The raid by the European Commission’s antitrust gumshoes this month on Orange (formerly France Telecom), Deutsche Telekom and Telefónica of Spain seemed to come out of the blue. The companies professed a surprise verging on stupefaction. Even some Brussels insiders were caught on the hop. Naming no names, the commission said the inquiry involved internet connectivity. The question is whether entrenched telecoms firms are abusing their strength in the market for internet traffic to deny video-streaming websites and other content providers full access to their networks to reach consumers. Besides the content providers themselves, the other potential plaintiffs are the “wholesalers” that the content providers use to ship their data across borders (and usually the Atlantic). These rely on incumbent internet-service providers (ISPs) such as Orange to take the data the last bit of the way to subscribers’ screens and mobiles.
All eyes turned to Cogent Communications, an American wholesaler which handles data for the likes of YouTube. Cogent has complained, fruitlessly, to French and German regulators that their former monopolies were asking too much to handle data, and throttling the flow to consumers when bigger fees were not forthcoming. It is appealing against the French decision. In theory Orange and the other network providers might simply pass on to their customers the cost of all their streaming and downloading… But Europe’s market is fiercely competitive; and regulators place all sorts of constraints on how networks can charge for their services, while haranguing them to invest in new technology and new capacity to keep up with rising traffic. Though there are similar spats in America (for instance between Cogent and Verizon, a big network operator), it looks to some Europeans like another example of the rape of the old continent by America’s data-mining, tax-avoiding internet giants.
The broader issue—and the reason, perhaps, why the antitrust watchdogs chose to weigh in—is that Europe is on the brink of big regulatory change. A draft law to be published in September will subtly alter the principle of “net neutrality”, the idea that companies which own the infrastructure cannot give priority to some traffic (eg, from their own websites) over that of others.;”
Internet access: Congestion on the line, Economist, July 20, 2013