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Originally published March 30, 2014 at 5:18 PM | Page modified March 31, 2014 at 6:42 AM

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EU to vote on ‘net neutrality’; who pays, how much are key

The European Union’s 28 member countries plan to vote Thursday on digital-policy legislation meant to ensure equitable access to the Internet’s pipelines for services like streaming music, on-demand television and cloud computing.


The New York Times

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LONDON — Vodafone gave Chris Herbert a package deal he found too tempting to turn down.

To persuade Herbert, a 27-year-old conference organizer, to pay 50 percent more for his monthly cellphone contract, the British telecom giant threw in a free subscription to Spotify, the music-streaming service.

The bundled deal, giving Herbert access to both a high-speed digital network and consumer content, is the type of packaging at the core of a raging public-policy debate in Europe over what types of services will be widely available and how much they will cost.

“I talked myself into this,” said Herbert, a London resident who now pays the equivalent of $75 for his monthly cellphone subscription. In his case, he considers the much higher monthly rate an acceptable trade-off: He canceled his existing Spotify contract that had cost him $16 a month.

“With my new data plan, I’m streaming a lot more music than I ever did before,” he said.

The online habits of customers like Herbert, and their ability to pay, are the focus of digital-policy legislation on which lawmakers from the European Union’s 28 member countries plan to vote Thursday in Brussels. A key part of the legislation is “net neutrality.” The rules are meant to ensure equitable access to the Internet’s pipelines for services like streaming music, on-demand television and cloud computing. The big questions are who pays for them and how much.

The proposed rules have drawn furious lobbying from telecommunications companies like Vodafone, Internet giants like Google and smaller players like Spotify and advocacy groups on behalf of the EU’s 500 million consumers.

The battle is akin to a struggle playing out in the United States but with its own European twists.

The outcome could help determine whether the financial incentives are in place to pay for the multibillion-euro investments needed to upgrade Europe’s patchy mobile and landline Internet infrastructure, which in the absence of continentwide rules has slipped ever further behind the more advanced data networks of North America and Asia.

Few parties were happy with the set of compromises that a committee of the European Parliament approved in mid-March. And even if the full Parliament adopts the legislation this week — passage is no sure bet — further wrangling among member countries over how to implement the law would be expected to drag on for months. Because that process would extend past parliamentary elections in May, it would be up to the next Parliament, later this year, to either carry forward the current legislation or reopen the debate.

The wrangling has pitted some of the biggest companies in Europe against one another.

The telecom carriers want to charge content providers like Google, with its YouTube video service, higher rates for premium, high-speed access to the Internet. The carriers say such extra costs are necessary because of the amount of network capacity — or bandwidth — such services require.

The legislation provides some pricing leeway in that regard. But the carriers say the flexibility is not sufficient, while content providers counter that any premiums at all would be unreasonable. Although the richest players, like Google and the on-demand service Netflix, might be able to afford premium access, some midsize or smaller players worry that they could be priced out of the Internet fast lines and relegated to network side roads.

Consumer-advocacy groups, meanwhile, say their main concern is that the new rules would make Internet access unaffordable for many Europeans. And they warn that the network economics could end up favoring U.S. juggernauts like Google, Netflix or Amazon, to the detriment of providers of European content and services.

The vote “will either mark an unprecedented advance toward the protection of our fundamental rights, or mark the final days of the open Internet as we know it,” said Félix Tréguer, co-founder of the La Quadrature du Net, an advocacy group in Paris.

Representatives for Google and Microsoft, like many of the other big U.S. companies, declined to comment, citing the sensitivity of the debate.

A similar debate continues in the United States. The Federal Communications Commission is still trying to map out net-neutrality rules, after two of the biggest U.S. providers of broadband access, Verizon and Comcast, successfully challenged the commission in court.

“Net neutrality is starting to bleed into a bigger debate about whether the Internet has become a public utility,” said Tim Wu, a professor at Columbia University in New York who coined the phrase net neutrality in the early 2000s. “It has become about who controls access to online content.”

Unlike U.S. regulations, in which mobile Internet services have mostly been excluded from net-neutrality policy, the European legislation does not differentiate between mobile and fixed data networks.

As people increasingly use smartphones and tablets to access online content, mobile data traffic jumped 57 percent in Western Europe and 77 percent in North America in 2013 compared with the previous year, according to the network-equipment company Cisco Systems. Internet usage on cable networks has had similar increases over the same period.

To keep pace with that demand, European telecom companies are gearing up to spend billions of dollars to upgrade their networks.

Vodafone, for example, has announced plans to invest almost $12 billion in network improvements. Telefónica of Spain has agreed to buy E-Plus, a German carrier, for $10.7 billion to expand Telefónica’s operations in Europe’s largest economy.

To justify such outlays, many European carriers say they should be able to charge companies extra for transporting data-intensive services like Internet TV.

“Data volumes are growing exponentially,” said Tom Phillips, chief regulatory officer of GSMA, a telecommunications industry body. “At a point, someone has to pay for the necessary investments in the network.”

Not surprisingly, Internet giants like Google and European content providers like Spotify and Rovio, the Finnish gaming company behind the Angry Birds franchise, don’t agree. Many content companies argue that Internet access providers are simply trying to greedily exploit the rising consumer demand for online media.

The Finnish national broadcaster YLE, for example, says it has had a threefold increase in monthly visits, to 14.5 million, for its online TV and radio services since 2010.

A few years ago Dutch lawmakers opposed efforts by the country’s big telecom company KPN and the local units of Vodafone and T-Mobile to block, or charge extra for, Internet communication services like Skype and WhatsApp. In response, in 2011 the Netherlands became the first European country to enshrine the concept of net neutrality into national law.

And a German court overturned efforts by Deutsche Telekom last year to reduce the speed of consumers’ Internet services after they reached certain download limits. The company’s opponents, noting that the limits did not apply to Deutsche Telekom’s own online content, argued that the approach would have given the carrier an advantage over other Internet companies looking to offer rival online services like video on demand.



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