vodafone response to the european commission public consultation
TRANSCRIPT
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Vodafone response to the European Commission Public Consultation on
specific aspects of transparency, traffic management and switching in an
Open Internet
October 2012
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Executive Summary
Network capacity is a finite resource and needs to be carefully allocated between different
users and applications. Most communications networks have elements that are contented.
This is of particular significance for mobile networks, but also applies to backhaul capacity of
fixed networks or within user groups, such as members of private households. Current and
foreseen traffic management practices are useful, beneficial and necessary for the
functioning of our networks, the enhancement of services and the development of new
business models. They do not put the current Open Internet environment at risk.
‘Traffic management’ refers to a wide variety of different and constantly changing practices
used for a variety of commercial, operational and security purposes. It should be left to
operators to determine how those measures are delivered by the network. Regulators are
not well placed to write detailed rules on how networks should be managed. Regulators
should instead focus on the outcomes of traffic management and if they find that user
interest is harmed or competition affected, they can intervene on an ex-post basis. Sector
specific rules and general competition law are more than capable of dealing with
infringements of customer interests.
Retaining flexibility of operators to deal with uncertain and fast changing demands for their
network capacity in the most efficient way is critical for emerging product areas. For
example business models that guarantee or prioritise QoS are in an early stage of
development. Where network capacity is limited operators will set prices that allocate
capacity to the user or application that values it most thereby maximising the customer
value and overall welfare.
In case a market based approach will not deliver the desired outcome (e.g. customer groups
not being able to afford access to services or applications) there is a case for directly
subsidising those users. However trying to prevent the market from working instead cannot
be an appropriate response.
There still remains a strong role for regulators to ensure that vertically integrated operators
cannot leverage their network to prefer their own downstream services. Specific non-
discrimination rules might need to be introduced to tackle such competition risks.
Beyond that regulators will have to ensure that consumers are well informed of their choices
and that they can change provider in case they are not happy with their choices. Barriers to
switch in the mobile market are low and new measures to further facilitate switching
defined in the 2009 regulatory framework are being implemented now. Regulators should
refrain from imposing new rules.
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Traffic management activities are, like all other activities undertaken by operators, subject
to data protection rules. These are a matter for data protection regulators and should not be
confused with, or introduced into, the net neutrality debate. While we believe in being
transparent on DPI, we think that specific customers’ consent is not required to implement
traffic management measures that are legitimate, beneficial and necessary in a variety of
operational and commercial circumstances. Consent is implied by acceptance of the service.
Explicit consent should be required if the technologies are used also for a secondary purpose
(e.g. targeted advertising).
We believe that service differentiation where users accept some service limitations in
exchange of a lower price (e.g. pricing plans without VoIP) and where users pay a higher
price to purchase guaranteed or prioritised service are overwhelmingly welfare enhancing.
In the first case, the obvious advantage for the user is the lower price. If there is enough
choice, transparency and low barriers to entry, customers will be able to make the choice
that better suits their needs. Not all customers need the same set of functionalities and it is
normal for competitive markets to offer differentiated services.
Regulators are not well placed to decide how services should marketed to users and how
prices should be set. Nor are they well placed to decide when ‘internet access’ is used as a
marketing term, or what other terms might be used. For example, regulators do not seek to
govern how VOIP providers market their services. These are matters best left to the relevant
advertising bodies and to the courts.
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Question 1
Vodafone is answering the questionnaire as: d) Internet network or service provider
Question 2
a) Please provide a brief description of your organisation and of your interest in open
Internet issues.
Vodafone Group Plc is one of the world's largest mobile companies providing a wide range
of services including voice, messaging, data and fixed broadband. Vodafone has over 404
million customers, employ over 86,000 people and operate in over 30 countries across 5
continents. The Group’s operations are split into three geographic regions – North Europe,
South Europe and Africa, Middle East and Asia Pacific (AMAP). Vodafone owns also a 45%
share in Verizon Wireless in the United States.
b) If your organisation is registered in the Transparency Register, please indicate your
Register ID number
The transparency register ID number for Vodafone is 90142503473-81 (Vodafone Belgium
SA)
c) Please provide the postal and e-mail address of your organisation and, if you wish, the
name of a contact person (including telephone number and e-mail address) for any
questions on your contribution.
25 Rue Archimede
Brussels 1000
BELGIUM
Contact Person for this consultation:
Giulio Maselli
d) In which Member State(s) are you established and where do you perform your activity?
Vodafone provides telecommunications services in 12 EU countries: Italy, Germany, Spain,
UK, Ireland, Netherlands, Portugal, Greece, Malta, Hungary, Czech Republic and Romania.
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1.1 Traffic management and differentiation
Question 3: Please explain briefly which traffic management techniques are usually applied by
network operators or ISPs and how they are technically implemented
As other telecommunications operators, Vodafone uses different traffic management techniques in
the various markets where it operates. With the term traffic management, we mean any action that
analyses data traffic and applies different policies for the following purposes:
To enhance its commercial proposition:
Some applications require a specific minimum level of network Quality of Service (QoS) or
reserved network capacity to function properly. This scenario includes IPTV and voice
services offered on fixed networks. Customers pay an additional fee for the video content
provided and they require a guaranteed performance level. On the fixed network, this is
often provided via traffic management techniques that guarantee the required level of QoS
on a constant basis (i.e. managed services). On mobile networks, a minimum level of
guaranteed quality of service is not achievable because many factors influence the level of
network performance (coverage, weather conditions, number of users connected to the
same cell). However, smart mobile networks allow prioritised service for specific categories
of applications. At the moment, Vodafone prioritise applications on a limited basis (e.g.
Voice over LTE in Germany and IPTV on the fixed network).
Traffic management platforms allow Vodafone to offer premium packages to users based on
prioritised network performance and QoS in a number of European countries (Italy, Spain,
UK, Netherlands and Ireland). These users get better performance compared to other users
in the same situation (i.e. relative better performance) when congestion happens. In other
words, the packets of some users get higher, but not absolute, priority compared to packets
of other users. This is implemented at the radio-network level where bottlenecks are more
likely to occur. The number of users with prioritised service will always be limited. This will
not affect in a perceivable way the level of service offered to non-premium users. .
Traffic management allows Vodafone to differentiate its prices according to customer needs.
