Neelie Kroes Pushing Telcos’ Agenda to End Net Neutrality

Paris, 30 August 2013 — For the past 3 years, a consortium led by Alcatel-Lucent has been working on technical, business and legal aspects of a plan that would effectively put an end to the free and open Internet we enjoy today. Under the guise of protecting Net neutrality, EU Commissioner Neelie Kroes is about to give these big telecom companies a EU-wide legal shield to achieve their power-grab on the Internet economy, as confirmed by a new leaked EU Commission document. Such a shocking instance of corporate policy capture would have disastrous effects for freedom and innovation online.

Last month, La Quadrature du Net and several advocacy groups slammed the Commission’s draft proposal on the reform of the EU telecom market, showing how it aims at killing Net neutrality under the guise of defending it{[(|fnote_stt|)]}Article 20(1): “End-users shall be free to access and distribute information and content, run applications and use services of their choice. via their internet access service.
Article 20(5): “Within the limits of any contractually agreed data volumes or speeds for internet access services, providers of electronic communications to the public internet access services shall not restrict the foregoing freedoms provided for in paragraph 1 by employing traffic management practices solely or primarily to block, slowing down, degrading or otherwise discriminating against specific services or content, applications or services, or specific classes thereof, unless,except in cases where it necessary to apply reasonable traffic management measures. Reasonable traffic management measures shall be transparent, non-discriminatory, proportionate (…).”{[(|fnote_stt|)]}, the Commission would let them engage in prioritization (through “specialised services” and “Assured Service Quality” products), which is of course another form of discrimination{[(|fnote_stt|)]}Prioritization is a non-technical term for “guaranteed”, “differentiated” “Quality of Service”, as opposed to the traditional “best-effort” model for the delivery of Internet traffic{[(|fnote_end|)]}. The proposal would also let operators establish data-caps, breaking away from the unlimited access offers many European citizens enjoy today{[(|fnote_stt|)]}See also article 20(1): “End-users shall be free to agree enter into agreements on data volumes, and speeds and general quality characteristics with providers of electronic communications to the public internet access services and, in accordance with any such agreements relative to data volumes, to avail of any offers by providers of internet content, applications and services (…).”{[(|fnote_end|)]}.

As we pointed out, by allowing anti-Net neutrality priorization, the Commission would thereby be giving in to the telecoms lobby’s long-lasting demand to enter into business deals with big content providers such as Google, Facebook or traditional broadcasters to prioritise their data flows over the Internet{[(|fnote_stt|)]}In early-2010, for instance, the CEO of Telefonica declared that “Internet search engines use our Net without paying anything at all, which is good for them but bad for us. It is obvious that this situation must change, our strategy is to change this”. eitb.com, 6 February 2010, Spanish Telefónica to charge Google, Yahoo, Bing.{[(|fnote_end|)]}. Through such a corporate power-grab, this plan would relegate the rest of citizens and new-entrant innovators to a slower Internet, undermining competition, innovation, and the open platform of communication called the Internet.

While Commissioner Neelie Kroes and her staff have arrogantly dismissed these criticisms, a comparison between the draft regulation and the ETICS consortium documents{[(|fnote_stt|)]}The ETICS documents are referenced at the end of the post, and linked to in the text.{[(|fnote_end|)]} shows that they were exactly to the point. These documents help explain why Neelie Kroes — who not long ago used to condemn commercially-motivated traffic discrimination{[(|fnote_stt|)]}At the beginning of her mandate, during her confirmation hearing at the EU Parliament, Neelie Kroes made a statement against commercially-motivated anti-Net neutrality practices.{[(|fnote_end|)]} — has become such an ardent defendant of the short-term business interests of dominant telecom operators.

What is ETICS?

Three years ago, under the ironic name of ETICS (for “Economics and Technologies for Inter-Carrier Services”), a consortium started working on the technical, business and legal aspects of so-called “Assured Service Quality” (or “ASQ”), another name for “traffic proritization”.

