Response of Bonnier and the TV4 Group to the BEREC BoR 12 (31-33) Reports on Net Neutrality

Transcription

1 Program Management BEREC Office Meierovica Bulv.14 Riga LV-1050, Latvia Response of Bonnier and the TV4 Group to the BEREC BoR 12 (31-33) Reports on Net Neutrality Introduction Bonnier is an international media group active in television, newspapers, magazines, movies, cinemas, books and digital media. With a base in the Nordic region and substantial operations in the U.S., Germany, the U.K. and Eastern Europe, Bonnier has operations in 16 countries worldwide and employs more than 10,000 people. Bonnier stands for entrepreneurship and has always combined a genuine commitment to freedom of speech with a sense for business. Since 1804, Bonnier has published high-quality media products. Bonnier is wholly owned by the Bonnier family, which has been running the company for seven generations. The TV4 Group is the Nordic region s leading TV company, and has delivered engaging news, grand entertainment of great variety and quality, live sport and top-class drama to Swedish viewers for more than two decades. In addition to the main channel TV4, the group s portfolio includes 40 TV channels in the Nordic region - in the free-tv, basic cable and premium segments - and 25 local stations in Sweden, as well as a wide range of web and mobile sites and on demand services, for example TV4 Play, where programs from the group s different channels are available online. Bonnier and the TV4 Group welcome BEREC s work in the field of net neutrality and appreciate the opportunity to contribute to the consultation on BEREC s recent reports on net neutrality and related issues (BoR (12) 31-33). 1

2 General remarks 1. The development of the open Internet has during the past two decades had a transformative effect on our society and on economic activities. We appreciate that BEREC in its recent reports clearly recognizes that the principles of openness and end-to-end connectivity have been key drivers in this development (BoR (12) 31, pp 60-61). 2. The aforementioned open nature of the Internet is also expressed in European Union law in the Framework Directive, which states that the policy in the area of electronic communications should promote the ability of end-users to access and distribute information or run applications and services of their choice. We agree on this overarching objective as a vital point of departure for the further policy discussions on the issue of net neutrality. 3. Bonnier and TV4 firmly believe that equal treatment of all electronic communication through a network should be promoted as the prevailing norm. The policy objective of maintaining an open and neutral Internet cannot be upheld by transparency and competition alone, but must be based on clearly expressed political support for, and promotion of, net neutrality as intrinsically important and as the prevailing general rule. Exceptions to this rule should be well-defined, motivated by general interest and be non-discriminatory with respect to the provider of traffic. 4. A move away from the best efforts Internet would have a negative impact in a number of dimensions: - Innovation and competition: A growth of non-neutral practices would increase entry barriers for new content and application providers (CAPs), particularly those with less financial strength, and make it harder for them to reach consumers. Also, on the ISP side, new ISPs could potentially face difficulties entering the market if there would be exclusive deals between CAPs and ISPs. - Access to information and media pluralism: Non-discrimination also holds an important freedom of information dimension, as it guarantees the opportunity for individuals, organizations and companies to reach citizens without prior negotiation or authorization. Valid forms of traffic management 5. We recognize the need and the potential efficiency gains from traffic management due to reasons relating to legal provisions, protection of integrity, and congestion-reduction (as discussed in BoR (12) 32, ), and also to ensure the functioning of certain services such as VoIP and IP-TV. It is of utmost importance that these measures are subject to clear and non-discriminatory definitions, and that they are provider-agnostic in nature. 2