Not all customers need the full set of services at full prices. Users willing to restrict their
VoIP, P2P or data tethering1 use can get a lower price for their data connections. With these
offers, VoIP, P2P or tethering (depending on the plan) are usually throttled (i.e. IP packets
are slowed down) or blocked using network management platforms2. Vodafone always
provides a sufficient number of tariff plans without limitations to ensure that all customer
needs are met.
1 This term refers to the use of the smartphone data connections as a modem for other devices(e.g. laptops,
smartphone, tablets). Some tariff plans do not include tethering, while some others foresee an additional charge. 2 Terms and conditions of tariff plans that do not include VoIP usually exclude the possibility to use messaging
over IP, however this is not technically implemented. Therefore, in practice, customers are able to use messaging over IP platforms. In Germany, any applicable restrictions on specific tariff plans are implemented only on a contractual basis, but not enforced contractually.
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To protect users:
Traffic management is also used by Vodafone to intercept and block viruses, malware and
spam before they reach the end user. Without this, customers would be subject to virus and
malware attacks that could put at risk the integrity of their devices. The user experience is
also enhanced by substantial reduction of spam (unsolicited emails).
To reduce network congestion and enhance network resilience:
Traffic management allows Vodafone to manage capacity hungry applications if there is
congestion to ensure that all network users can continue to use the network. Mobile
networks are designed to take expected traffic demand in different geographic areas into
account. This is done by increasing the number of sites or the amount of valid spectrum in
high demand areas. However, unpredictable factors may cause sudden increases in traffic
demand in specific areas generating congestion. In these circumstances, traffic management
is used to slow down applications that consume capacity but which can operate at lower
speeds. This is implemented to prevent congestion affecting all users.
To enhance user experience:
Traffic management allows the network to recognise certain types of applications and to
implement optimisation techniques to enhance their user experience and reduce the risk of
congestion. Typical examples are video/image optimisation and compression techniques. For
example, the network can recognise that the end-user is using a smartphone and
automatically adapts the resolution of images and video to the characteristics of that
terminal.3
The application of the correct traffic policies (routing, filters, caps, prioritisation, etc.) to IP traffic
requires Vodafone to interrogate internal databases (e.g. subscriber registry, traffic routing tables,
etc.) and to recognise the different traffic categories. This is done by using traffic analytic tools which
have been standardised by 3GPP (so called Traffic Detection Function – TDF) which may rely on deep
packet inspection.
Additional traffic management techniques which are usually not considered in the net neutrality
debate are the following (some of them are still in a planning phase):
Use of Content Delivery Networks both at the edge of the network or closer to the access
network
Deep caching at different levels of the network (cache servers for most downloaded content
are installed within the network closer to the user to reduce latency and increase perceived
speed)
3 In VF-Germany network, this is performed on the basis of the APN dedicated to smartphone users. Customers
can adjust the rate of compression or opt-out from the functionality by using a stand alone client or app.
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Background downloading where the network anticipate the behaviour of the user and
downloads content closer to the user before it is requested thus reducing latency and
increase perceived speed
Off-peak download where customers can select the content they want to consume at a later
time. The network downloads the content at a time when the network is not congested
Scheduled software updates where large software providers agree with network operators
to distribute the software updates for users over a wider period of time and at off-peak time
Question 4.a and Question 4.b: Please describe briefly how congestion management normally
works. If possible, please provide a definition and examples of genuine congestion management
measures, i.e. measures which are necessary to avoid or tackle network congestion, as opposed to
measures which may be called congestion management but actually pursue other purposes.
Congestion in mobile networks takes place mainly at the radio access level. Each cell in the network
has a finite capacity due to the limited amount of spectrum. This finite capacity is shared among the
users connected to the same cell. Depending on the technology being used (i.e. 2G vs 3G vs 4G),
specific channels or capacity are dedicated to voice and signalling. The rest of the channels/capacity
are used for data traffic. The sharing of the available capacity between different data users is an
intrinsic congestion management activity where bandwidth is reduced for all to make sure that every
user gets data access. For some applications a lower speed means just a less performing service, for
other applications which are more sensitive to lower speed, they will simply not work. When
congestion occurs, some users will not be able to access the web or use some applications.
In addition to increasing the capacity of the access network (i.e. adding more base stations,
buying/using more spectrum), other solutions used which are not based on traffic management
involve the following:
- Shifting traffic to other access technologies by facilitating use of WiFi in high traffic areas
(owned or leased WiFi hotspots), at home and in the office
- More widespread use of private Femtocells. For example by providing high traffic users with
a Femtocell at home. Another possibility is to open privately owned Femtocell to other users
- Off-peak download where customers can select the content they want to consume at a later
time. The network download the content at a time when the network is not congested
- Scheduled software updates where large software providers agree with network operators
to distribute the software updates for users over a wider period of time and at off-peak time
Congestion management based on traffic management techniques by operators imply a number of
different possible solutions used in Vodafone networks (not all of them apply the same techniques):
- Throttling traffic categories that are less sensitive to speed (e.g. P2P traffic)
- Introduce video/image optimisation techniques that adapt the image/video resolution to the
size of the screen of the user (e.g. no need to have high resolution images on smartphones
with small screens). This saves network capacity without compromising the quality of the
service
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- Fair usage policies that throttle access of specific customers (in some cases only and for
some categories of applications that do not comply with the terms of the policies). They are
applied for a limited period of time. In general, fair usage policies are less common now in
the mobile market as operators are moving to tiered plans. However, they are still important
congestion management tools in the fixed broadband sector and in some mobile markets
- Background downloading where content is downloaded during non-busy hours for use at a
later stage
More in general, bundle-based pricing plans are a way to reduce traffic consumption by giving the
right price signals to users (i.e. making sure that the customer pays for the data usage increments).
Previous plans with unlimited data consumptions (with fair usage policies) provided incentives to
some users to generate abnormal levels of traffics.
Question 5.a: Are traffic management measures applied to deliver managed services (e.g. to
ensure a guaranteed quality of service for a specific content/applications)
necessary X appropriate X Problematic
Managed services with a guaranteed quality of service are offered only in the Vodafone fixed
network of some countries. They are used to offer IPTV/VoD services that are paid by the customer
through an extra charge.
Voice over NGN (both mobile and fixed) can also be considered a managed service, but being part of
regulated PATS, it is considered outside the scope of any Net Neutrality discussion. The need to treat
Voice transmitted over the IP backbone as a managed service is also required by Quality of Service
regulatory requirements (mainly a legacy of fixed telephony regulation) and the need to guarantee
emergency services.