ETICS partners

Led by the telecom equipment company Alcatel-Lucent, ETICS was comprised of dominant telecom operators (BT, Deutsche Telekom, Orange, Telefonica, Telenor), but also research institutions (Politecnico di Milano, Institut Telecom, Université de Versailles, University of Stuttgart). EU taxpayers will also be interested in knowing that most of the project’s budget came from an 8-million-euro public subsidy from the European Union, under a research program on “Future Networks”{[(|fnote_stt|)]}Source: http://cordis.europa.eu/fetch?CALLER=ICT_UNIFIEDSRCH&ACTION=D&DOC=3821&CAT=PROJ&QUERY=0130ef6d9003:9714:06ee8c4b&RCN=93071{[(|fnote_end|)]}.

The ETICS project concluded in June 2013 by issuing its last deliverables. Among many false assumptions, the ETICS documents claim that “current Internet funding and management rules may have reached their limit”, and that traffic prioritization on the Internet is the only way for operators to invest in faster networks. Meanwhile, they grossly ignore or misrepresent the arguments of Net neutrality advocates{[(|fnote_stt|)]}For instance, after having described at length the position of those who defended the status quo (i.e sticking to competition and transparency as the solution for anti-Net neutrality abuses) in EU policy consultations, the document claims that “a few (sic) opinions recognized that transparency and competition are part of the answer, but remarked that they do not provide the full solution” (p. 95). Revealingly, ETICS also distinguishes between two definitions of Net neutrality: “While the first (avoiding intentional traffic hampering but applying prioritization) can more exactly be termed as ‘neutrality’, the other (avoiding any kind of traffic management) should be better qualified as ‘egalitarianism’.” (p. 121).

Needless to say, ETICS supports the former, which is not neutrality, at least not as nearly all stakeholders independent from telecoms operators understand it. And contrary to the claim of the document, the second acception does give room for “reasonable” traffic management on the Internet, for instance to protect the integrity of networks or deal with unforeseen congestion whereby all traffic should be treated equally, and even possibly user-controlled, application-agnostic managed QoS on the public Internet.{[(|fnote_end|)]}. But in spite (or because) of all their biases, these documents help to shed a new light on much of the the EU policy debate on Net neutrality of the past three years.

ETICS and Kroes’ shifting stance on Net neutrality

Looking at the ETICS document, it becomes absolutely clear that Neelie Kroes’ anti-Net neutrality stance has been directly aimed at paving the way for the regulatory framework called for by the consortium.

[Note: the corrections in the following paragraph have been made shortly after publication, in response to Neelie Kroes’ spokesperson criticisms — we apologize for these inaccuracies].

At the beginning of her mandate, during her confirmation hearing at the EU Parliament, Neelie Kroes made a statement against commercially-motivated anti-Net neutrality practices. But a few months later, the ETICS project was launched the first ETICS workshop took place, and in 2011, Kroes started convening so-called “CEO-roundtables” to gather ideas on “boosting investment in high speed broadband networks”. Of course, civil society, researchers and the many citizen organizations providing flexible and affordable Internet access across Europe remained out of the picture. Meanwhile, most of the ETICS consortium’s members the most important members of the ETICS consortium were represented at these gatherings{[(|fnote_stt|)]}Alcatel Lucent, France Telecom Orange, Deutsche Telekom, Telefonica. Other big ISPs, not part of ETICS, were also represented: KPN, Numericable, Portugal Telecom and Telecom Italia. Content providers such as Google, Vivdendi and others also attended these gatherings.{[(|fnote_end|)]}.

