Is the EU creating a level or layered playing field for OTT players?

Written by on September 20, 2016 in Guest Blog with 0 Comments

Children on a seesawThe EU is expected to propose that OTT giants providing voice & messaging telecom services meet the same obligations as operators.

The European Union’s executive arm is expected this week to propose subjecting online services like Microsoft’s Skype, Facebook’s WhatsApp and Apple’s iMessage to some of the same rules that have long regulated the telecom services business.  Specifically, they are expected to adhere to the same laws governing telecom services providers, which could have a big impact on privacy and encryption. Telecoms services providers currently have several obligations governing how they protect, store and access data on customers under the e-Privacy Directive.

Operators have long complained that it is unfair that so-called over-the-top (OTT) providers are not subject to these laws, despite offering essentially the same services.

This could threaten the end-to-end encryption offered on these services. Telecom services operators cannot currently offer this protection as they are required to make communication data available if requested by law enforcement.

What are traditional telecom services providers required to provide that Skype and WhatsApp aren’t? Skype, for example, may have to offer free emergency-calling services for European customers who use its online voice service to dial traditional phone numbers. In cases where Skype assigns telephone numbers — allowing for calls from traditional phones — they would need to adhere to number portability rules.

The draft proposals are still fluid. But what is clear is that the EU is proposing to move in a direction telecom services executives have been pushing for years. The executives say they want a level playing field” with tech companies. They have long wanted the EU to repeal some of the industry-specific regulations they face, particularly on user privacy. Failing that, they have pushed to extend some of the same telecom rules to internet-based services. “It would be better to remove rules for us,” said one telecom executive who has been briefed on the proposals.

A European Commission spokeswoman said the proposed rules, which also seek to spur improvement in the continent’s high-speed internet networks and cellular-airwave-allocation process, are part of the EU’s strategy to “encourage investments in next-generation networks, set the right conditions for modern digital networks and provide a level playing field for all market players.”

The two sides have also clashed over regulatory issues including net neutrality in the U.S., connecting the developing world, and the question of who will profit from the detailed information both sets of companies have on the online and offline habits of their customers.

The battle lines are particularly clear in Europe, where carriers were slower than those in the U.S. in switching to make money from selling data rather than voice and texts. Telecom giants, like Spain’s Telefonica SA and Germany’s Deutsche Telekom AG, have long chafed that their services face industry-specific taxes and restrictions that similar offerings from big tech firms don’t.

Big tech companies argue that while they sometimes offer comparable services, their businesses contrast starkly—and need different rules. “This isn’t a level playing field—it’s a layered playing field, and the rules need to reflect that,” said an executive at a U.S.-based tech firm.  “You could see these cheaper calling options and video options disappearing from the markets,” said James Waterworth, vice president for Europe at the U.S.-based Computer & Communications Industry Association, a lobby group that represents Microsoft, Facebook and Alphabet Inc.’s Google.

On the issue of so-called lawful access rules, which require telecommunications firms to allow police to install wiretaps, should be expanded to tech firms. It isn’t clear if the EU’s proposals would include such a change, but the possibility raises the specter of renewed fighting over whether tech firms should be forced to build in back doors to encrypted services, both Telecoms, and tech lobbyists say. “There’s a lot of money that operators invest in data access for authorities,” said one telecommunications executive. “It should be same services, same obligations.

More on v3-uk and Morningstar

This article was first published on PricingDataPlans.

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Jonathon Gordon

About the Author

About the Author: Jonathon has been lurking around the Telecoms and Internet space for the last 20 years. He is now a man on a mission – that being the reformation of the Industry Analyst business. He is working with his co-conspirators on transforming the Industry Analyst world forever as an Expert with EMI. .

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