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Monday, December 01, 2008

EU intervention in mobile - a double-edged sword

The European Commission's involvement in the mobile industry, through the commissioner Viviane Reding, seems to be really bipolar.

On the one hand, it introduces consumer-centric legislation on competition which is broadly positive. Termination and roaming fees are in many cases egregiously high, and ordinary competition largely fails to bring them down to realistic levels. This is because despite retail-level choice for consumers, there is an effective monopoly by your service provider on interconnecting calls/messages to a given number.

And it's not like the industry isn't given enough warnings, so the recent moves to cap intra-European SMS and data roaming at €0.11 per message and €1.00 per MB can't come soon enough. In fact, there's probably a good argument for dropping another zero or two from the data roaming threshold, but it's a good start at least.

(Actually, the whole notion of "roaming" access for data is ludicrous - why is the 95%+ of Internet-destined 3G data traffic backhauled all the way via your home network anyway, rather than broken out onto the Internet locally in the visited country for pennies?).

So that's the good side of the European Commission. Competition, free trade, international tariffs and so on. It has also gone a long way to ensure that Internet connectivity is a basic right of citizens.

The downside comes when it tries to intervene in actual technology decisions or attempts to harmonise laws and regulatory regimes in a heavy-handed fashion. The recent "Telecoms Package" included many onerous, and in some cases frankly authoritarian, demands. Luckily the EU Council of Telecom Ministers has thrown out some of the more ridiculous aspects, including the suggestion of an EU-wide super-regulator and centralised spectrum policies.

While the original GSM Directive which mandated both technology and frequency choice has indeed, in hindsight, been a major success, the EC needs to recognise that the world has moved on. In particular, it misses the fundamental move from a vertically-integrated and voice-centric telecoms industry, to one which is layered, data/Internet-driven and intimately entwined with IT and entertainment industries, and increasingly various others as well.

Now, attempts to impose external legal requirements on particular layers of technology has a huge potential for introducing extra cost, delay or outright market failure. We have already seen pointless and wasteful intervention in the market for Mobile TV, where the insistence on DVB-H was completely in contradiction to the spectrum policy moves towards "technology neutrality" for wireless access.

The latest efforts by the commission to meddle in the market have been around supposed harmonisation of spectrum policy. In theory, that's a laudable aim which could help scale economies for suppliers, but in reality each European market is very different in terms of market structure, technology preferences, customer psychology and national government stance on key issues. The notion of an unaccountable Brussels-based authority that could veto specific national ideas is completely anathema to most observers.

Some of the thinking around "net neutrality" seems pretty woolly as well, especially given the likely emergence of innovative business models in some of the most competitive markets. There's nothing wrong with non-neutral models if people are easily able to switch providers. That said, legislation on openness and transparency about non-neutrality would be welcome, which is a very important distinction.

In my view the whole argument about the necessity of EU legislation to protect the relevance of the overall "European telecoms industry" in a global context misses the point. Why should accidental geographical contiguity of 27 countries determine information technology policy anyway? Why shouldn't Romania be able to adopt the spectrum policies of China if it chooses? Why should a country with high population density and lots of fibre have the same mobile vs. broadcast frequency allocations as one with sparse population? Why should a future libertarian government in the UK be forced to apply the same data-retention laws as those in France or elsewhere?

In my view, the European Commission and Viviane Reding should generally stick to issues impacting consumer protection and competition. And it needs to be especially wary of consultants that make huge sums through trying to steer EU-wide policy towards specific technologies or applications.

And I'm sorry Ajit, but I reckon that Reding's latest hobby-horse is another guarantee of failure "We must make sure that Web 3.0 is made and used in Europe". Frankly, that's the scariest and most megalomaniac statement I've heard from a bureaucrat in a long time (well, about technology at least), and an almost certain guarantee that nothing of the sort will occur. The only "main step that Europe has to take to respond to the next wave of the Information Revolution" is to get out of the way, and leave innovation to the innovators.


Anonymous said...

"Actually, the whole notion of "roaming" access for data is ludicrous - why is the 95%+ of Internet-destined 3G data traffic back hauled all the way via your home network anyway, rather than broken out onto the Internet locally in the visited country for pennies?)"

OK lets dissect your comment there to see precisely why you are completely and utterly wrong...

1) perhaps when you are roaming in Spain and log into Google you might prefer to find you find google UK and not Google Spain?
2) perhaps you are not multilingual so when you are directed to a home page you get to one that you can understand in your own language
3) perhaps you want to be directed to services your provide actually offers you and can seamlessly bill you for - you won't get that with local access
4) perhaps the operators have obligations to filter out content to certain viewers (e.g. children). If you are roaming in some countries that won't work but with home access it will
5) perhaps when you are roaming is certain countries you want to access google in any language yet the country you are in won't allow access to google in any language.

Dean, do you need any more examples? You have made this point before yet never with real justification. You don't get billed extra for home routing, you don't get any significant time delay, you do get a better user experience so what precisely is the concern?

Dean Bubley said...

SPO: Yes, all of those arguments are worthwhile.

But they're worth 10%, not 10x

Huge numbers of people happily use Internet cafes, or local WiFi access in hotels, without those factors being more than a minor irritation.

I'd certainly pay 5p per session to have these issues fixed. But anyone who suggests they're worth £3-6 per MB is clearly smoking something entirely too entertaining.