Since then, Kroes has constantly sided with the telecom lobby on the fundamental question of Net neutrality{[(|fnote_stt|)]}A timeline have been created to show the evolution of her stance on Net neutrality: http://www.tiki-toki.com/timeline/entry/108784/Net-neutrality-in-Europe/{[(|fnote_end|)]}. For instance, in the Fall of 2012, the Brussels-based lobby of dominant telecom operators, ETNO, proposed amendments to the founding treaty of the International Telecoms Union (ITU) that would have imposed “differentiated Quality of Service” (i.e. prioritization) on the Internet worldwide{[(|fnote_stt|)]}At that time, ETNO said the ITU’s founding treaty should “enable incremental revenues by end‐to‐end QoS pricing and content value pricing” and allow for “new interconnection policies based on the differentiation of the QoS parameters for specific services and types of traffic (not only on the “volume”)”. That, they said, should be part of the “Internet ecosystem” (i.e. not just for private IP networks physically distinct from the public Internet).{[(|fnote_end|)]}. It was an attempt at imposing on the international scale the anti-Net neutrality business models pushed by big EU telcos. Neelie Kroes remained silent, in spite of the criticisms of advocacy groups and other stakeholders: it was clear that ETNO had her tacit support. Such support became more explicit last January, after the ETNO proposals were rejected at the ITU, when Kroes wrote in an Op-Ed that she supported a fragmented Internet, whereby operators could give priority to specific online services at the expense of all other Internet users.

Looking at the ETICS document, it is clear that the ETNO ITU proposals were modeled on the recommendations of the consortium. And now, Kroes is pushing for the same exact regulatory framework that would allow the ETICS consortium to develop business practices that will end Net neutrality and severely undermine the open platform of expression and innovation that is the Internet.

Kroes’s proposal is ETICS’s “model law”

Not only does the proposed article 20 of the draft regulation recognize the operators’ “freedom” to prioritize{[(|fnote_stt|)]}“(…) Providers of content, applications and services and providers of electronic communications to the public shall be free to agree with each other on the treatment of the related data volumes or on the transmission of traffic as specialised services with a defined quality of service or dedicated capacity so long as the provision of such specialised services does not substantially impair the quality of internet access services.”
What does “substantially impair”, it is not further defined. And article 24 on minimum QoS only restates exsiting regulatory tools adding the notion of non-discrimintaion. It is not enough without further regulation of the priorization of Internet services.
Also, quite tellingly, there was no reference to the notion of “specialised services” in the previous version of the draft, but only to “defined quality of service”. This latter addition appears to be the Commission’s response to the criticisms of civil society on its first draft. As Kroes and her staff refused to address the question of: “Will you allow priorization on the public Internet?”, it is now using the notion of specialized services to imply that defined quality of service will only be allowed on private IP networks physically separate from the flow of Internet communications. This is how “specialised services” are usually understood. But in this new draft, discrimination amounting to priorization is not banned on the public Internet in the definition of Net neutrality. Actually, the Internet itself is never defined, whereas “specialised services” are only vaguely defined: “Specialised service” means an electronic communications service or an information society service that provides the capability to access specific content, applications or services, or a combination thereof, or provides the capability to send or receive data to or from a determined number of parties or endpoints; and that is not marketed or widely used as a substitute for internet access service.”
This definition suffers from severe flaw, since it does not stress the fact that to be acceptable, “specialised services” should clearly be defined as private, closed to the public, and separate from the Internet at the network layer. Moreover, the definition of Net neutrality in 20(1) and 20(5) should stress that positive discrimination under the form of priorization on the Internet should be banned (i.e not just banning blocking, throttling, degrading or discriminating against, but also discriminating in favor of particular services of classes of traffic). Lastly, the framework should define more thoroughly the general architectural features of the Internet.{[(|fnote_end|)]}, the text also creates the perfect regulatory framework for “Assured Service Quality”, which precisely accommodates the product and business models that the consortium spent three years working on{[(|fnote_stt|)]}In the recitals state that: “Assured service quality (ASQ) connectivity product” means a product that is made available at the internet protocol (IP) exchange, which enables customers to set up an IP communication link between a point of interconnection and one or several fixed network termination points, and enables defined levels of end to end network performance for the provision of specific services to end users on the basis of the delivery of a specified guaranteed quality of service, based on specified parameters”.
The requirement for ASQ products are further defined in annex II of the draft regulation: “Connectivity agreement ensuring end-to-end Quality of Service, based on common specified parameters that enable the provision of at least the following classes of services: voice and video calls; broadcast of audio-visual content; and – data critical applications.”{[(|fnote_end|)]}. But there is more. ETICS’ research on current regulatory frameworks suggested that existing or future national Net neutrality rules could prevent them from launching ASQ-based services. And so in its proposal, the EU Commission carved out a EU-wide loophole banning NRA from enforcing “real” Net neutrality{[(|fnote_stt|)]}See again article 20: “The exercise of these freedoms shall not be restricted by national competent authorities, or, as regards the freedom laid down for end-users, by providers of electronic communications to the public, save in accordance with the provisions of this Regulation, the Directives and other provisions of Union law.”{[(|fnote_end|)]}.