3 6. Reserving bandwidth for a certain traffic category should hence constitute an acceptable form of traffic management, whereas differentiating between providers of said traffic would not. 7. We therefore agree with BEREC that such measures are only valid if the restrictions are done in a non-discriminatory basis among all content and applications providers, and under objective criteria such as consumption of resources (BoR 12(31) p.9). On the present restrictions to the open Internet 8. Net neutrality has been, and remains, the norm on the Internet. However, BEREC s inquiry into the restrictions to the open Internet in Europe (BoR (12) 30) shows that discriminatory and anti-competitive behavior is an existing problem for certain types of Internet-based businesses, particularly VoIP. BEREC notes that more than 21 percent of VoIP users are affected. Blocking and throttling is already today limiting consumer choice in the area of VoIP. 9. The prevalence of discrimination of VoIP services indicates that the resulting risk for foreclosure, resulting in harm to end consumers through both static and dynamic effects, is not necessarily mitigated by the absence of an ISP with SMP, or by the existence of transparent user agreements. This is supported by the fact that all major Swedish ISPs have chosen to restrict the use of VoIP in their agreement terms (thus far, they have however not gone so far as to block these services). This indicates that competition among ISPs is not a sufficient means to stop foreclosing and innovation-hindering practices. 10. Even in the presence of competition, very few applications are in themselves of such importance that they will motivate a switch from one ISP to another. As BEREC states, a non-neutral practice might not [be] significant enough to trigger an end-user switching in front of switching costs that will never be zero, but nevertheless inducing significant side effects for end-users. 11. The severity of the risks of decreased competition and consumer choice-neutral practices is likely to increase if policymakers and regulators retreat from the principle of net neutrality. Until now, the continued expression of support for net neutrality, not least by the European Commission, has had a preventive effect with regards to nonneutral and discriminating traffic management practices. Media convergence increases the impact of net neutrality on competition 12. BEREC rightly states that vertical integration gives incentives to implement differentiation practices to ISPs as they could reduce competitive pressure on their own retail services. The paradigmatic example of this is VoIP (BoR (12) 31). Similar situations are however 3

4 likely to arise in other areas, as the developments toward media convergence make ISPs increasingly act as vertically integrated content providers in the media sector. 13. Vertical integration is a threat to net neutrality since it gives an incentive to the ISP to block competitors. This vertical integration can occur through the offering of content services by ISPs, or through quasi-vertical integration through exclusive partnerships with content providers. This development creates new incentives for ISPs to act in an anti-competitive manner, analogously to the observed behavior regarding VoIP. Future targets for throttling or blocking might be VoD providers, search engines or e-commerce companies, all depending on the commercial interests of the ISP. 14. As BEREC points out, even if functioning competition among ISPs would be enough to prevent foreclosure through a total blocking of a service, this would not necessarily be enough to prevent a reduction of consumer choice. Such a reduction could materialize in a situation where one ISP blocks a certain service, application or CAP, another ISP blocks a different application or CAP, resulting in a fragmented access service offering where choosing certain access service providers precludes using a host of application or CAPs. In such a scenario sometimes labeled a cable-tv-internet it would indeed, as BEREC writes, be very difficult to maintain [Internet s current features], affecting end users welfare (BoR (12) 31, p.9). Impact on entry barriers 15. A defining characteristic of the Internet economy has been the low barriers to entry. This might change if ISPs enter exclusive partnerships with certain CAPs. Whereas large companies will be able to partner up with ISPs, the entry cost required might prove dissuasive for entrepreneurs. We will risk a situation where the basic tenet of innovation in the Internet economy the ability to test products and reach end-users without prior negotiation or authorization is severely weakened. (i.e. fewer one man in a garage entrepreneurs). Policy measures and minimum Quality of Service 16. Transparency requirements and pro-competitive measures (such as facilitating switching from one ISP to another) should be promoted, but are not likely to be efficient safeguards of the open Internet in the absence of a clearly expressed and supported norm of nondiscrimination and openness. Net neutrality should remain a central policy objective for the Commission, Member States, BEREC and NRAs. It would therefore be premature to in any way preclude binding proneutrality legislation. 4

5 17. The present existence of restrictions to the open Internet, as recently described by BEREC (BoR (12) 30), indicates that there is a need for preventive/proactive monitoring by NRAs. Such preventive measures taken by the regulator are supported by Article 22(3) in the Universal Service Directive, empowering the regulator to impose Quality of Service standards in order to prevent the degradation of service and the hindering or slowing down of traffic over networks. Bonnier and the TV4 Group appreciate the opportunity to contribute to BEREC s work on Net Neutrality, and look forward to the continued dialogue on policies to promote the development of the open Internet. Best regards, David Salsbäck Head of Public Affairs Bonnier AB Åsa Jamal Head of Communication, HR and Public Affairs TV4 Group 5