Sweeping new telecom rules in the European Parliament could permit differing classes of service on the Internet—but Google and others are fighting back
With MEPs and European Union member states just inches away from clinching a deal on a sweeping revision of EU telecommunications rules, one major issue remains the sticking point: whether the flow of information on the internet will remain neutral or be split, with some data being privileged over other data.
Internet innovators, from Google (GOOG) to Skype (EBAY) to web-based start-ups are afraid that in the rush to get a deal on a telecoms package through the European institutions before the June parliamentary elections, so-called net neutrality is being left by the wayside.
Currently, wherever data comes from, whether from a silver-surfing Latvian granny blogging about her favourite traditional recipes or a multinational corporate content provider, the packets of information are treated equally, or neutrally, hence 'net neutrality'.
Amendments to a proposal on the minimum levels of service provision by network operators backed by some centre-right MEPs however would permit telecoms companies and internet service providers to block or degrade some of the data passing through its lines while privileging other data.
Opponents of the amendments, largely from the left and green corners of the house, fear that this would instantly deliver two or more tiers to the internet, with some providers paying premium fees to prioritise their data.
The big content producers and service providers would be able to eclipse smaller publications and tiny internet start-ups.
Moreover, telecoms and ISPs may choose to block or otherwise restrict the data of providers of competing services or competitors or their partners.
Not co-incidentally, the provision of free or extremely cheap internet telephony from companies such as Skype, are the telcos' major competitors. Indeed, analysts believe internet telephony is digging the grave of the large telcos.
Internet search giant Google also opposes the amendments. "We could easily pay any additional premiums, but that's not the point. It's a point of principle. We started out as a small company. We wouldn't be able to do the same thing now, if this passes."
Jean-Jacques Sahel of Skype told EUobserver: "In a time of economic crisis, the EU should be enabling this sector to be more competitive and innovative as possible and this is going in the opposite direction. It protects the big boys and shuts out the small-time innovators."
Supporters of the amendments, including European telcos such as Telefonica (TEF) and Orange (FTE), but also, crucially, US telcos AT&T (T) and Verizon (VZ), for their part back a hands-off regulatory approach, saying that competition is enough to sort out any problems that may arise.
They also argue that any such protection of net neutrality inhibits their ability to co-ordinate traffic flows and guarantee quality of service. Many new video and gaming service suck up a lot of bandwidth, they say, arguing that data needs to be managed and prioritised so that internet provision to users is not diminished.
Furthermore, the additional revenues from preferred access fees could finance development of advanced new networks and other innovative services.
This approach is backed by the European Commission, which argues that if consumers feel their content is somehow being compromised, they will switch to other providers.
At the same time, according to sources close to the discussions, the UK and France do not favour net neutrality – the UK believing, similar to the commission, that competition alone is sufficient, and France supporting any moves that it believes will enable it to crack down on copyright infringement.
The debate has sparked off a furious round of lobbying, particularly from American firms.
US President Barack Obama made net neutrality a key issue while on the campaign trail, and at the beginning of March appointed Julius Genachowski, a strong backer of net neutrality, as the country's top telecommunications regulator. The big US telcos see the writing on the wall, and so the battlefield has shifted across the Atlantic.
"If they can deliver a result here in Europe that goes their way, this is something they can use to pressure policymakers with back in the US," said Mr Sahel.
Negotiations over the telecoms package between the parliament, the commission and the Council have all but concluded apart from haggling over the net neutrality issue, which dominated discussions between the three parties on Tuesday.
Compromise texts currently being floated from the parliament and being considered on Thursday evening appear to have caved into the anti-net-neutrality stance as MEPs pick their battles and choose other issues to make a stance over.
Further discussions are expected to take place on Monday night ahead of twin votes on the topic in the parliament's internal market and industry committees on 31 March. The full sitting of the house will consider the matter on 22 April.