At the moment, Vodafone does not use traffic management to deliver specific managed services on
mobile networks. On mobile networks, managed services, intended as guaranteed QoS for a specific
application, cannot be offered due to the unpredictability of mobile traffic (unless the definition of
minimum QoS is defined in a statistical way: e.g. minimum speed of x Mbps for yy% of the time).
However, new business models are developing fast and mobile operators are more likely to offer
prioritised access for specific applications. CAPs might be willing to pay mobile operators to provide
a better service to their end-users. An example could be fast moving HD video content such as
Formula 1 that requires specific priority classes to function properly. At the moment, Vodafone does
not offer such prioritised service on the CAP side, but it is investigating the possibility to do so in the
future.
We believe that the practices described above do not generate competition issues requiring
prescriptive regulatory measures.
If prioritisation is offered to all interested parties on the same terms, we believe that there should
be no competitive concerns (i.e. potential unfair advantage to a Content and Application Provider -
CAP compared to its competitors). We agree, however, that a vertically integrated operator that
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competes with the CAP can give rise to concerns, but these can be addressed by straightforward
non-discrimination rules.
Large internet companies enjoy many economies of scale and scope that are not available to new
entrants or smaller players. For example, larger CAPs can invest in more powerful servers, CDNs,
advertising, etc. in a way that a small application developer cannot afford. These smaller CAPS will
benefit from the availability of volume based charging for prioritisation services. This will put small
and large CAPs on level playing field in terms of innovation and quality access to customers.
Even though direct commercial agreements for prioritisation with all broadband providers will be
the solution only for the largest CAPs, aggregators and intermediaries will offer similar services to
smaller players. Intermediaries will have the direct relation with broadband providers and resell a
wholesale comprehensive service to smaller CAPs that will just need to sign one or a limited number
of agreements. This approach would be similar to the one currently adopted by Content Delivery
Networks that bring content closer to the edge of the network where the end-user is connected.
Question 5.b: Are traffic management measures taking into account the sensitivity of the service
to delay or packet loss
necessary X Appropriate X problematic
These measures are very important to make sure that the limited network capacity is used in the
most efficient way possible. If an application is not sensitive to delay, the network could give this
application a lower priority without compromising the perception of the level of service received. On
the reverse, other applications which are more sensitive will get a higher priority. This is the case of
IPTV/VoD on the fixed network as described in the answer to question 5.a.
At the moment, the typical example is traffic management of Peer to Peer traffic (measure used by
Vodafone in some markets). Nonetheless, this practice is used much less often and usually only in
case of congestion. Its relevance has also decreased as many operators have moved from unlimited
data plans to plans with tiered data caps. This has removed the incentive for some customers to
consume abnormally high amounts of data, usually for P2P applications. Initiatives by regulators to
confront copyright infringement have also affected P2P volumes in some markets.
The decision to throttle P2P traffic – rather than throttle all applications - is driven by several
considerations:
P2P is the application least sensitive to delay. If the speed is reduced, it will simply take
more time to transfer the files, but the application will work. Other applications such as on-
line gaming, VoIP, streaming, etc. will simply not work if throttled
P2P is peculiar in the use of bandwidth as it starts multiple TCP or UDP parallel connections.
This means that a single P2P user consumes much more bandwidth when compared to
users of other applications within the same mobile cell. If application agnostic restrictions
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were applied, the P2P user would continue to have assigned a much higher cumulative
bandwidth than other applications. We consider this unfair to other users.
Question 5.c: Are traffic management measures used to implement or manage compliance with
the explicit contractual restrictions (e.g. on P2P or VoIP) of the Internet access product accepted
by the user necessary appropriate problematic
Necessary X Appropriate X Problematic
Traffic management is being used by operators to differentiate pricing according to customer needs.
In particular, many mobile operators offer pricing plans that include VoIP and others where VoIP is
not included (usually this is performed by throttling VoIP traffic rather than blocking it tout court).
This practice responds to the different needs of customers. Not all customers use VoIP and they are
willing to accept this limitation in exchange for a lower price. This practice is definitively welfare
enhancing if operators offer a wide range of pricing plans that include or exclude VoIP.
We think that the BEREC report published in May confirms that current VoIP price differentiation
practices in Europe generate benefits for users. The Commission asked BEREC to provide details on
the current market situation to check whether the restrictions on VoIP and P2P can be considered
severe or if the differentiation is the outcome of the normal competitive dynamics. Among the data
points collected, the analysis highlights that there is only one country with serious restrictions of
VoIP in the mobile market (i.e. countries where operators that restrict VoIP to all their customers
have more than 50% of the market) and only four operators that block VoIP to all their customers.
Another 22 mobile operators – Vodafone included- have some customers on plans that do not
include VoIP. The remaining 85 operators have VoIP included in all their plans.
The resulting picture should reassure both the Commission and BEREC that the availability of tariff
plans without restrictions is sufficiently large to conclude that the advantages in terms of price
differentiation (i.e. lower prices for customers that are not interested in one or more application)
clearly outweigh any possible concern that the unavailability of some applications could have effects
on future innovation due to the network effects.
BEREC also notes that the number of operators with open pricing plans and operators that do not
block VoIP at all on any tariff plans has increased. This is to be expected in a competitive market.
The move toward plans that include VoIP is also the result of a broader tariff rebalancing process as
operators adjust to the migration to IP. Operators are progressively moving from separate stand-
alone tariffs for data and voice to joint bundles where customers obtain voice and data together.
Within the pricing bundles, the driver is no longer the amount of voice and SMS minutes, but data. In
the United States and Europe operators (including Vodafone) have recently introduced plans where
unrestricted voice and SMS services are bundled into data plans.
The attached graph shows the trend in penetration of integrated tariffs for some of the key
European Vodafone operators. While the absolute numbers varies substantially due to the legacy
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pre-paid plans in Italy and Spain, the general trend toward integrated tariffs is evident in all
countries.
Source: Vodafone Group interim management statement for the 3 months ending 30 June 2012
Question 5.d: Are traffic management measures targeting types/classes of traffic contributing
most to congestion
Necessary X Appropriate X Problematic
This is the case of throttling of P2P traffic that is used normally only in case of congestion or within
fair usage polices (i.e. when customers with unlimited data plans use an amount of traffic well above
the normal user)4. Throttling involves slowing down IP traffic to a low speed (e.g. max 64-128 Kbps).
