April 26, 2024

Antitrust Scrutiny of Telecoms in Europe

BRUSSELS — European Union antitrust authorities said on Thursday that they had investigated major telecommunications companies, including Deutsche Telekom of Germany, on suspicion that the companies were using their dominant market positions to limit Internet providers’ access to their networks.

The European Commission, the executive arm that oversees antitrust policy across the 28-member bloc, did not identify the companies or say how many had been inspected in the operation, which took place Wednesday.

But Deutsche Telekom confirmed on its Web site that a raid had occurred, adding that e-mails and other data had been seized. Reuters reported that the authorities had also raided the offices of Orange of France and Telefónica of Spain.

Big telecommunications companies provide the networks that link smaller sites, like movie-streaming services, to the Web, effectively acting as a gateway. In a statement, the commission said it was concerned that the companies may have violated antitrust rules “that prohibit the abuse of a dominant market position.” Those companies provide services “crucial for the functioning of the Internet” so consumers can gain access to “Internet content with the necessary quality,” it said.

Inspections are a preliminary step in an antitrust investigation. Companies found to have broken European Union competition laws can be fined as much as 10 percent of their annual global sales.

Cogent Communications, a company based in Washington that sells Internet access to third parties, said the inspections were probably linked to complaints it had filed in Germany against Deutsche Telekom and in France against Orange, previously known as France Télécom.

Dave Schaeffer, the chief executive of Cogent, said by telephone that the major telecommunications companies in France, Germany and Spain were impeding his business by refusing to upgrade congested networks. The result, he said, was that services for Cogent clients like Netflix, the film-streaming service, or YouTube, the online video-sharing site, would be slowed or difficult to access.

He cited Dailymotion, the French video-sharing site that is owned by Orange. “For example, Orange owns the direct competitor to YouTube,” Mr. Schaeffer said. Orange “wants French consumers to use Dailymotion instead of YouTube.”

The French state holds a stake of about 27 percent in Orange. This year, the government of President François Hollande expressed its objections to plans by Yahoo to buy a controlling stake in Dailymotion.

Mr. Schaeffer said his company had discussed the matter with the commission but that Cogent had not submitted a formal complaint. He said national authorities in France and Germany had rejected his company’s complaints against Orange and Deutsche Telekom but that Cogent was appealing the French decision. Cogent has also had difficulties in Spain but has not filed a complaint there, he said.

Deutsche Telekom said on its Web site that it was “surprised by the initiation of further investigations by the commission into the global market for Internet traffic, since previous allegations have all turned out to be unfounded.”

“Similar investigations carried out by national regulatory bodies, who have also dealt with the issue in great detail, have also been abandoned,” it said. “This market is dominated by major providers based in the United States, which means we are not the right target for these investigations.”

Orange and Telefónica could not be reached for comment.

Article source: http://www.nytimes.com/2013/07/12/business/global/eu-investigates-telecom-firms-over-internet-access.html?partner=rss&emc=rss

France Rejects Plan by Internet Provider to Block Online Ads

The dispute has turned into a gauge of how France, and perhaps the rest of Europe, will mediate a struggle between telecommunications providers against Internet companies like Google, which generate billions of dollars in revenue from traffic that travels freely on their networks.

European telecommunications companies want a share of that money, saying they need it to finance investments in faster broadband networks — and, as the latest incident shows, they are willing to flex their muscles to get it.

Until now, European regulators have taken a laissez-faire approach, in contrast to the U.S. Federal Communications Commission, which has imposed guidelines barring operators of fixed-line broadband networks from blocking access to sites providing lawful content.

On Monday, Fleur Pellerin, the French minister for the digital economy, said she had persuaded the Internet service provider, Free, to restore full access. The company, which has long balked at carrying the huge volume of traffic from sites owned by Google without compensation, had moved last week to block online ads when it introduced a new version of its Internet access software.

“An Internet service provider cannot unilaterally implement such blocking,” Ms. Pellerin said at a news conference Monday, after meetings with online publishing and advertising groups, which had complained about a possible loss of revenue.

While she acknowledged that it could be annoying “when five ads pop up on a site,” she added that advertising should not be treated differently from other kinds of content. “This kind of blocking is inconsistent with a free and open Internet, to which I am very attached.”

While rejecting the initiative by Free, Ms. Pellerin said it was legitimate for the company to raise the question of who should pay for expensive network upgrades to handle growing volumes of Internet traffic.

French Internet analysts said advertisements appearing on Google-owned sites or distributed by Google appeared to have been the only ones affected — fueling speculation that the move was a tactic to try to get Google to share some of its advertising revenue with Internet service providers. Google’s YouTube video-sharing site is the biggest bandwidth user among Internet companies.

Google was not represented at the meetings Monday with Ms. Pellerin. In an interesting twist, its case was effectively argued by other Web publishers, including French newspapers, even though these sites, in a related dispute, are seeking their own revenue-sharing arrangement with Google. Separately, French tax collectors are also looking into the company’s fiscal practices, under which it largely avoids paying corporate taxes in France by routing its ad revenue through Ireland, which has lower rates. One proposal that has been discussed would be to use receipts from a tax on Google to support local Web sites.

In yet another dispute involving Free and Google, the French telecommunications regulator is investigating complaints that the Internet provider has been discriminating against YouTube. In that case, a French consumer organization, UFC-Que Choisir, said it suspected that Free was limiting customer access to YouTube because of the high amount of bandwidth that the site consumed.

Ms. Pellerin said these issues would be examined separately. Still, the timing of Free’s move raised questions, given that it came only days before a scheduled meeting among Ms. Pellerin, Internet companies and telecommunications operators to discuss the financing and regulation of new, higher-speed networks.

“Should users be held hostage to these commercial negotiations? That is not obvious to me,” said Jérémie Zimmermann, a spokesman for La Quadrature du Net, a group that campaigns against restrictions on the Internet.

Article source: http://www.nytimes.com/2013/01/08/technology/france-rejects-plan-to-block-online-ads.html?partner=rss&emc=rss