A new report argues that European telecommunications providers should be able to charge for network priority
European telecommunications operators are set to demand the right to charge more for certain types of content delivered over their mobile broadband networks, in the face of growing pressure from the European Commission over the rollout of fibre-optic networks.
A report presented to the European commissioner for telecoms on Wednesday provided support for such a business model, according to drafts seen by the Financial Times and the International Herald Tribune.
Freedom from restrictions
The report, headed by the chief executives of Alcatel-Lucent, Deusche Telekom and Vivendi, argued telecoms operators should be free to develop new business models free from any “restrictions” other than commercial agreements.
“There should be no … restrictions on the development of these business models, albeit they should be on the basis of commercial agreements,” said one draft of the document seen by the FT.
That line of argument is widely seen by industry observers as protecting the ability of mobile network providers to charge content providers for delivering bandwidth-heavy content such as streaming video.
This would give telecommunications companies access to new income, which they could then use to invest in areas such as fibre-optic networks, some companies argue. Companies such as Google oppose such charging plans under the banner of “network neutrality”.
The report was presented in response to a March meeting between Kroes and about 40 industry players, where she called on them to draw up “concrete proposals” on how to speed up Europe’s high-speed broadband rollout.
While the report doesn’t explicitly mention the idea of charging content providers, this was widely seen as being the issue at stake.
The report highlights the friction between network operators and the EC over high-speed broadband targets, according to Frederic Huet, managing director of Greenwich Consulting.
“It will no doubt be difficult for operators to meet the $421bn (£260bn) cost of rolling out high speed broadband networks, but charging online content providers for delivering material may not be the best way to approach the situation,” Huet said in a statement.
However, he acknowledged that operators are being squeezed and that bandwidth-hungry applications such as streaming video are on the rise.
“We are now at an impasse,” he stated. “Ultimately, operators need to ease congestion – and make money. Operators’ commercial prospects need to be balanced with consumer choice and fair play.”
Acision, which provides mobile data infrastructure technology, said operators must be allowed to exert more control over mobile broadband to ease congestion.
“Mobile broadband capacity is a physically constrained resource where demand will fundamentally outstrip supply for the foreseeable future,” said Acision’s marketing vice president, Steven van Zanen, in a statement. “If left ‘free’ and unchecked, congestion will become a permanent feature of mobile broadband and erode the end-user experience.”
The EC’s targets stipulate that at least half of European homes should have access to download speeds of 100Mbps by 2020.
In the UK, BT Openreach is planning to link fibre to 66 new exchanges during the course of 2012, which could between them serve up to a million more homes and businesses. The list includes unsurprising arease such as Holborn, Waterloo, Euston and Kings Cross, along with Skipton, Derby, Norwich and Eastbourne.
BT has a £2.5 billion programme which will include more than 1,000 exchanges, 30,000 roadside cabinets and 50,000km of fibre.
BT is also involved in trials of “white space” spectrum for linking rural areas to broadband.