The decision to throttle P2P traffic – rather than throttle all applications - is driven by several
considerations including the fact that P2P is the application least sensitive to delay and because P2P
is peculiar in the use of bandwidth as it starts multiple TCP or UDP parallel connections. This means
that a single P2P user consumes much more bandwidth when compared to users of other
applications within the same mobile cell. If application agnostic restrictions were applied, the P2P
user would continue to have assigned a much higher cumulative bandwidth than other applications.
We consider this unfair to other users.
The relevance of P2P limitations has decreased as operators have moved from unlimited data plans
to plans with tiered data caps in most European markets. This has removed the incentive for some
customers to consume abnormally high amounts of data, usually for P2P applications. Initiatives by
4 The objective of fair usage policies is to prevent abuses and to give to all users a fair share of the network
capacity. As an example, these are the fair usage policies of Vodafone UK: http://www.vodafone.co.uk/vodafone-uk/about-this-site/terms-and-conditions/products-and-services/mobile-broadband-fair-use-policy/index.htm
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regulators to confront copyright infringement have also affected P2P volumes in some markets (P2P
was the application most commonly used to distribute illegitimately reproduced content).
Question 5.e: Are traffic management measures targeting heavy users whose use is excessive to
the extent that it impacts on other users
Necessary X Appropriate X problematic
In the early stages of mobile internet development, mobile operators, including Vodafone, launched
pricing plan with unlimited data. These pricing plans have led to the unintended consequence of
having a few customers using a substantial share of the available network capacity.
[xxx]
Network performance for the remaining customers is substantially affected. As described in the
answer to question 5.d, operators have responded by activating the “Fair Usage Policies” contained
in the terms and conditions to make sure that usage by a limited number customers did not affect
service to the rest of the customer base. This is usually done by throttling (for a limited period of
time) data traffic over defined threshold considered normal for high data users. Traffic management
is used to implement fair usage policies that are necessary to maintain a good service for the whole
customer base.
More in general, fair usage policies are becoming less important as customers are progressively
moving toward tiered pricing plans where users buy predefined amount of data. Vodafone has
substantially reduced the number of pricing plans with unlimited data. However, in some markets
where tiered data caps are still uncommon fair usage polices still have a key role in preventing traffic
congestion and allocating network resources to users in a fair manner.
Question 5.f: Are traffic management measures applied during busy times and places, when and
where congestion occurs
Necessary X Appropriate X problematic
Mobile networks are designed to share the available capacity in a specific cell among the users
connected. The speed of the data connection will therefore depend on the number of users
connected. When approaching saturation, the network progressively reduces the speed of all users
to avoid congestion.
As mentioned above in the answer to question 5.d, the policy to throttle P2P traffic is applied in
circumstances where the network is becoming saturated. The reason why P2P is subject to more
stringent policies than the rest of the traffic is fully described in the answer to Question 5.d.
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Question 5.g: Are traffic management measures affecting all applications/content providers in the
same way (application-agnostic)
Necessary X Appropriate X Problematic
As mentioned in the answer to Question 5.f, application-agnostic traffic management measures are
already applied in mobile networks (speed for all users is progressively reduced as the cell reaches
saturation). However, this approach is not sufficient to guarantee to all users a fair share of the
capacity. Therefore, application specific limitations have to be introduced (e.g. P2P).
Tiered pricing in mobile networks provide price signals to customers to avoid abnormal usage of the
network and economic incentives to operators to invest in the network to prevent congestion as
much as possible. A congested network does not only result in a loss of customers, but also in a loss
of paid-for traffic (at least indirectly via bundles). Tiered pricing can therefore be considered a sort of
application-agnostic measure.
Question 5.h: Are traffic management measures affecting (similar) applications/content providers
of the same category in the same way
Necessary X Appropriate X problematic
We believe that there cannot be any discrimination among similar applications within the same
category. If VoIP is throttled on a specific pricing plan, the same approach should be applied to all
VoIP applications. Similarly, if prioritised service is granted to an application provider, the same
feature should be available at comparable conditions to providers of similar application. Vodafone
will not discriminate different applications regardless whether they are provided by Vodafone or
other third parties.
Question 5.i: Are traffic management measures used, without other grounds, against services
competing with the ISP's own services
Necessary Appropriate problematic
The blocking/limiting of competing services on all tariff plans without other grounds such as
preventing congestion or differentiating pricing for the user is certainly problematic particularly if
implemented by dominant providers or if applied by all or most operators in the market. However,
the evidence from the BEREC information gathering exercise on traffic management published in
May 2012 shows that currently this is not the case in Europe with the exception of one market. If
operators offer a choice of plans with VoIP and without VoIP, if there is enough competition in the
market and if offers are transparent to customers in terms of VoIP limitations, the pricing
differentiation is necessary to make sure that customers not interested in VoIP will be able to pay
less for the service. This latter example is clearly welfare enhancing and should not be limited.
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Question 5.j: Are traffic management measures implemented at the full discretion of the ISP
Necessary X Appropriate X Problematic
All traffic management measures are implemented at discretion of ISPs for objective reasons as
clearly explained in the in the answers to questions 5.a to 5.j.
Question 5.k: other differentiation criteria (please specify)
Necessary Appropriate Problematic
Question 6.a: Please explain the impact of managed services on the standard Internet access
service ("best effort") in terms of available bandwidth and quality of service.
Managed services and ‘best effort’ internet share the same network capacity. This means that an
increased penetration of managed services could consume a larger share, in percentage terms, of
available network capacity. This could have an impact on the performance of ‘best effort’ internet,
but only if the deployment of new network capacity would stop. In practice this will not happen as
operators will continue to increase overall network capacity to cope with demand for both managed
services and ‘best effort’ internet. The great majority of customers and the great majority of
services/applications are on the ‘best effort’ internet. It is in the interest of ISPs to keep and
constantly improve the high level of performance of the ‘best effort’ internet. Otherwise, they will
lose customers to competitors.
The likelihood that ISPs can collectively agree to reduce performance is also remote given the
competitive nature of the market (many networks, MVNOs and service providers), the complexities
in keeping the anticompetitive equilibrium (monitoring and sanctioning deviations), the cost-
peculiarity of the telecom market (high fixed costs and low marginal costs), etc. In any case, any
anticompetitive practices will be sanctioned by competition authorities.
