Net Neutrality – Pete Farmer speaks

PortcullisOpen Internet & Net Neutrality – both are terms that are meaningless to many and equally emotive and commercially crucial to many others.

As with many things in life, there’s a spectrum of what this means. At one end, there’s a threat to civil liberties, commercial strategies, intellectual property and safeguarding against illegal content. At the other end, there’s (for want of a better phrase) a type of technological anarchy whereby there are ideological demands that all packets of data should be equal regardless of the content, legality, source or otherwise.

ITSPA’s members all operate in the VoIP space to some degree, so the subject of throttling (sorry, I think the marketing term is “traffic shaping”), blocking etc is both emotive and important to their businesses; so I think it is worthwhile explaining what I think the average VoIP provider means by Net Neutrality.

The first qualifier is that we always talk about legal content. What is legal and not legal varies by jurisdiction and is defined by various legislatures around the world; we would not necessarily expect any definition of an open internet to include illegal content.

We would also say that prioritisation of some services is an important option for users of internet connections to consider. Whilst your average domestic customer may have no need for such things (or rather not know they may need such things), it is a very different story in businesses. For example, you may want your supplier to ensure that voice traffic and business critical systems (say databases held in the Cloud) are prioritised over an employee surfing Facebook during their break.

They may even want to buy a managed package from their data services supplier where such websites are blocked in working hours, or to throttle iPlayer during Andy Murray’s latest Quarter Final attempt at Wimbledon.

Both examples are perfectly legitimate reasons to engage in traffic shaping. But I would say that the blocking of VoIP on a mobile network is illegitimate as it stands today. Whilst both examples are selective blocking or throttling based on a service, there’s a fundamental difference between the two; the business example is at the request of the customer in the full and transparent knowledge of what is going on. The latter example is often underhand and plays on consumer’s naivety.

One major UK mobile operator’s terms and conditions prohibit the use of iMessage and WhatsApp, along with third party video streaming (so, iPlayer and YouTube) services. Furthermore, under those terms and conditions of business, this constitutes a material breach with a potential remedy of suspension of service, but leaving the customer liable for the rest of the monies due under the contract absent a service.

So, in other words, they can sell you an iPhone, suspend your service upon the first iMessage you send and expect 2 years’ worth of contract payments. I have no doubt that this would fall foul of any judge ruling whether it is a reasonable contract, but this has to be considered against the fact this mobile operator was advertising “internet access” and/or “data” in their glossy magazines.

I reckon the average consumer would consider Skype and YouTube to be part of the internet; a more advanced or knowledgeable consumer would back that up saying “well, it’s called the Internet Protocol for a reason”. And if presented with a package of 1GB of data, they should expect to send or receive 8.59×109 ones and zeroes (assuming they comprised a legal whole) regardless of what they constructed. Anything else would be tantamount to the Royal Mail charging or refusing to accept letters based on their content, which only has to be stated to be shown to be ridiculous.

But, it would seem, that some mobile operators want to block certain products and services that compete with their own (so VoIP applications for cheaper non-geographic or international calls for example) for purely commercial reasons and do their utmost to ensure that consumers aren’t aware of this. Hardly a resounding example of a market based on competition and innovation is it?

Whilst there’s a debate going on as to whether Ofcom or the European Commission have the power to intervene on preventing blocking (there’s work going on about net neutrality there generally, and I would say that the plain and natural meaning of the revised Universal Service Directive empowers Ofcom to prevent the hindrance of traffic already) the easiest and most uncontroversial remedy is to increase transparency.

Why can a Communications Provider hoodwink customers into thinking that they have open and free internet access at the point of sale? Yes, they have to publish traffic management policies on demand and various other remedies, but would consumers go to that level of due diligence when they think they are buying “internet access”? Communications Providers have a requirement to ensure that they are transparent and clear in their dealings with their customers and to not engage in mis-selling (that’s not just a statutory requirement applying to all businesses, but is also enshrined in all their licence conditions) and it seems to me that this is a huge problem largely ignored by the regulator.

The consequence is that consumers are paying more for services through a captive provider and providers of these services can only launch them in a section of the market that is so difficult to define to potential customers (for example one mobile operator only blocks VoIP on tariffs under £40 a month) few rational investors would be confident enough to launch them which is holding back UK plc.

So to conclude, the ideal is an open internet where there is no blocking of any form of legal traffic for self-interested commercial reasons alone but where there is, there should be complete transparency and clear sign-posting of this at the point of sale, front and centre and not buried in the small print in technical jargon.

