Mobile VoIP and Net Neutrality: Mobile subscriptions with blocked VoIP x Higher prices subscriptions allowing VoIP An European perspective

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1 Mobile VoIP and Net Neutrality: Mobile subscriptions with blocked VoIP x Higher prices subscriptions allowing VoIP An European perspective University of Oslo Faculty of Law Candidate number: _ Deadline for submission: 11/10/2011 Number of words:

2 Table of Contents Table of Contents Introduction Mobile VoIP and Net Neutrality Net Neutrality definition VoIP and Mobile Networks Issues brought by VoIP on Mobile Networks and approaches of different European operators Principles of Net Neutrality in EU legislation and their relevance to Mobile VoIP Conclusion... 8 References

3 1 Introduction The issue of Net Neutrality has been at the heart of the Internet convergence dilemma, and the debate around it raises concerns that vary from privacy and data protection to Quality of Service issues. This dilemma includes legit consumers worries about the increase of price for tiered content, as well as technical issues originated by the larger amount of data that occurs due the new services available on the Internet. The scope of this work is to discuss the Net Neutrality concerns, as they are posed on current EU legislation, and how should it enlighten the problem of the VoIP service over mobile networks specially if it would be possible, under current legislation, to bar that particular service in a tiered down offer, charging more for it on a value-added, higher priced subscription. At first, the concept of Net Neutrality will be briefly analyzed, and following that there is a quick overview of the current state of the VoIP and mobile technology, and examine which kind of Net Neutrality principles are present in current legislation. 2 Mobile VoIP and Net Neutrality 2.1 Net Neutrality definition Over the last two decades, almost all the content trafficking over electronic networks is digital. Legacy (PSTN) telephony is the only service that is still provided mostly over its analog form to customers. The Internet became a medium of content distribution itself, replicating or showing the same functionality (with different characteristics) as other dedicated networks, such as telephony, or cable TV. Looking upon that, traditionally, the network infrastructure companies also sell the same services (either directly or by other companies that have unbundled access to the networks), it would mean that the Internet could be 3

4 cannibalizing their profits, as its customers could look elsewhere on the net for better (or cheaper) providers of those services. With that in mind, Internet providers, in an attempt to limit the losses, can create barriers to block or slow down certain services, in order to prioritize others. In that scenario, this is done either to prevent the cannibalization of concurrent services offered by the themselves, to capitalize on selling value-added subscriptions where these once blocked services would be allowed (and even optimized) or simply to get some remuneration for the higher traffic generated by some content providers. That context brings the definition of Net Neutrality as a situation where no interference on data traffic is caused by artificial control exercised by the owner of the network. Advocates of neutrality on the net stand that there should be no limitation of services on a network, and that all packets trafficking should be equally treated 1. There are, in fact, other definitions of Net Neutrality, which consists on each pundit s own tolerance on the degrees of neutrality, from total neutrality to some traffic shaping in order to ensure QoS. Some say that it is even desirable to manage traffic in order to maintain quality. There are other issues involved, such as DPI (deep packet inspection), regarding control sometimes mandated by governments in order to prioritize traffic or search for illegal content. So Net Neutrality is an issue that can also be seen by the eye of public liberties, among them the one of the free speech. These issues are not in the scope of this work, but it is important to mention them for a comprehension of the big picture of the problem. 2.2 VoIP and Mobile Networks One of the traditional services that found a mean on the Internet over which it could be provided is voice telephony. VoIP, or voice over IP, is the traffic of voice over IP networks. It has various ways of being provided, and various protocols, either proprietary or open, can be used to deliver the service. An example of a proprietary 1 Again, this approach has some degrees of acceptance, as some advocates that some interference to ensure QoS (quality of service) can be accepted, even desired. 4

