Network Neutrality Implications for Europe. Dr. Klaus Müller Executive Vice President Group Regulatory Strategy Deutsche Telekom 3 December 2007
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1 Network Neutrality Implications for Europe Dr. Klaus Müller Executive Vice President Group Regulatory Strategy Deutsche Telekom 3 December 2007
2 What is Net Neutrality all About? Possible Understandings Existing Answers No censorship media law, constitutional law (free speech) No arbitrary blocking competition law, Art. 5 EU Access Directive (DoS) (any-to-any-principle) No discrimination competition law, Art. 10 EU Access Dir. (non-discrimination) No exclusion of devices interoperability rules, e.g. Art. 7 R&TTE Dir. ( -marking for terminal equipment) No differentiation of bits international standards (dumb pipes) (MPLS, IPv6... of IETF, ITU-T...) No innovation in IP networks? Net Diversity approach (freeze the internet) (consumers choice) 1
3 Net Neutrality in the USA 2002 Nascent Services Doctrine by FCC Commissioner Abernathy: Regulators should exercise restraint when faced with new technologies and services FCC starts deregulation of broadband markets by narrowing open access (common carriage) requirements for DSL facilities 2003 Prof Wu publishes paper on Network Neutrality, Broadband Discrimination and thereby starts a debate on re-regulation 2004 FCC Chairman Powell articulates non-binding Four Freedoms concept 2005 FCC investigates in alleged unjustified blocking of VoIP by Madison River Com., closed after settlement 2006 FCC approves AT&T/Bell South merger under condition of a net neutrality commitment limited to 2 years Six different bills for some sort of net neutrality rules proposed 2
4 Regulation in Europe 1998 First Regulatory Framework on telecommunications 2002 New Regulatory Framework maintains strict ex-ante regulation plus dogma of Technological Neutrality (extension to new technologies) 2003 Expansion of ex-ante regulation on mobile sector 2007 EU Commission s infringement proceeding against German new market rule: New market shall not in principle be subject to ex-ante regulation 2007 EU Commission sets prices for international mobile roaming by Regulation outside the regulatory framework 2007 EU Commission proposes amendments to Regulatory Framework, e.g. additional separation remedy (segregation of SMP networks) plus authorization for imposing net neutrality obligations:... 3
5 European Regulation of Minimum Quality? EU Commission s proposal: minimum quality of service In order to prevent degradation of service and slowing of traffic over networks, the Commission may, having consulted the Authority, adopt technical implementing measures concerning minimum quality of service requirements to be set by the national regulatory authority on undertakings providing public communications networks. Art. 22 (3) Users Rights Directive What is a minimum quality? Will consumers benefit? Is more state control always better? The East German experience of quality control by the state: a role model for European Internet regulation? Trabant, GDR, production EU proposal is going to become effective not before
6 Customer Choice in Germany Variety of broadband platforms with a quality policy of their own right 100,00 90,00 80,00 70,00 60,00 50,00 40,00 30,00 20,00 10,00 0,00 94,40 DT DSL Household Coverage (%), September bidir. Satellite wholesaler Source: BMWi Breitbandatlas 75,29 min. 1 of 2 HSDPA operators 67,81 m in. 1 of ca 60 altern. DSL ops 42,34 the respective Cable operator 10,11 min. 1 of sev. B WA operators 68 % of Germans have a choice of at least 4 broadband offers with different quality features Variety of super broadband (25+ Mbit/s) infrastructure Various roll-outs 2005: Cable ops, regional 3-play offers 2006: Deutsche Telekom, FTTC in 50 cities 2006: NetCologne, FTTH in Cologne area 2007: M-Net, FTTH in Munich 2007: Arcor, FTTC in 50 cities 2008: Versatel, FTTC in large cities 5
7 US Deregulation / EU Regulation and Investments Telecom investments per capita (USD) 200 USA US Dollar 150 Europe* *EU-15 Source: OECD (2007) USA: 193 USD per capita EU-15: 128 USD per capita In 2006 and 2007, investment rates in the US are rising due to consistent deregulation. 6
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