All of this is why Philip Davies MP recently took Ed Richards, the Chief Executive of Ofcom, to task on the subject in the Department of Culture, Media and Sport Select Committee. If you have 5 minutes, do watch this video (on a device connected to the internet via an Internet Service Provider where streaming is permitted of course) from 11:28 onwards – or about 40 minutes in. This one single parliamentary intervention has thoroughly reinvigorated efforts in this area so watch this space for updates (or better yet, join ITSPA and be part of it) as the battles continue!

This post was written by Pete Farmer, writing in a personal capacity. Pete is the Commercial and Regulatory Manager for Gamma  a wholesale supplier of telecoms services. Pete sits on the ITSPA Council  and chairs their Regulatory Committee. His contact details can be found via his LinkedIn profile.

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  1. Phil Veale

    “Anything else would be tantamount to the Royal Mail charging or refusing to accept letters based on their content, which only has to be stated to be shown to be ridiculous.”

    But…they kinda do;
    http://www.royalmail.com/personal/help-and-support/Tell-me-about-Prohibited-Goods

    Not all Internet traffic is correspondence. You could distill it down as such, but when the Ones and Zeros represent something more real, the argument against allowing said content does seem more reasonable.

    That said, you still can’t email people itesm on the Royal Mail prohibited goods list.

    (though see also Internet Ham: http://www.youtube.com/watch?v=1r3tx3IEsN4)

  2. Sven Huster

    I really struggle to see how you arrived at this statement: “Hardly a resounding example of a market based on competition and innovation is it?” It would appear quite clear to me that there is no free market that drives competition and innovation in the mobile industry. Ofcom is preventing this exact thing through overregulation of spectrum allocations as well as spectrum use.
    Open this up to allow new entrants and services easily and let’s talk about market again after this.

    Regarding the other point of hiding service restrictions for the consumer in the contract small print, I would assume one can address this through jurisdiction. If it is clear that the contract is incomprehensible to the person buying the service and limited in a way not described sufficiently, it should be possible to just nullify or terminate it through a court leave the consumer with no liabilities after. Nevertheless, if the consumers are too lazy to engage with what they are actually buying, this seems self-inflicted and no action is required. Overall, regulation provides nothing in addition here.

    Providers of services other then connectivity obviously have a vested interest in delivering their services across operators networks for the least cost possible (ideally for free). Furthermore, Ofcom will always be looking for additional things to regulate to justify its existence and expand its influence. Neither of this means that regulation of this issue delivers benefits or is justified.

  3. Peter Farmer Pete Farmer

    Both very interesting points of view and very welcome as we’ve yet to come across them.

    On the prohibited items list, many of them are illegal or present a danger to the people handling them, whereas say VoIP or streaming isn’t. The point was more to illustrate that if you are transporting boxes, the contents being a competitive threat shouldn’t in itself dictate commercial behaviour.

    On the second comment, it’s very interesting to consider whether wholesale dynamics affect this issue, such as spectrum. My gut instinct is that if this was liberalised you may have positive effects and innovative services launched on “niche allocatees” of the resource, but it then comes back to the infrastructure. Other than maybe a few very esoteric local uses, would anyone buy a mobile service without national coverage? Maybe. Maybe not. Then you get into more intrusive regulation on infrastructure sharing and wholesale call and data origination conditions to counter the effect, especially if the infrastructure owners use their dominance in this area to restrict competition somehow. I’d cite the fact that many MVNOs have certain data streams blocked in their contracts with their network as a strong indication that these effects would continue to be seen absent intrusive regulation.

    However, if all these issues can be addressed then I would say a more vibrant market may well solve the issues. Ironically, the European Commission seems to want to promote more consolidation now and wants to make it easier cross-border which may worsen things.

    Onto the point about more regulation; we are really asking for the enforcement of existing regulation. ITSPA has evidence that mis-selling of these services may well be systematic – I.e consumers engaging with the issue and asking outright are told a falsity. You are right these are grounds for action – be it a nullified contract or Ofcom intervention. I also take issue with the slight of hand used which comes from saying “1GB data” or “Internet access” which to many reasonable people would mean YouTube should be allowed, regardless of small print. There is of course a fine line between spoon feeding and patronising consumers who should have a degree of caveat emptor and the more underhand stuff we can see.

    Consumers would also engage more if they knew what they were missing – it’s a catch-22 that they don’t know because things aren’t launched and developed, which aren’t because things are blocked.

    As to the vested interests of our services, free is the only answer – the consumer has already paid for a quantum of bit transport, so why would the service provider pay again? In fear of over flogging the postage analogy, that would be like the sender paying for the stamp and Royal Mail going off to get more from the envelope.

    And finally, will Ofcom extend its reach in this area? They’ve done a good job of avoiding it for 2 years – we shall know more next week after an ITSPA/Ofcom meeting – hopefully Tref will let me follow up with another post afterwards. Though by all accounts the European Commission may beat us all to it with a pan-EU net neutrality law next year.

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