US Watching as EU Takes Deep Dive Into How Communications Are Regulated

The EU released its 16-step digital single market (DSM) strategy designed to promote e-commerce across Europe. The EU concurrently launched an antitrust competition inquiry Wednesday that will look at whether and how companies are impeding cross-border online trade. The European Commission had launched an investigation of Google's comparison shopping service and its Android mobile operating system (see 1504150002).

“I want to see pan-continental telecoms networks, digital services that cross borders and a wave of innovative European start-ups,” said Commission President Jean-Claude Juncker in a news release. “I want to see every consumer getting the best deals and every business accessing the widest market -- wherever they are in Europe.” The digital strategy includes an overhaul of EU telecom rules, including more effective spectrum coordination, incentives for investments in high-speed broadband and looking at ways to ensure “a level playing field for all market players, traditional and new.” The EU will also examine search engines, social media and app stores, with an eye on transparency and competition.

“This will cover issues such as the non-transparency of search results and of pricing policies, how they use the information they acquire, relationships between platforms and suppliers and the promotion of their own services to the disadvantage of competitors -- to the extent these are not already covered by competition law,” the EU said. It will examine how to address illegal content on the Internet. The EU initiative will focus on how to develop a modern European copyright law, the free flow of data across Europe, cybersecurity and the future of e-privacy, a news release said.

"European citizens face too many barriers to accessing goods and services online across borders,” said Margrethe Vestager, European commissioner in charge of competition policy. “Some of these barriers are put in place by companies themselves. With this sector inquiry my aim is to determine how widespread these barriers are and what effects they have on competition and consumers.”

"It was only a matter of time before the EU sought to consolidate disparate national regimes under one standard,” said Adonis Hoffman, chairman of Business in the Public Interest and former aide to FCC Commissioner Mignon Clyburn. “It is a practical move that could have just as much impact inside Europe as outside.” The development could help American companies by making it easier to compete in the EU, but they must be alert to EU protectionism, “which could accelerate with this development,” he said. "With this win, so to speak, American firms should be concerned whether European regulators will be emboldened to hyper-regulate foreign companies -- something that started with Google.” Politics, “which is evolving and in flux,” could overwhelm policy as the process plays out, he warned.

FCC Leading the Way

“The general global trend is to have more government control of the digital ecosphere,” said former FCC Commissioner Robert McDowell, now at Wiley Rein. The FCC played a role when it approved net neutrality rules in February that classified broadband as a common-carrier service, he said. “Such interventionist actions may inadvertently give encouragement and comfort to international regimes that want more state influence over all aspects of the Internet -- all while using a variety of seemingly positive pretexts,” McDowell said. “The thrust of the more regulatory aspects of the EU DSM initiative proves that U.S. Internet companies that pushed for more rules for their rivals can no longer insulate themselves from the statist contagion they created. A single European digital market with less regulation would be better for Europeans than a single market with needlessly burdensome rules."

The Computer & Communications Industry Association sees the DSM as a mixed bag. CCIA Europe Vice President James Waterworth said some of the proposals could lead to a more robust digital market, while others will constrain trade. The document reflects deep divisions in Europe, Waterworth said. “While many European leaders, primarily in the Nordics, the Baltics, the Benelux and the British Isles see the Internet as the best hope for reviving Europe’s faltering growth engine, others from Germany and France are promoting measures that would impose new regulatory burdens that put the brakes on Internet innovation.”

The DSM is a “hodge-podge” of initiatives, said Larry Downes, project director at the Georgetown Center for Business and Public Policy. “Some of them would, if implemented, correct earlier failed efforts at regulation that unintentionally choked development and deployment of digital technology and infrastructure,” he said. “Europe, for example, is the only major economy whose investment in broadband has declined. Others would attempt to remove disharmonies in Europe’s digital market, which is also essential. But many of the others go the other way, continuing efforts to micromanage privacy, security, and establish more complex regimes and standards that will once again prove impossible to implement across the member states.” The EU also continues its attack on U.S. companies built under an unregulated regime, he said. That's “an expansion, in other words, of an ongoing trade war over information products and services,” Downes said.

The European Telecommunications Network Operators' Association welcomed the inquiry into telecom regulation. “European citizens and businesses demand a rapid transition to superfast networks,” said Steven Tas, ETNO executive chairman. “Swift actions on current rules and a profound review of the current telecoms framework are the pre-requisite to building Europe’s new digital backbone. Telecom executives are ready to invest more in Europe: concrete and speedy measures are a critical factor.” ETNO called spectrum “the gateway to a real Digital Single Market.”

“The EU’s new policy stepping up review of restrictive telecom regulation is the right step toward creating a favorable investment climate to address the stall in Europe’s broadband investment," a USTelecom spokeswoman said.

Fragmented Policies of 28 States

Robert Atkinson, president of the Information Technology and Innovation Foundation, said the “fragmented policies of the EU’s 28 member states” have long held back a unified digital market in Europe. The strategy appears aimed at creating a single market in Europe “at the expense of the global digital economy,” he said. “The DSM should be a pathway towards integrating Europe into the global Internet economy, not a strategy for isolating Europe from the rest of the world. In particular, the EU should avoid developing European-only, government-led technology standards.”

The EU's real agenda appears to be not just “search neutrality,” but also “platform neutrality,” said Berin Szoka, president of TechFreedom. “We've seen platforms come and go, each seeming dominant for a time, only to give way to some new challenger -- from Prodigy to AOL to MySpace to Microsoft. Technological disruption checks the power of even companies that have, temporarily, huge market shares. But European regulators seem convinced that the web has finally stopped evolving, that today's ‘gatekeepers’ have finally solidified their power and that only micro-management from Brussels can protect consumers.” European regulators appear to be uncomfortable with the “unplannable messiness of the digital revolution,” he said.

Free Press Policy Director Matt Wood sought to debunk what he called “false” comparisons between the U.S. and the EU that were brought up during debate on FCC net neutrality rules. “A lot of the self-serving fairytales told by carriers on both sides of the Atlantic are false,” Wood said. “It’s wrong to pretend that all of Europe has a single set of rules, that those rules are uniformly burdensome, that they're remotely similar to what the FCC just did with reclassification, or that the rules in the EU have led to bad results. When you look at the numbers properly, the U.S. and European broadband markets as a whole are remarkably similar on almost every metric except the one that counts most: price.” People across much of Europe pay much less for the same speeds, he said. “And in half of the EU countries, not only do consumers pay less, they get far more.”