From a technical point of view, some managed services (e.g. Voice, IPTV, VOD, video-conference
services on corporate LANs) offered on fixed broadband networks require operators to guarantee a
certain level of QoS in the access network. This is done via various technical measures:
A separate and dedicated channel for voice, IPTV, VOD as it happens on cable and FTTH/B
access network
Tagging the specific traffic and giving it a high priority, de facto creating reserved capacity
channel (when the service is in use)
Dedicating specific data ports to certain types of traffic and giving a high priority to traffic
related to these ports . This creates a de facto reserved capacity
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In any case, we believe that customers should be clearly informed that managed services will run on
the same access line as internet access taking into account that parallel use of these services and
could have some impact on the performance of internet access (e.g. a user watching IPTV and
another browsing the web using the same fixed access line. This is not applicable at the moment to
mobile services.
On mobile networks, managed services with guaranteed capacity are not technically possible at this
stage. Mobile networks are able to provide prioritised internet access to some users (i.e. bronze,
silver, gold users). This means that traffic generated by customers with this functionality will get
priority compared to traffic generated by ‘best efforts’ customers when the network is approaching
congestion (i.e. the reduction of speed is lower than the rest of the customers).
The same functionality could also be applied to content and application providers if the network is
capable to offer such functionality (at the moment, it is only available on LTE).
Question 6.b: Please explain whether it is possible to offer separate capacity for managed services
and the standard Internet access service. If yes, please provide information on the circumstances
(costs, technologies) of separating them.
As mentioned above, real and fully separate capacity can be offered at the moment only on FTTH/B
and cable networks. Voice on 2G and 3G mobile networks can be considered as being offered on
separate capacity as some channels can only be used by voice. Other managed services on DSL fixed
broadband (e.g. IPTV, VOD,) are offered via de facto guaranteed capacity by providing high priority
to these types of traffic. This means that a separation of capacity for managed services on mobile
networks or fixed networks based on wholesale products cannot be offered.
Cost estimates for the different technologies are not available.
Question 7.a.(i): Please give examples of "new business models" which could be developed on the
basis of managed services by Network operators/ISPs:
[xxx]
Question 7.a.(ii): Please give examples of "new business models" which could be developed on the
basis of managed services by Content providers (on the basis of agreements with ISPs):
[xxx]
Question 7.b: How important are these innovative business models likely to become in the next
three years? Please substantiate your view by means of available forecasts or studies.
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These business models are in the early stage of development and it is not possible to provide
estimated or forecasts. For this reason, it is necessary to leave network operators to be free to
experiment different business models. Regulators are not in the best position to decide the best
business models for the market.
Question 7.c: What would be the expected benefits in terms of innovation and investment
through new businesses (content or applications) benefitting from guaranteed levels of quality of
delivery through managed services?
New business models will generate more demand for additional premium functionalities and
revenues leading to additional network investments and innovation. The additional revenues will
improve sustainability of investments and the introduction of innovative functionalities in fixed and
mobile internet infrastructure improving the level of quality of service for all customers.
In particular, the new business models will give increase investments in:
Platforms and functionalities that help to improve customer experience (Content Delivery
Networks, deep caching, video/image optimisation techniques, etc.)
Enhancing capacity/speed of current fixed and mobile networks
Accelerate transition to LTE and fiber-based fixed network access
Question 8: What are likely positive and negative effects of certain traffic management practices
on the Internet ecosystem, in particular on innovation and investment, by (i) network
operators/ISPs and (ii) content providers? Please explain your view and, if appropriate, distinguish
between different traffic management practices.
Traffic management systems allow operators to perform a number of activities. Each one of them
will have positive effects on the Internet ecosystem:
- Reduce/prevent congestion:
o Better service for all customers leading to more applications and services
o Optimise network investment
- Price differentiation (prioritised access, VoIP inclusion/throttling, data caps, etc.):
o Price innovation
o Better value for money
o Price structure closer to customer needs leading to higher mobile internet
penetration
o Application innovation (i.e. QoS requirements related to some applications)
- Protect general users (block viruses, malware, spam):
o Safer internet leading to higher penetration
o More resilient networks
- Protect minors (e.g. content filtering):
- Optimise user experience (image/video optimisation, web caching)
- Implement legal requirements
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Among those mentioned above, differentiation practices on the application side (e.g. prioritisation)
have been subject to more discussion within the Net Neutrality debate. Again we believe that the
practices described above do not generate competition issues requiring prescriptive regulatory
measures. If prioritisation is offered to all interested parties on the same terms, we believe that
there should be no competitive concerns (i.e. potential unfair advantage to a Content and
Application Provider - CAP compared to its competitors). We agree, however, that a vertically
integrated operator that competes with the CAP gives rise to particular concerns, but these can be
addressed by straightforward non-discrimination rules.
Large internet companies enjoy many economies of scale and scope that are not available to new
entrants or smaller players. For example, larger CAPs can invest in more powerful servers, CDNs,
advertising, etc. in a way that a small application developer cannot afford. These smaller CAPS will
benefit from the availability of volume based charging for prioritisation services. This will put small
and large CAPs on level playing field in terms of innovation and quality access to customers.
Even though direct commercial agreements for prioritisation with all broadband providers will be
the solution only for the largest CAPs, aggregators and intermediaries will offer similar services to
smaller players. Intermediaries will have the direct relation with broadband providers and resell a
wholesale comprehensive service to smaller CAPs that will just need to sign one or a limited number
of agreements. This approach would be similar to the one currently adopted by Content Delivery
Networks that bring content closer to the edge of the network where the end-user is connected.
1.2. Traffic management and privacy issues
Question 9: It appears that the implementation of traffic management measures requires ISPs to
analyse certain information about individual data packets, for instance by deep packet inspection
(DPI) techniques. Please explain which type of information needs to be read by ISPs to implement
the different traffic management measures. In which layer can this information normally be
found?
Traffic management tools, sometimes relying on deep packet inspection, are deployed to identify
the type of traffic (not the content of the traffic) and to apply the appropriate network policies. DPI
techniques look at the sequences of bits (both the header and the payload) to recognise common
patterns or “fingerprints” related to a specific application. However, they are not able to “read”,
“understand” or “translate” the content of the transmitted packets (i.e. the contents of the letter).
Once the specific patterns are identified, the traffic management policy is implemented. DPI
technologies need to analyse the payload of the packet because the header does not contain
enough information to identify the type of traffic taking as most communication applications (e.g.
