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EP’s approval of Digital Single Market Regulation: summary and first reactions

On April 3rd 2014 the European Parliament approved in plenary session substantial changes to the DSM Regulation compared to the initial European Commission proposal. Reviewed Regulation draft was approved by 534 votes casted in favour, 25 against and 58 abstentions.

 

Most significant changes were included in the Net Neutrality provisions, where precise definitions were included for Net Neutrality, Internet Access Service and Specialised Services, which are to be provided if ”are not to the detriment of the availability or quality of  internet access services”; this introduces significant restrictions for ISPs in general, while proving an insurmountable barrier for the mobile industry. Traffic management measures have also been limited to a predefined and closed list of possibilities.  On roaming, the EU Parliament has set December 15th, 2015 as the deadline for its end within the EU, but relevant issues included in the package, like Fair Usage Policy and Roam Like at Home, are yet to be defined. The EP supported EU Commission proposals on spectrum, including criteria to be acknowledged by National Authorities when they design spectrum auctions, extending license duration to 25 years and strongly supporting an acceleration of the 700MHz band release (Digital Dividend II). Regarding harmonised EU virtual products on fixed wholesale, the EP proposes National Regulatory Agencies should assess the proportionality of imposing such obligation with BEREC to provide guidelines on the service definition.

 

Despite media coverage taking for granted the approval of the new Digital Single Market Regulation, there is still a long way process for its final approval, which could lead to further significant changes to be introduced: The EU Council, who now takes the lead in the approval process as it should also vote on the Regulation proposal, has already started internal discussions taking the original EC proposal as a starting point –but they should also take into consideration the EP text–. It is important to notice though, that it has not been requested in the EP Plenary the negotiating mandate to start the trialogue process with the Council, so the negotiating mandate should be requested and voted again at the ITRE Committee, once is set up under the new Parliament.  

 

Despite negative impact roaming elimination is to have on mobile industry, current EP’s Net Neutrality provisions represent an area of major concern for the whole telecom industry.  Restrictive definition of specialized services will have an immediate negative effect on innovation and already existing services like IPTV. Consumers, as end users of such services, shall also be affected by such constraints preventing the emergence of yet unforeseen new services. Even players of adjacent industries, willing to directly participate in the telecom industry or indirectly through an OTT model, such as WhatsApp, might also suffer from this restrictive approach.

 

First reactions

 

Neelie Kroes, vice-president of the European Commission and sponsor of the DSM Regulation, has stressed the very positive effects EP’s proposal on roaming, transparency and some aspects of net neutrality could have on consumers. But specialized services definition, within net neutrality approach, is an area of great concern for her: it is quite restrictive and poses a problem for online innovation and for all who might want to access new services based on guaranteed connections such as IPTV, videoconferencing and e-health services.

 

Though the GSMA believes that the overall package fails to address the key challenge of stimulating growth and investment, on spectrum related issues is more supportive: securing access to long-term, harmonised, spectrum is critical given the increasing spectrum demand driven by the growth of Internet access over mobile broadband. Thus proposed extension of license terms and guidelines for Digital Dividend II and design of spectrum auctions are welcomed.

 

Strand Consulting is highly critical with EP’s roaming regulation proposal. Though reasonable use principle has been included and thus roaming usage is to be monitored not to allow “excessive use” avoiding arbitrage risk, it has not been defined who or how abuse will be monitored and punished. Additionally, Strand considers the EP has created a blatant hypocrisy with net neutrality and roaming: on the one hand it has expressly prohibited monitoring use and blocking of Skype or other VoIP services with net neutrality, but it has opened the door to a new monitoring and blocking regime with roaming; despite roundly criticizing the NSA, the EP is on track to make its own surveillance regime.

 

 

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Chema Alonso

Chief Data Officer, Telefonica.