new law will need implementing in 2015 and national regulators such as Ofcom will need to report back on their progress in 2016/17.
So what does that mean for ISP users, if all this comes to pass? It means that there may be net neutrality law next year or the year after that. It should mean that Skype and Whats App cannot be blocked by ISPs such as Vodafone and they cannot charge more to unblock them, as currently happens in several countries. It means that small innovators (tomorrow’s Facebook, Google, Skype or WhatsApp) can be reassured that they will be able to reach their users and grow as rapidly as they did in the past. It also means the autobahn builders will have to find the money from somewhere else than charging content providers for the high speed lane. They might charge users more, they might stop spending billions on football rights.
Will this law happen at all? Yes, it is now very likely, but the restriction on partitioning the open Internet into a slow and fast lane might not survive. First, the governments in Council are not enthusiastic for this type of real net neutrality. They will agree to stop blocking of Whats App and Skype, but they may try to remove the language that stops the autobahn charge controls. Britain and Germany will lead the way judging by their activities last time. Second, the law as amended will then go back to the newly elected European Parliament, which is generally agreed to change significantly with many more fringe MEPs. Will they understand the issues and vote for consumers, as the Pirate MEP Amelia Andersdotter has done? If there are 20 or 25 UKIP MEPs, will they vote for extra-legal censorship as British MEPs did on 3 April? British legislators have not covered themselves in glory on free speech issues in the year since Snowden started his whistleblowing, quite the opposite.

The idea of an open Internet won a battle on 3 April, but it is a long war, and that vote marked only the end of the beginning. Mrs Kroes’ grandchildren who leave the net-neutral Netherlands may be blocked from talking to her on Skype long after she retires.

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