VoIP, messaging, etc.) encrypt traffic. The encryption requires DPI systems to look at the “signature”
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(e.g. the “fingerprints”) which is common within the same application. In any case, the DPI analysis is
not decrypting the content of the communication.5
The following figure simply describes this process.
To facilitate comprehension of how these analytical tools work, think of a comparison with
hieroglyph. These analytical tools are like Egyptologists before the finding of the Rosetta Stone: they
could recognise an inscription as being ancient Egyptian, but they could not understand the
meaning.
Question 10.a: Are there any privacy risks arising from the use of DPI for traffic management
purposes, and, if so, what are the implications for transparency and consumer protection?
The use of traffic management technologies for varying purposes naturally raises privacy concerns.
Depending on the purpose for which the technology is used, there is the danger of mission creep
(the danger of data captured being used for other purposes for which it was not originally intended).
However, traffic management measures are legitimate, beneficial to our customers and are also
necessary, justified and appropriate in a variety of operational and commercial circumstances as
described in the previous answers. We recognise that operators need to properly and robustly
control and govern such practices. However, the suggestion that customers should be asked to
consent to the use of traffic management for purposes that seek to deliver a secure, confidential,
and quality service to customers is not correct. In our opinion, any privacy concerns regarding the
uses of DPI for traffic management purposes can be managed by robust accountable business
practices and controls; and by providing customers with transparency surrounding the use of
network traffic management technologies.
At Vodafone we make a commitment to our customers to respect their privacy and adhere to laws
and standards that are intended to protect consumer privacy. To that end we have a robust internal
policy in place that governs the use of traffic management technologies. Any use of DPI or any other
technology beyond the purpose of traffic management is carefully considered and a comprehensive
privacy impact assessment is conducted to protect against “mission creep” (the danger of data being
used for other purposes for which it was not originally intended). This enables us to identify any
5 DPI has the capability to identify the URLs that the user has selected. This information may be used for
content filtering purposes, if the user has subscribed to the service.
“fingerprint” of a
virus → blocked
“fingerprint” of
streaming → allowed
“fingerprint” of VoIP
→ allowed, if price
plan includes it
“fingerprint” of VoIP →
blocked, if price plan
does not include it
19
privacy risks and legal compliance requirements and to develop solutions to protect them, followed
by approval (or not so as the case may be) at a senior level within the business.
Vodafone does not use traffic management to profile individual customers. If that were the case, we
would only do so where our customers have given their explicit opt-in consent.
Moreover, we are committed to being transparent regarding the use of network traffic management
technologies.
Vodafone informs customers about any relevant traffic management practices via a number of
means:
general terms and conditions that are available in paper form in stores and in electronic
format via the local Vodafone websites; and
specific sections of the websites dedicated to explaining traffic management practices.
Vodafone is always working to improve the level and clarity of information provided to its
customers. In some markets, this will also include the definition of industry code of conducts to
make sure that all operators provide a minimum set of information with a common language. The
first example is the UK industry voluntary code of conduct on traffic management transparency. The
code foresees a commitment on signatory ISPs to provide more and better information to customers
about the traffic management practices used. In addition, each ISP is required to publish a consistent
Key Facts Indicator (KFI) table, summarising the traffic management practices they use for each
broadband product they currently market. This will ensure comparability among tariff packages of
the same ISP and among different ISPs.6 There are also discussions in other countries to develop
similar codes.
Question 10.b: Are there alternative techniques for traffic management that do not involve deep
packet inspection? Please provide examples and explain your response. Please compare those
alternative techniques with deep packet inspection, in particular in terms of their effectiveness,
potential impact on privacy and costs for operators
As mentioned above traffic management is used for a variety of purposes. Some of them may have
some alternatives which could achieve some of the objectives, but in a less effective manner. For
example:
Traffic management used for congestion prevention: alternatives could include investing
substantially more in additional network capacity. This will be unprofitable and likely to raise
prices for end-users. Another alternative would be to raise prices to curb demand (again not
a practice that will satisfy users)
Virus, malware prevention: possible alternatives are the usual antivirus software that
currently are available only for computers and not smartphones
6 An electronic copy of the code can be found at the following address:
http://www.broadbanduk.org/component/option,com_docman/task,doc_download/gid,1335/Itemid,63/
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Content filters: alternatives include filter software downloaded on the device, but this may
not cover all terminals and might not be as effective
For the rest of the purposes (routing, caps, prioritisation, price differentiation, etc. ) there are
currently no available alternatives.
Question 11: Where the user's consent is required for traffic management measures, particularly
where such measures might entail access to and analysis of certain personal data by ISPs, please
explain how (e.g. in which format) this consent should be sought by the ISP, what prior
information needs to be provided by the ISP to the user, and how the user consent should be
given, in order to optimise user awareness and user convenience
Vodafone believes DPI and other traffic management technologies are necessary and have
legitimate uses and benefits to service providers and customers for example, traffic management
and personal network security e.g. spam and malware detection/prevention etc. As outlined above,
we believe in being transparent regarding the uses of DPI to optimise user awareness. However, we
do not believe we should be required to seek the explicit consent of our customers for the purpose
of implementing traffic management measures that are legitimate, beneficial and necessary to
comply with legal obligations under EC electronic communications law in a variety of operational
and commercial circumstances.
Any requirement for consent should be tied to the purpose/use and not the technology. A
technology neutral approach is required if any privacy implications are to be addressed in a balanced
and effective manner. If data is captured and used for the provision of the necessary service,
ensuring quality of service, filtering for malicious activities, choosing and enforcing tariffs etc. then
consent should not be the basis of the data processing. It is a legal necessity to take appropriate,
technical and organisation measures to safeguard the security of our network and services as set out
in Article 4 of Directive 2002/58/EC (e-Privacy Directive). Furthermore, traffic management
technologies can be considered as ensuring the performance of the service contract with our
customers who expect a degree of security in the services we provide Article 7b of Directive
95/46/EC ( Data Protection Directive). Article 4 of the e-Privacy Directive and Article 7 b of the Data
Protection Directive provide a legitimate basis for the processing of personal data in this regard. If
service providers wish to use personal data captured from DPI technologies for a secondary purpose
for which it was not originally intended, for example, targeted advertising, then explicit customer
consent should be required. Where consent is required, it should be obtained by clear and
prominent prior notice and meaningful choice.
2.1. Transparency and general characteristics of the Internet access offer
Question 12: In order to allow consumers to make informed choices, on the basis of clear,
meaningful, and comparable information, which elements should be communicated to
consumers?