5 VoIP service is Skype, a popular application for audio conversation over the Internet. Many concurrent applications use an open protocol called SIP 2, which allows some interconnection between these services. In fact, the SIP protocol has eliminated traditional telephony on many enterprises, lowering the costs of deploying private, internal telephony networks. The use of VoIP over mobile networks was almost non-existent until the introduction of 3G services. This is so because the bandwidth of older networks was not wide enough to allow the constant, low latency flow of data required by digital audio transmissions. UMTS, or 3G, introduced faster data transmissions for mobile terminals, allowing a broader range of services to be delivered over those kinds of networks. The popularity of smartphones, however, ignited the use of VoIP over portable devices, especially due the user-friendly nature that some newer handsets have 3. 3 Issues brought by VoIP on Mobile Networks and approaches of different European operators. The provision of telephony services was exclusively done over the networks that were deployed for the delivery of those particular services. So the billing of telephony services were commonly an exclusivity of the network owner (or of those who had access to the network by the use of local loop unbundling). In order words, voice telephony traffic was only possible (and thus profitable) for the owners (or retailers) of the physical network. With the advent of VoIP, companies that had no ties with the Internet providers could provide voice services. Voice traffic could flow over the Internet, bypassing dedicate telephone layers of the networks. This means that, instead of following the physical routes of the telecom companies networks, and being billed by them, VoIP telephony are carried over the Internet, bypassing traditional telephony networks (and its billing 2 Session Initiation Protocol, a largely used protocol for VoIP communications. 3 Nokia has introduced SIP capable handsets before 2006, but use of VoIP over mobile networks was only common by corporate users. 5

6 systems). This has the potential to decrease telecom s income, as it presents an alternative, cheaper and more competitive mean of telephony service. In fact, Skype, arguably leading provider of VoIP services to the end users, had, in 2010, almost 25% of all international voice traffic 4, being claimed by some as the leading company providing that kind of service 5. The bypass of telephony traffic from telecom s networks (that is, from telephonydedicated layers) under the form of VoIP threatens the revenues of conventional telephony companies, either mobile or fixed, as the business model of those undertakings is also greatly on selling calling minutes, which can be bought for competitive prices under VoIP by the consumers. This situation was not welcome by mobile telecoms, which started to develop practices in order to curb VoIP. Those practices were either direct measures 6, such as simply blocking VoIP (as T-Mobile did in Germany, blocking Skype 7 ), or indirect measures below (in Europe, specifically), sometimes applied individually, other times combined: - Traffic shaping or throttling speed, such as the Italian operator TIM, under the argument of preserving the reliability of the network 8 ; - Increase the price for higher volume of data, rendering VoIP unattractive and encouraging the use of mobile-tailored services, as opposed to services that are agnostic of the interface used by the consumer, such as the Norwegian companies; - Tier-based services, with different allowances depending on the price paid, with more capacity to some services, such as the French operator Orange 9 ; - Unlimited traffic usage, but with speed throttling after a certain amount of data transferred 10, such as the Spanish telecom Movistar (Telefónica); 4 (Achtemberg, 2011) 5 (Ricknäs, 2009) 6 Often through mechanisms such as traffic shaping, filtering, deep packet inspection, etc. 7 (Allen, 2009) 8 (TIM) 9 (Orange) 10 (Movistar) 6

7 Note that many of those companies do offer premium services for an extra cost that would allow VoIP usage, but the price increase could impair the competitiveness of such service. How those measures are faced by the principles of Net Neutrality depends on the compromises one is willing to make regarding how strict that neutrality is, as saw previously. 4 Principles of Net Neutrality in EU legislation and their relevance to Mobile VoIP The current state of EU law on Net Neutrality is somewhat contradictory. As said before, Net Neutrality advocacy includes both civil rights and anti-competitive concerns, and, looking alone at the Commission s Declaration on Net Neutrality 11, one would feel rather confused, as it didn t provide any solution to the question, going as far as saying that it (the Commission) would monitor closely the matter, but mostly under the degradation of services aspect. That leaves the issue mostly unresolved, as degradation of the service rendering VoIP useless in mobile networks can be just an indirect result of prioritizing services, which is tolerated and even accepted by the EU Commission! 12 That been said, there is no direct support for Net Neutrality on current framework of regulation of electronic communications in Europe. In fact, some norms actually authorize implicitly that operators can restrict or put limitations to some services, as one can see on the Article 21 (c) and (d) of the USD 13, even though they are somewhat conditioned to be a measure to protect the impact of traffic on the network. One must keep in mind clearly the main arguments in this dispute: the operators normally claim that the increased data traffic generated by VoIP would harm their 11 (Commission Declaration on Net Neutrality 2009) 12 (European Commission 2007) 13 (Universal Service Directive) 7