Net neutrality advocates, La Quadrature included, have argued that “guaranteed” Quality of Service for existing Internet services and applications (as opposed to the traditional best-effort delivery model) could be acceptable under three main conditions{[(|fnote_stt|)]}See also John Palfrey’s 2010 submission to the FCC (item 3): http://jpalfrey.andover.edu/2010/11/03/a-citizens-choice-framework-for-net-neutrality/{[(|fnote_end|)]}:

• that such Quality of Service be application-agnostic (applied indiscriminately to different online services or applications);
• that such Quality of Service be under the full control of the user so as to preserve the key architectural features of the Internet{[(|fnote_stt|)]}End-users should be able to choose whether they want to communicate through defined QoS (by activating/desactivating the use of defined QoS at will), and which service or application providers they use through such QoS. This kind of application-agnostic and user-controlled discrimination is defined in a May 2012 ETICS document as the “Quality Classes – User Pays” model (p. 130). For more discussion on end-user-controlled Quality of Service, see the work of prof. Barbara van Schewick: https://cyberlaw.stanford.edu/blog/2012/06/network-non-discrimination-and-quality-service{[(|fnote_end|)]};
• that the best-effort Internet be protected from degradation caused by the development of guaranteed QoS, for instance by ensuring a “sufficient quality of service” for the best-effort traffic delivery model (a notion already in use in some EU countries){[(|fnote_stt|)]}On this point, the draft regulation says that guaranteed QoS shall not “substantially impair” Internet access, which is both vague and extremely weak. It will do very little to address the problem.{[(|fnote_end|)]}.

However, that is not something ETNO or ETICS is interested in. To be sure, big telcos want to be able to act as an oligopoly, picking the winners of the Internet economy by deciding who is able to benefit from guaranteed QoS, monetizing prioritized access to their subscribers to the highest-bedding online services (e.g. Google, Facebook or media corporations). After all, there would be big money to be made for an ETICS cartel: according to the document, ASQ-based video communications could make up as much as 73% of all Internet video traffic within five years; it also forecasts that ETICS partners could be able to grab 25% of Skype’s revenues.

The draft regulation, as well as Neelie Kroes’ repeated statements and refusal to genuinely address the concerns voiced by civil society last month, confirm that the Commission is ready to push for this unacceptable model{[(|fnote_stt|)]}The Commission does so by allowing “assured service quality” products on so-called “specialised services” (a category introduced in the latest draft regulation). The problem is that “specialized services” are never correctly defined as strictly separate from the public Internet or regulated so that they do not unfairly compete with existing Internet services or applications. This inclusion therefore appears to be a mere diversion aimed at misleading the Commission’s critics.{[(|fnote_end|)]}. If adopted as is, the regulation would turn Internet access providers into the Internet’s gatekeepers, breaking the historic model of growth and innovation that has worked so well for the past two decades, as well as the egalitarian platform of free communications we know today.

In the coming days, the European Commission will make public the draft regulation. Citizens as well as policy-makers must vigorously oppose Neelie Kroes’ plan, and instead adopt a meaningful protection of Net neutrality against the risk of corporate capture and rent-seeking business-models. In particular, lawmakers should amend the text to explicitly ban prioritization of Internet services. The future of the Internet is at stake.

Sources

• The new version of the EU Commission’s leaked draft regulation on the telecom single market
• ETICS “Master document” from May 2012
• ETICS publishable summary from June 2013
• ETICS “Scenarios & Requirements” document from 2010