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Business ofcom Regs

The Single Market

At the recent Eighth Parliament and Internet Conference, at which I was privileged enough to be speaking on a panel extolling the virtues of an open internet for ITSPA, one of the preceding presentations had been by the European Commission Directorate General for Communications Networks, Content and Technology (that mouthful is colloquially abridged to “DG Connect“) promoting the Commission’s new idea for a single market for telecommunications.

A slide was shown, seemingly promoting the United State’s competitive landscape of 3 major operators, alongside China’s similar landscape, against the European Union’s 250 major operators. The Commission’s proposals, in summary are “aimed at building a connected, competitive continent and enabling sustainable digital jobs and industries.“.

Hang on a second. I thought the European Economic Community established a single market for goods and services? I thought the Common Regulatory Framework introduced in 2002 harmonised telecommunications regulations and a general authorisation regime across Europe, negating the need to be “licenced” in each country (though as Skype recently found out, it doesn’t prevent “registration” necessarily)? Bluntly, today, if Deutsche Telekom wants to buy Jazztel, it can, subject only to the overarching rules of mergers and acquisitions and competition concerns common to any member state and any industry.

Yet they haven’t. All of these hundreds of telecommunications companies branded “major operators” by the European Commission are economically rational profit maximising entities. That’s regulatory/economist speak for “they’ll make decisions in relation to their resources that will always maximise their profits”, in other words if buying Jazztel was the best thing for Deutsche Telekom to do, that means they would’ve done so already.

We live in an era where mass consolidation led to “too big to fail”. The Banking industry is a shining example of how such growth through acquisition can go horribly wrong; but yet we seem to be promoting a regulatory and legislative framework to repeat it in telecommunications.

Theoretically, consolidation should lead to efficiency savings for the benefit of both shareholder and consumer, but there is empirical proof it didn’t in telecommunications; look at the cost of broadband in New York versus London. Take a moment to compare mobile tariffs across different countries on Google too. Within that article is a quote from a presidential adviser on technology;

We deregulated high-speed internet access 10 years ago and since then we’ve seen enormous consolidation and monopolies, so left to their own devices, companies that supply internet access will charge high prices, because they face neither competition nor oversight.

Instead of thinking that having 250 major operators is a weakness in our competitive landscape, or instead of thinking there are barriers to consolidation, maybe the European Commission should embrace what has been created under the framework we already have and the US and China should be looking to them for guidance, not the other way around.

These proposals, to me, are worrying. Unless I have missed the point (which, in all fairness wouldn’t be the first time) they seem to be a solution hunting for a problem. Ill-conceived and rushed (they are trying to get it through before this EU parliament ends) legislation rarely ends well. This is why I was heartened to hear Ed Richards, the Ofcom CEO, challenging this during the conference and have heard rumblings of concern in the Department for Culture, Media and Sport. Of course, there is always room for improvement…. and there are issues with the regulatory landscape across Europe today, but nothing insurmountable – certainly not beyond the odd evolutionary tweak as opposed to a revolutionary approach.

That said, this pack of proposals also contains the proposed Regulation on an Open Internet, a subject close to my heart, so hopefully that at least will survive the legislative process! What does everyone else think – interested in your views, but be kind on my inaugural proper guest post!

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broadband Business internet online safety piracy Regs

UK Government Efforts ISP Regulation Gets Opposition from Unexpected Sources

There has been a lot in the press recently regarding Government plans to regulate the ISP industry. ISPs have been vociferous where they consider that this regulation is unnecessary and adds cost burdens that will have to be borne by consumers.

Quite pleasingly other industries which the Government is likely to think would be the beneficiaries of the legislation have also come out against it.

For example the high profile “three strikes” approach to Music Piracy whereby persistent file-sharers have their broadband cut off is attracting a lot of opposition from the music industry itself. The BBC reports:

Radiohead guitarist Ed O’Brien, a member of the Featured Artists’ Coalition (FAC), said: “It’s going to start a war which they’ll never win.”

Feargal Sharkey’s UK Music allegedly has a war chest of up to £20 million a year to lobby Government on the subject of ISP regulation. This FAC stance seems to be clear disagreement within that industry.

The leak in the Independent this week that the Queen’s Speech currently is planned to propose mandatory blocking of consumer broadband connections for child abuse images has also created a bit of a stir.

The vast majority of consumer broadband connections already have such screening and it seems that the Government is trying to make political capital out of a subject which everyone will of course support in principle.

The issue is how much effort and money will it take to cover the last few consumers not already “protected” particularly as it is smaller ISPs who are most likely to be affected. This is particularly relevant considering that all we are not talking about stopping hard core child abusers who already know how to get around the blocking.

The Register has come out with an interview on this subject with Jim Gamble, Chief Executive of the Child Exploitation and Online Protection Centre (CEOP), and effectively the UK’s leading investigator of online child abuse who has come out against legislation in this area.

There is potentially a lot more regulation in the pipeline. Somewhere in a Government office near you someone is plotting to gain more control ever our every day lives. It is at least nice to see that there are people out there with some common sense who are willing to stick their hands up and say “this is not right”.