8 networks and other users. This argument is debatable, as the data flow of VoIP has been demonstrated to be not that significant, especially on a 3G network 14. The real concern here is of a business model based on the revenue of calling minutes, which is monopolized by the operator to which the subscriber is attached. There are, however, certain norms that provide certain guarantees regarding the nondiscrimination of content, and some cases where net neutrality can be enforced when limitations by SMP 15 operators turn out to be anti-competitive. First, one must remember that on the Recital 18 of the Framework Directive 16, it is said that the NRA 17 s should not impose or discriminate some kinds of technology in favor of others, and that regulation must be technological neutral, or agnostic. Recital 39 of the same directive also states that changing technological conditions should lead to change of the Directive s provisions. Additionally, Article 8, 4 (g) of this Directive also generally states that the citizens have the right to distribute and access information using the application of their choice. That said, and remembering that the then EU Commissioner for Information Society and Media, Viviane Reding, has approached the issue saying that Discrimination of Voice over IP services by operators with significant market power must not be tolerated by national regulatory authorities. 18, one can argue that an SMP operator may not create mechanisms to restrict VoIP, because this limitation is seen as limiting competition. 5 Conclusion So, with no direct limitation on the EU legislation regarding traffic prioritizing, blocking of VoIP is being tolerated in EU, and operators have been using practices that make the use of it unattractive, either limiting the data plans using a volume criteria, or 14 (Voip-info.org, 2011) 15 Significant Market Power 16 (Framework Directive 2002) 17 National Regulaatory Agency 18 (Golob 2009) 8

9 simply blocking VoIP on the unlimited/high volume plans. However, it was shown by the Commission that the situation might be seen differently if the blocking occurs by operators with Significant Market Power. There might be changes ahead, as there has been some soft law being used to address the problem. The Commission has issue a communication standing for an open Internet, where content shouldn t be discriminated. However, concrete measures, especially changes in current legislation, to ensure that operators do not discriminate VoIP on European mobile networks, are still to be seen. 9

10 References Achtemberg, E. (2011, January 11). Skype Needs more paid services. Retrieved 10 04, 2011 from Telecompaper: Allen, K. (2009, 03 31). T-Mobile blocks Skype for German iphones. Retrieved 10 04, 2011 from The Local: Commission Declaration on Net Neutrality. (2009, 12 18). Official Journal of the European Union, 52 (L 337), s. 69. European Commission. (2007, 11 13). Impact Assessment on the proposals to amend the European regulatory framework (Working Document - SEC(2007) 1472). Retrieved 10 06, 2011 from m_pdf_sec_2007_1472_1_en_documentdetravail.pdf.pdf Framework Directive. (2002). Directive 2002/21/EC of The European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive). Framework Directive. European Parliament. Golob, L. (2009, 09 11). Mobile VoIP is driving Net Neutrality. Retrieved 10 06, 2011 from VentureBeat: Movistar. (u.d.). Tarifa plana Internet en el móvil. Retrieved in 10 04, 2011 from rifaplanainternet Orange. (u.d.). M6 Mobile by Orange version SIM. Retrieved from _oes.html Ricknäs, M. (2009, 03 25). Skype is largest international voice carrier, says study. Retrieved 10 04, 2011 from PCWorld Business Center: 10

11 voice_carrier_says_study.html TIM. (u.d.). Informazioni sulla qualità del servizio e regole per l'uso consapevole della banda larga Mobile di Telecom Italia. Retrieved from Voip-info.org. Bandwidth Consumption. Retrived from Universal Service Directive. Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users' rights relating to electronic communications networks and services (Universal Service Directive). European Parliament. 11

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