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Head-in-the sand ETNO presents its backside for the Americans to kick

Posted By TelecomTV One , 22 August 2012 | 2 Comments | (1)
Tags: Internet ETNO Technology Finance Politics

A cabal of vested interests, the European Telecommunications Network Operators (or ETNO for short), has annoyed both the US government and the powerful US carrier Verizon among others, by continuing to demand that its members should be permitted to charge companies such as Facebook, Google and Netflix for carrying their content over various European networks. Martyn Warwick reports.

Earlier this year ETNO, a Brussels-headquartered lobbying organisation representing the interests of carriersin 35 European countries, wrote to the International Telecommunications Union (ITU) detailing its claim to the right of its members to levy fees on content providers using their networks to disseminate programmes, films, video and so on.

It seems though to have chosen the wrong place and the wrong time to reiterate its message. The ITU is an agency of the United Nations and the UN is not particularly popular in the US. In fact, that is something of an understatement. Successive US administrations have long regarded the body as an expensive and toothless talking shop whilst parts of the media have conducted press campaigns demanding that the UN's New York City lease be terminated and the organisation required to depart American shores.

It was against this febrile background that Luigi Gambardella, the chairman of ETNO's executive board, told delegates to the Technology Policy Institute's 'Aspen Forum' held in Aspen, Colorado, this week, that the inability to charge fees to content providers is "putting at risk our capacity to invest." His predominantly North American audience wasn't in the least sympathetic to that particular cri de coeur from across the wide Atlantic.

ETNO rests its claim to be able to charge for the onward transmission of content on the hoary old international telecoms principle that "the sending party network pays". Unsurprisingly, Verizon and its ilk are very much against any such proposal, and says that if adopted it will bring an end to the key Internet convention of "un-metered 'peered' traffic and introduce a de facto tax on service providers channeling content outside the US.

Meanwhile, the Obama administration has been piqued by the ITU's determination to wrest aspects of control of the Internet from the US and has channeled displeasure via the US Department of Commerce.

Tthe odds are stacked against ETNO getting any quarter from implacable opponents.

However, that near certainty of defeat hasn't fazed Mr. Gambardella. He says "We should have the freedom to make commercial agreements based on the value of the information. This would benefit us because we could have additional revenue." That was followed by another 'lead balloon' moment when the he continued, "We need to rethink together and to establish a new balance." His audience meanwhile could perceive of  no requirement for a rethink or a rebalancing - and told him so.

Nonetheless, Luigi Gambardella continued to plough his lonely furrow,adding that ETNO would like to do deals with content providers to offer "better-than-best-effort connection speeds,which would benefit everyone". And, of course, some more than others.

In response, Fiona Alexander of the National Telecommunications and Information Administration (which is part of the US Department of Commerce) commented, "This [ETNO's] proposal doesn't respect the way the Internet works" - and there's the rub.

ETNO's demands are non-starters because the old telecoms convention of basing a fees structure on bits and bytes flowing across national borders and through different networks is irrelevant to the working of the Internet. US-based service providers now have major data centre operations overseas (for example, Google has installations in Belgium, Finland and Ireland while Facebook has built a big centre in Sweden) and the old rules no longer pertain.

What is needed is a new business model, one from which all parties will derive benefit. However, vested interests with a desire to cling to the old certainties of the past and and a bloody-minded determination to try to drive a 20th century square peg into a 21st century round hole are delaying the design and implementation of a new fees.payments system. In the end thoiugh they'll all have to play nicely together or pay the price - and unless European telcos get a grip on the new reality, they could easily be the losers.


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(1) 22 August 2012 21:05:04 by Mark Callow

When the sender initiates the connection/transmission (the phone call model) then sender pays is a reasonable model. When the receiver initiates the connection/transmission (the internet usage model), the receiver should, and does, pay. What ETNO wants to do is akin to charging twice for the same service.

(2) 23 August 2012 11:39:38 by Chris Horton

ETNO does not seem to have thought through what happens when a relationship shifts from working partnership to customer-supplier.

Would any new business model be better than the one we have? The Internet's growth has been driven by a symbiosis between access and content. Attractive content attracts subscribers to buy access. Access gives content providers their sales and delivery channel. 20 years of Win-Win has built a multi-$Giga industry.

So the ETNO access providers now want to turn content providers into customers? This is not Joe Public spending 1% of disposible income on Internet access. These are major corporations, whose survival depends on access to their customers. Such a customer-supplier relationship is on a totally different scale of difficult and demanding, so how long might it be before an ETNO member suffers the 'churn' of, say, Google or facebook? They are going to have a hard time explaining to their subscribers. The content providers know that, and can sit tight until ETNO sees sense.