[governance] Regulatory reforms Netherlands

Fri Jun 24 10:12:45 EDT 2011

The International Herald Tribune/NY Times

June 23, 2011 Thursday 

FINANCE; Pg. 1 

1204 words

Dutch ban extra Net phone fees; 
Under law, telecoms may no longer charge for using services like Skype	

BY KEVIN O'BRIEN

BERLIN 

ABSTRACT 

The Netherlands has become the first country in Europe to ban its mobile
operators from blocking or charging consumers extra for using Internet-based
services like Skype. 

FULL TEXT 

The Netherlands on Wednesday became the first country in Europe, and only
the second in the world, to enshrine the concept of network neutrality into
national law by banning its mobile telephone operators from blocking or
charging consumers extra for using Internet-based communications services
like Skype or WhatsApp, a free text service. 

The measure, which was adopted with a broad majority in the lower house of
the Dutch Parliament, the Tweede Kamer, will prevent KPN, the Dutch
telecommunications market leader, and the Dutch units of Vodafone and
T-Mobile, from blocking or charging for Internet services. Its sponsors said
that the measure would pass a pro-forma review in the Dutch Senate without
hitches. 

Analysts said that the legal restrictions imposed in the Netherlands could
shape Europe's broader, evolving debate over network neutrality, pushing
more countries on the Continent to limit operators from acting as
self-appointed toll collectors of the mobile Internet. 

''I could also see some countries following the Dutch example,'' said
Jacques de Greling, an analyst at Natixis, a French bank. ''I believe there
will be pressure from consumers to make it clear what they are buying,
whether it is the full Internet or Internet-light.'' 

Advocates hailed the move as a victory for consumers, while industry
officials predicted that mobile broadband charges could rise in the
Netherlands to compensate for the new restrictions. 

''We support network neutrality,'' said Sandra de Jong, a spokeswoman for
Consumentenbond, the largest Dutch consumer organization, based in The
Hague. ''We don't think operators should be able to restrict the Internet.
That would be a bad precedent.'' 

Luigi Gambardella, the chairman of the executive board of the European
Telecommunications Network Operators' Association, an industry group based
in Brussels, warned that the Dutch legislation could deter operators from
making needed investments in high-speed networks for fear of building
expensive but unprofitable infrastructure. 

''Any additional regulation should avoid deterring investment or innovative
business models, leading to a more efficient use of the networks and to
creating new business opportunities,'' Mr. Gambardella said. He said
operators needed the ability to charge different tariffs for different
levels of service, to recoup the costs of data-intensive applications. 

Operators could still offer a range of mobile data tariffs with different
download speeds and levels of service, but they would not be able to tie
specific rates to the use of specific free Internet services. 

Under the law, Dutch operators could be fined up to 10 percent of their
annual sales for violations by the national telecommunications regulator,
OPTA. 

Patrick Nickolson, a spokesman for KPN, said that the measure could lead to
higher broadband prices in the Netherlands because operators would be
limited in their ability to structure differentiated data packages based on
consumption. 

''We regret that the Dutch Parliament didn't take more time to consider
this,'' Mr. Nickolson said. ''This will limit our ability to develop a new
portfolio of tariffs and there is at least the risk of higher prices,
because our options to differentiate will now be more limited.'' 

Stephen Collins, the head of government and regulatory affairs in London for
Skype, applauded the move by the Dutch lawmakers. 

''Skype welcomes the sensible and fair approach the Dutch Parliament has
adopted today,'' Mr. Collins said. ''It sets an example for other countries
in Europe and elsewhere to follow.'' 

Bruno Braakhuis, a Dutch legislator from Haarlem who was the original
sponsor of the legislation, called the adoption a victory for Dutch
consumers. 

''For us, this is really a basic right,'' said Mr. Braakhuis, a member of
the GreenLeft party. ''We consider network neutrality to be as important as
freedom of the press, freedom of speech.'' 

The Dutch restrictions on operators are the first in the 27-nation European
Union. The European Commission and European Parliament have endorsed network
neutrality guidelines but as yet have taken no legal action against
operators that block or impose extra fees on consumers using services like
Skype, the voice and video Internet service being acquired by Microsoft, and
WhatsApp, a mobile software maker which is based in Santa Clara, California.

Sanctions may be coming, however. 

In May, the European telecommunications commissioner, Neelie Kroes, warned
operators to stop blocking or charging extra for Skype or she would take
unspecified action this year. So far, only a few operators, like 3 UK of
Britain, a unit of the Hong Kong conglomerate Hutchison Whampoa, have
allowed their customers to have unfettered use of Internet services with
their flat-rate wireless data packages. 

Maxime Verhagen, the Dutch deputy prime minister who supported the net
neutrality restrictions, said that the new rules would ensure that Internet
services were never threatened. 

''The blocking of services or the imposition of a levy is a brake on
innovation,'' Mr. Verhagen said. ''That's not good for the economy. This
measure guarantees a completely free Internet which both citizens and the
providers of the online services can then rely on.'' 

Besides the Netherlands, only one country, Chile, has written network
neutrality requirements into its telecommunications law. The Chilean law,
which was approved in July 2010, only took effect in May. 

In the United States, an attempt by the Federal Communications Commission to
impose a similar set of network neutrality restrictions on U.S. operators, a
bid to prevent them from blocking or imposing fees on data-intensive
services, has been tied up in legal challenges from the industry. 

The debate over net neutrality in the Netherlands erupted in May when Eelco
Blok, the new chief executive of KPN, the former phone monopoly, announced
plans to create a new set of mobile data tariffs that included charges on
services like WhatsApp that allow smartphone users to avoid operator charges
for sending text messages. 

Use of the free text service has spread rapidly, eroding operator text
revenues. 

According to KPN, 85 percent of the company's customers who use a Google
Android phone downloaded WhatsApp onto their handsets from last August
through April. As a result, KPN's revenue from text messaging, which had
risen 8 percent in the first quarter of 2010 from a year earlier, declined
13 percent in the first quarter of this year. 

At a presentation to investors in London on May 10, analysts questioned
where KPN had obtained the rapid adoption figures for WhatsApp. A midlevel
KPN executive explained that the operator had deployed analytical software
which uses a technology called deep packet inspection to scrutinize the
communication habits of individual users. 

The disclosure, widely reported in the Dutch news media, set off an uproar
that fueled the legislative drive, which in less than two months culminated
in lawmakers adopting the Continent's first net neutrality measures with
real teeth. 
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