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‘Net neutrality’ could raise broadband prices

21 октября 2008

Broadband prices could rise by up to one-third if regulators in Europe insist on strict “net neutrality” rules that would block carriers from charging content providers premium prices to prioritise certain web traffic, a leading think-tank is set to warn.

Net neutrality has become a big issue in the US as internet congestion has increased. In Europe, regulators and industry players have claimed that the situation is different because users have more choice of network providers, and the debate has been more muted.

However, there have been growing concern among big telecoms companies that changes introduced in the European Parliament into the so-called telecoms package – the sweeping legislation which is designed to overhaul European Union telecoms laws – could open doors to net neutrality regulation in the future.

An industry-commissioned report from consultants at Copenhagen Economics, due to be published next week, is set to warn that imposing net neutrality in Europe will “pass on the cost of scarcity to all consumers” and significantly increase broadband prices. That, in turn, could depress broadband demand.

The report’s authors suggest, for instance, that the average monthly broadband subscription rate could rise from €33 ($44) to €44 in Sweden, and from €29 to €39 in Germany. In the latter case, the loss in “consumer welfare” from the increased cost and lower broadband penetration could be as much as €1.7bn annually.

A separate report, due out in the next few days from the Centre for European Policy Studies, also concludes that “mandating net neutrality would not be a desirable option”.

This suggests that softer regulation – for example, ensuring that end-users know about usage restrictions so that they can sensibly shop around – coupled with existing antitrust laws would address many of the potential problems.

Meanwhile, the prospect of a compromise solution to the regulation of the European telecoms industry – a key aspect of the same telecoms package – on Monday got the backing of Ofcom, the British regulator.

Ed Richards, Ofcom chief executive, suggested in Brussels that an advisory body made up of national regulators, working with a small permanent staff and in conjunction with the European Commission, would be a “powerful mechanism for driving regulatory consistency”.

“A Commission recommendation backed by the considered opinion of the college of regulators that a national remedy was seriously defective would clearly have tremendous force and weight”, he said.

But Mr Richards rejected the idea that Brussels should have an unconstrained power of veto over telecoms measures proposed by national regulators – as originally sought by Viviane Reding, EU telecoms commissioner.

“What would not be acceptable to us is a process which allowed the commissioner to aim off from the advice of the regulatory experts in pursuit of some political goal ‘du jour’ ”, he said. The telecoms package will be considered by member states next month.

Источник: Financial Times

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