EU parliamentarians voted last week for a far reaching net neutrality law that will bar telecom operators from charging extra for delivering faster services.
According to the press release issued by the European Parliament, “MEPs want clear rules to prevent internet access providers from promoting some services at the expense of others…internet access should be provided in accordance with the principle of net neutrality.”
While mobile operators have been known to block or slow down OTT services such as Skype, most recognize that this is not what their customers want. The success of services such as WhatsApp and Spotify is shaking operators out of their sometimes passive role, and providing the catalyst for them to look for ways of ensuring that both they and their customers benefit from the innovation of the OTTs.
Operators do, in fact, have numerous ways to add value to OTT services running over their networks; for example by providing enhanced Quality of Service; charging, billing and settlement services; and access to marketing campaigns based on customer insights. As a result, open collaboration platforms, which enable operators to work efficiently with OTT partners, are increasing in importance.
Under any sensible interpretation of net neutrality rules, operators would be allowed to add value to OTT services in these ways, and to charge for this added value, although they would not be allowed to discriminate between OTTs wanting to access these value added services. For example, AT&T’s ‘sponsored data’ proposition (where the OTT pays for the data traffic to deliver its own service, rather than the end customer paying from their data account) recently caused questions in the US Congress about net neutrality, but the furore seems to have died down because AT&T is making the option to sponsor data available to any OTT who is willing to pay.
However, if the European Parliament’s proposal is taken at face value, then operators will be prevented from adding any value to partner OTT services in exchange for payment or revenue share. According to the Financial Times, the legislation will “ban business class internet access for companies willing to pay more.”
If operators are prevented by the EU from leveraging their network and IT capabilities to provide competitive differentiation to OTTs, then they can wave goodbye to potentially lucrative additional revenue streams. If this ability to generate additional investment from their infrastructure is strangled at birth, operators will not have any incentive to enhance the performance of OTT services running on their networks.
So who wins in that scenario? Not the operators – they are prevented from leveraging the OTT service. Not the OTT – they have to settle for lowest common denominator service. Not the end user – they will not now benefit from operator/OTT collaboration delivering innovative services, price plans and enhanced QoS.
Operators in Europe are working to compete in a mature market. Prices are being driven down, and the EU is also looking to ban extra charges for roaming from the end of 2015. Operators have to look to innovation to win the customers’ cash, trust and loyalty. For who else pays for the networks?
Those in the EU looking to stifle new routes to revenue are the same people who will expect European operators to deliver 4G networks and beyond, to underpin Europe’s leadership in communications technology.
Mobile operators have capabilities far beyond simply delivering voice and data services to a standardized level. Operators must be allowed to leverage the potential of their network and IT systems to those willing to pay. If net neutrality has to stay in the equation, let’s go down the route of equal access for all. Once the access is settled, operators can work with as many partners as are willing to pay to create differentiated services, and that means European operators are freed to create a new competitive market.
In a nutshell, more investments to upgrade network technologies & better/faster service will have to be preceded by laws guaranteeing return on investments.