Fixed and mobile operators in Europe are facing quite a dilemma. On the one hand they are being pressured by European Digital Agenda commissioner Neelie Kroes to improve their network’s broadband speeds and capacity, while being told they are not investing enough to meet EU targets.
On the other hand, their customers want to use their internet connections for more and more bandwidth-hungry applications, especially video, but they don’t want to pay extra for the privilege.
Betwixt the two are the over the top (OTT) players like Google’s YouTube and the BBC’s iPlayer that are more than happy to deliver high quality video streaming direct to their customers over those same networks for free.
Something has to give, and according to the Financial Times, the big European operators are looking closely at reforms of the current peering system to introduce charging agreements for exchange traffic where their networks meet. In a nutshell, this would mean that those generating the most traffic would have to pay for it.
It makes a lot of sense, really. Those high traffic generators are also generating big dollars, none of which the operators get a share of despite the fact that without them the services could not be delivered. If mobile operators can’t find new revenue streams they will not be able to invest in higher speed networks and if they don’t, the video content being demanded won’t look so good to the end user. There’s quite a Catch-22 developing.
The complications don’t stop there either. Unless all the operators act together, any abstainers could end up getting all the traffic and, potentially, all the customers wanting to access that traffic. If they do act together they could be in breach of anti-competitive regulation by acting as a cartel of sorts.
In what could be a worst case scenario Google, for example, may decide to become an operator in its own right, either by acquiring an existing player or starting one from scratch. The former would be the more likely and there is no shortage of cash in those coffers to do anything it pleases.
The whole idea of charging extra for certain traffic types, and guaranteeing priority or higher quality service to those willing to pay for it, flies in the face of net neutrality exponents, Google being one of the most vocal. However, this is Europe we are talking about, not the USA, and net neutrality has not taken the same foothold there as it has across the Atlantic.
In what could be the ultimate turnaround, European operators may request the assistance of regulators to help enforce some equality and fairness in the telecoms market. There is no doubt that this would be met by equally dramatic claims of anti-competitive activity by US content providers and legislators.
Maybe this is just a case of the Europeans ‘playing possum’ and lulling Kroes, while at the same time thumbing their noses at the big content players?
Whatever it is it could become a very interesting game of chess developing, indeed, and certainly one to keep an eye on.
This blog originally published on Poulos Ponderings