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a) Contractual restrictions (blocking, throttling, other restrictions on application use)
Important X Less important
These are key information for all customers that should be highlighted to the prospective customer.
Existing customers should also be able to get this information easily via the webpage or customer
care. Tariff plan descriptions on leaflets and on the web must include these information too. To
further increase transparency, Vodafone is working on a project to include the same information on
the Vodafone smartphone application (i.e. MyVodafone app7) that provides users with all billing,
traffic and pricing information specific to their subscription.
b) Traffic management policy applied to prioritise certain traffic in specific circumstances
Important X Less important
Information on traffic management policy are important to some customers (both prospective and
existing) and therefore should be included in the general terms & conditions and, in more detail, on
the website of the operator.
c) Whether and to what extent managed services may affect the quality of the best effort Internet
(e.g. the possibility of the Internet connection being affected when watching IP-TV or when using
other managed services)
Important Less important x
measuring technically feasible (fixed) measuring technically feasible (mobile)
currently measured (fixed) currently measured (mobile)
This issue applies to fixed internet access only as managed services are not available on the mobile
network. The extent that managed services affect the quality of the best effort internet is likely to
vary from access line to access line. It is therefore unlikely that a precise indication of the effects
could be given or measured for the specific customer. However, if the quality is affected, customers
should be informed that the capacity of the line will be shared between IPTV (when active) and the
rest data traffic.
However, this requirement should not be applied to mobile services. Prioritised access is already
available on some networks and provided to some customers. However, the value to the users of
this information is likely to be limited as other factors (e.g. the number of customers using the same
cell) are likely to affect the level of service much more than the priority given to some users. In
addition, prioritised traffic still represents a very small percentage of overall traffic and it is in the
7 A description of the UK version of MyVodafone app can be found at the following link:
http://itunes.apple.com/gb/app/my-vodafone/id370901726?mt=8
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best interest of operators to limit this functionality to specific cases where there is a real benefit to
users and applications providers.
In any case, performance in both fixed and mobile networks is constantly improving. This trend is
likely to continue in the future thanks to the introduction of LTE (for mobile) and multiple new
technologies in the fixed/cable sector.
d) Other restrictions, please specify:
Other restrictions such as blocking or charging for tethering (i.e. accessing internet via a laptop or
other devices connected to the smartphone) should be clearly stated to customers. This is not
strictly a Net Neutrality issue, but transparency on tethering conditions will still be important to
customers.
e) Data allowances (caps), download limits
Important X Less important
Together with traffic limitations, this is the most important information to be given to prospective
and existing users. Tariff plan descriptions on leaflets and on the web must include these
information. Smartphone mCare applications are great transparency tool to provide information to
mobile users on caps and download limits. Such information are already provided by Vodafone
operators via the MyVodafone application (see answer to question 12 above)
f) What these data allowances enable customers to do in practice (download x hours of video;
upload y photos etc.)
Important X Less important
These are useful information to be provided to prospective users that can then make more reasoned
decisions on which data bundle size to choose. The examples provided will always be an
approximation, but they could help users with limited understanding of technical terms (MBs, GBs,
etc.). The best communication tool for this information is the website of the operator.
Elements related to speed and quality:
a) Average speed, typical speed ranges and speed at peak times (upload and download)
Important x Less important
measuring technically feasible (fixed) x measuring technically feasible (mobile) x
currently measured (fixed) x currently measured (mobile) x
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At the moment, the information provided to users in terms of speed to be expected are often
insufficient. Operators typically give only information about the maximum speed that can be
supported which can be very different from real life scenarios. Providing precise information about
the average speed to be expected or the speed at peak time is unlikely to be feasible, particularly for
mobile networks where variance can be large. However, information on typical speed ranges should
be provided by operators, including mobile.
Operators should also inform customers that speed could vary substantially due to other factors that
may or may not be under the control of the operator. Vodafone already informs customers that
factors other than network capacity can influence the browsing experience and more generally the
use of data.
For existing users, there are multiple ways to measure their own speed in real time via applications
offered by the operators themselves or third parties (e.g. Ookla Speedtest).
In addition, regulators or the same industry players in Germany, Italy, France, Spain, UK, Portugal,
Greece, etc. are already measuring or planning to measure network performance for both mobile
and fixed networks with different statistically-valid testing techniques. The results of such
monitoring activities are generally published and available to both prospective and current users.
b) Respect of guaranteed minimum speed (if applicable)
Important x Less important
measuring technically feasible (fixed) Yes measuring technically feasible (mobile) No
currently measured (fixed) Yes currently measured (mobile) No
As explained above guaranteed minimum speed is not feasible in mobile networks given the high
variance of network performance due to many different factors not under the control of operators.
For fixed networks, a guaranteed minimum speed could be defined (generally in a statistical way to
take into account some network performance variance or limited faults), but the monitoring and
enforcement on a per line basis are difficult to implement. This is so because the methodology and
techniques used to define the minimum speed/performance and the “test” of the specific line must
be the same. This is often impossible taking into account the per-line performance can be influenced
by external factors that are different from the scenario used for the definition of the minimum QoS.
In other words, the risk is not comparing “apples with apples”.
c) What these speeds allow customers to do in practice (video-streaming, audio-download, video-
conferences etc.)
Important X Less important
These are useful information for prospective customers as not all technologies are able to support all
applications. The examples provided will always be an approximation, but they could help users with
limited technical understanding of technical terms. The best communication tool for this information
is the website of the operator.
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d) Latency/network responsiveness (a measure of traffic delay) and which services would be
affected thereby (e.g. certain applications such as IP-TV or videoconferencing would be more
seriously impacted by higher traffic delays in the network of the provider)
Important X Less important
measuring technically feasible (fixed) measuring technically feasible (mobile)
currently measured (fixed) currently measured (mobile)
Latency is an important KPI in determining the quality of the customer experience. Most regulators
and operators monitor latency. These information are generally published.
