Us vs. them: levelling the playing field for telcos and OTTs

The European Commission (EC) introduced a few months ago a proposal for establishing the European Electronic Communications Code. Known within telecoms industry as ‘the Code’, this proposal seeks to give new rights to consumers as well as impose new measures to stimulate further investment in the industry.

However, it also proposes new obligations to Internet services, provoking concern for the likes of Google, Facebook and Microsoft. In order to ensure that the services provided by these companies are comparable with those of incumbent European telecoms companies, this code places a greater regulatory burden on these Internet giants.

A slippery slope

In most respects, it seems reasonable to regulate obligations such as including the provision of clearer contractual information to customers; ensuring levels of security in their infrastructure; enabling equal access for disabled users; and letting consumers contact emergency services for free.

The main issue here is with regards to a standard EU principle that one set of regulations inevitably leads to another. So, the next logical step for the Code would most likely focus on data privacy and data protection, and this slippery slope seems to be the real issue for the Internet companies.

Same rules for all 

Lobby groups such as the Computer and Communications Industry Association and DigitalEurope have predictably reacted negatively to this announcement. The latter said that it was crucial for the new rules to “remain proportionate, technically feasible and supportive of innovation”. According to its Director John Higgins, “what we need to do now is to ensure that the proposed rules for online communication don’t inadvertently hamper innovation and that they are in line with technical realities”.

On the other hand, incumbent European telcos say that for years they have been forced to compete against OTT service providers, while having to adhere to very strict regulatory requirements. They argue that a level playing field is needed and that this can be better accomplished by regulating all the service providers equally, rather than just having a set of rules for one, and not for the other.

As with the negative reaction to the fair usage criteria in its roaming rules, it would appear that the EC cannot seem to steer a course that will keep everybody happy. This was never likely to be the case, and the EC is highly likely to take a regulatory course. The logic is that telcos have been heavily regulated so far, making it difficult for them to compete against the OTTs. So, the solution is to match the amount of regulation for OTTs, so as to ensure that European communications in general will be able to compete against non-EU companies, all with one set of regulations to have to adhere to.

Winners and losers

When momentous decisions need to be made, governments sometimes resort to the mechanism of a referendum. Perhaps the Code is such a divisive regulation, given the extremity of feeling that it has provoked, that a referendum is the only way of reaching a conclusion that benefits the majority, no matter how slim. However, this is a very all-or-nothing approach and there are always clear winners and losers.

So, to avoid the need for a straight-out “us versus them” decision, perhaps telcos and OTTs need to reach their own agreement on what regulation is the fairest for all, and present this to the EC for adoption. Yet, users will make a democratic choice on the services that they are happy with, voting with their feet whether it’s on cost, quality or security. As the OTTs hold the upper hand in so many ways at present, it is hard to see collaboration between OTTs and telcos in this regard.

That is why I would argue that regulation in the telecoms sector should be scaled back instead of regulation in the OTT space scaled up. This would encourage greater investment in service innovation, improve customer experience and empower traditional telcos to compete more effectively with OTT players.  It’s an approach that would help ensure the future success of the European technology and telecoms industry on a global level.

Read Conor’s previous post How service providers can discover new revenue streams from truly global unified communications. In the meantime, let us know your thoughts about telecoms regulation in the comments below.

Image credit: Sébastien Bertrand