from the unfortunate dept
Back in June, we wrote about the European Telecommunications Network Operators Association (ETNO) and its “proposal” to basically tax the internet, which they’re hoping the ITU will adopt later this year. The thinking here is not hard to figure out. These are old school (either state run or formerly state run) telco monopolies not used to having to compete or innovate. They look at the success of various internet companies, and get jealous and — like the big entertainment legacy players — start thinking “hey, some of that should be my money — this is unfair!” And, so they come up with schemes and proposals like this — trying to effectively get regulators to force a revenue shift from those companies that innovated and found business models that work, over to the lazy telcos who sat back, fat and happy with their monopoly, refusing to innovate. It reminds me of Andy Kessler’s description of companies that create value vs. those that lock up value. One goes out and builds something new that the market wants… and the other runs to the government and asks them to put in place policies that divert revenue to them.
With that in mind, check out ETNO’s latest proposal from ETNO for the ITU to consider (pdf) later this year. And you notice all sorts of questionable claims, all designed to basically say: we haven’t adapted, and so regulators need to force money from actual innovators into our bank accounts:
The telecommunications market and the telecoms industry as a whole is undergoing a
fundamental shift. Catalysed by the availability of higher bandwidth connectivity, new
applications and services are being enabled that go far beyond the traditional services of
voice calling. In both the consumer and enterprise segments, services such as Voice over IP
(VoIP), social networking, instant messaging and the rise of ‘apps’ have changed the way
customers use their mobile and fixed connections. This development is significant and
telecoms operators need to adapt and rebalance their tariff structure between voice and
While broadband definitely is a key “catalyst” note how they set this up so that they can claim that it’s really all about them… and then how the “tariff structure” needs to be “rebalanced.” It’s not about how they need to rethink their own business models or innovate or anything along those lines. It’s about asking regulators to divert money that others are making to them.
The aim of the ETNO proposal is to contribute to the achievement of a more sustainable
model for the Internet. ETNO is not asking for increased regulatory intervention but aims to
establish a reference for commercial negotiations. The current interconnection model has
some shortcomings that need to be addressed. Today there is a huge disproportion amongst
revenues and a clear shift of value towards players (Over the Top players — OTT) who are not
contributing to network investment. Traffic and revenue flows need to be realigned in order
to assure the economic viability of infrastructure investment and the sustainability of the
whole ecosystem. The revision of the ITRs offers a unique opportunity to propose high‐level
principles for IP interconnection.
Yup. “More sustainable” means “more money to the telcos.” “Disproportion amongst revenues and a clear shift” towards online service providers is basically “the folks providing the services that make our connections valuable are making more money than we’d like, and we deserve some of that.” And the idea that they’re “not contributing to network investment” is a red herring. The big internet companies pay a ton for the bandwidth they use. And that money goes to the telcos. If they’re not investing it in their networks, then perhaps they should explore why. Any time you hear a company say that “traffic and revenue flows need to be realigned in order to assure the economic viability,” you know you’re dealing with a company (or industry) that has failed to adapt and is asking the government to bail them out by taking money from those who did adapt. To claim that this isn’t asking for regulatory intervention is laughable, since the whole process is one giant regulatory intervention. If this was just about commercial negotiations, this wouldn’t be an issue. They’d just go out and negotiate.
ETNO believes that the revised ITRs should acknowledge the challenges of the new
Internet economy and the principles that fair compensation is received for carried traffic
and operators’ revenues should not be disconnected from the investment needs caused by
rapid Internet traffic growth. The ITRs should be flexible enough so as to further encourage
future growth and the sustainable development of telecoms markets, while respecting the
guiding principles that led to the successful development of the Internet: private sector
leadership, independent multi‐stakeholder governance and commercial agreements.
ETNO is certainly not asking for any change to the current Internet Governance model which
is based on private sector leadership and multi‐stakeholder dialogue.
Whenever a company is asking regulators for “fair compensation,” it’s basically them saying “our business model is flopping due to changes in the market, and we need you to prop us up.” If ETNO really isn’t asking for a change in the current internet governance model, then, um, why is it asking regulators to “rebalance” things and change who gets what cut of the revenue?
ETNO wants to avoid decisions that would prevent new business models from emerging or
that would hamper differentiated offers, hence limiting consumer choice. The risk of
undesirable economic and technical regulation of operator rates, terms and conditions will
be much higher if the development of the Internet continues to be jeopardized by the lack of
sustainability and/or by the lack of end‐customer satisfaction.
ETNO members have reiterated on many occasions their commitment to an open
Internet and to continue enabling consumers to access services and applications of
their choice as well as being completely transparent about terms, conditions and
limitations. As recognized by the European Commission, operators should not be
prevented from developing differentiated offers based on customer needs, in
addition to the best effort Internet. It is important to note that nobody will be cut
off from the Internet as the best effort Internet will continue to exist and to
evolve. New business models based on differentiated offers will ultimately create
more choice for consumers.
This is very close to “nice internet system you got there… you wouldn’t want anything to, you know, happen, to it, now would you?” Basically, if regulators don’t divert more money from successful internet companies to lazy telco monopolists, well, then we might just have to “jeopardize” the network.
There’s a lot more like that in there. They’re trying very, very carefully to use the language of “internet freedom” and innovation, in order to then explain why the ITU should put in place a proposal that effective forces local regulators to divert money from the companies who innovate, to the lazy monopolists. This is one of the reasons why so many folks interested in keeping the internet truly free and open are quite concerned about ETNO’s proposal. It’s not designed to benefit the internet or to encourage innovation. It’s just designed to divert money from those who innovate to the telcos who haven’t had to innovate.