At the moment, Vodafone does not provide detailed information on latency to end-users. This may
change in the future as for many applications latency is a key parameter. In addition, some
techniques being implemented (e.g. caching, deep caching, advanced CDNs, etc.) combined with LTE
will guarantee a drastically lower latency for most applications. This will create an incentive to
communicate more on latency as it could be a competitive advantage.
e) Jitter (a measure of the variability over time of latency) and which services would be affected
thereby (e.g. echoing in VoIP calls)
Important Less important x
measuring technically feasible (fixed) measuring technically feasible (mobile)
currently measured (fixed) currently measured (mobile)
Jitter is less important than latency, but it could still be a useful information for some more
technologically savvy users that are interested in VoIP applications or on-line gaming.
f) Packet loss rate (share of packets lost in the network) and which services would be affected
thereby (e.g. VoIP)
Important Less important x
measuring technically feasible (fixed) measuring technically feasible (mobile)
currently measured (fixed) currently measured (mobile)
Packet loss is a useful KPI that measures the quantity of packets that do not reach the final
destination. Packets will then have to be retransmitted. It is usually relatively low/stable unless there
is a network issue or low radio signal. If packet loss levels are very high, it could affect the end-user
experience of applications such as VoIP, on-line gaming, video streaming and videoconferencing.
However, it is a relatively technical parameter with limited significance for normal users. Therefore,
25
while it should be measured by operators (for internal service improvement purposes), it does not
necessarily need to be communicated to users.
g) Reliability of the service (network accessibility and retainability), i.e. measure for successful
start and completion of data sessions
Important x Less important
measuring technically feasible (fixed) measuring technically feasible (mobile) X
currently measured (fixed) currently measured (mobile) X
These parameters are important in determining the perceived quality of user experience. However,
at the moment the standardisation work on the measurement of these parameters is less advanced
compared to others.
h) Quality parameters for (mobile) voice telephony (call setup success rate, dropped calls, speech
quality, other)
Important x Less important
measuring technically feasible (fixed) measuring technically feasible (mobile) X
currently measured (fixed) currently measured (mobile) X
Voice quality parameters have always been measured by operators. In most countries, operators,
regulators or third parties already publish this information on their websites. They should continue
to do so. Even though importance of data is increasing, voice is still the key service for user.
i) Other, please specify:
N/A
Question 13: Some ISPs currently apply 'fair use policies', which give them wide discretion to apply
restrictions on traffic generated by users whose usage they consider excessive. Do you consider
that, in case of contractual restrictions of data consumption, quantified data allowances (e.g.
monthly caps of x MB or GB) are more transparent for consumers than discretionary fair use
clauses?
Yes x No
Data monthly allowances are more transparent than fair use policies as the customer is fully aware
in advance about the amount of traffic that he can consume. Fair use policies are a necessary feature
of unlimited data pricing plans to prevent network congestion (see answer to Question 5.e for more
details) and, in practice, they are enforced on a few cases of excessive usage. In any case, operators
are progressively moving to plans with monthly caps, particularly for mobile broadband offers. The
26
importance and impact of such policies is decreasing for mobile, but still important in some
geographic markets (e.g. Portugal) where data caps are still not widespread.
Question 14.a When should the elements of information referred to in question 12 be provided to
the consumer by the ISP?
before signing the contract X
regularly updated during the contract period
during the contract period if changes occur x
other, please specify:
If technically feasible, all the elements of information should be available to prospective customers
before they subscribe.
Any change to contractual conditions (e.g. traffic limitations, data caps, fair usage policies) should be
provided to customers via the usual information means. Most national regulators have already
specific rules on this matter.
If QoS parameters are measured periodically by operators or regulators, the relevant data should be
published on the operator’s website and updated as required.
However, the format, the level of detail and channel could vary (see answer to Question 14.b).
Question 14.b: Which format (e.g. contract, general terms and conditions, separate and
specific information, other (please specify)) do you consider appropriate to communicate this
information to consumers?
Different information should be provided via different and multiple channels:
- Contractual restrictions (e.g. VoIP, P2P, tethering limitations, etc.), data caps/allowances,
reference to traffic management policies, should be included in the contractual terms and
the description of pricing plans on websites and leaflets with high relevance
- Detailed information on traffic management policies should be published on the website
(possibly with two levels of detail: general summary and detailed description). Leaflets could
also be made available as an optional tool
- Information on speed ranges to be expected and what speed ranges or bundles allow to do
in practice (e.g. how many videos, pictures, etc.) could be included in the pricing plan
description on the website and leaflets. More detailed information could be provided on
specific pages on the websites
- Information on QoS parameters and measurements should be published on the websites of
operators and/or regulators
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Question 15: What would be the (additional) costs for ISPs to (i) collect the various data
mentioned in the table in question 12 (e.g. measuring of average speed, jitter, delay etc.) and (ii)
communicate the information to their customers. Please provide an estimate of the above costs
for your own company or an ISP of your choice explaining your assumptions and methodology,
and details about the technical tools used to collect the various data. If possible, please provide a
breakdown of the costs.
Measuring network performance parameters in a statistically reliable and comparable way is an
expensive activity. Costs related to mobile network testing are much higher than for fixed given the
complexity of performing on-field tests, including drive tests.
The costs will also vary substantially according to the number of operators involved, number of tests,
KPI to be tested, how big the country is, quality of the organisation performing the tests, devices to
be used, etc.
The following examples from show the costs of QoS data collection activity for Spain.
[xxx]
Question 16.a: In order to promote transparency and consumer choice, do you consider it
necessary that comparable data on the Internet access provided by ISPs is collected and published
by NRAs or another independent organisation?
Yes X No
Comparable data on the various KPIs should be collected and published by regulators. However,
the methodology used to measure, collect, compare and publish the data should be agreed
between operators and regulators as these comparisons could have a high impact on the
competitive scenario (customers will use them to choose the operators to which to subscribe).
In other words, operators should accept the methodology and believe in the data collected
otherwise they are likely to delegitimise them undermining the credibility of the data in the eyes
of the users.
Do you think this information should be broken down by geographic areas or different data
plans?
In principle, a break-down by geographical areas or data plans will provide a more useful information
to customers and will help them to make better purchase decisions as the analysis will more closely
reflect the service performance in their area or for a specific plan. However, at least in the short-
medium term, the analysis should remain on a national basis (or based on macro-regions) with a
possible differentiation for urban, sub-urban and rural as independent and statistically reliable
measurement campaigns are expensive. Multiplying this activity by the number of plans and
geographical areas could substantially increase the costs. To have a statistically valid analysis the size
of sample of tests must reach a minimum threshold. Providing the information with many different
break-downs will increase the number of tests to be performed.
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Question 16.b: What are the advantages and corresponding costs of this data collection and
publication being undertaken by NRAs or by another type of organisation (please specify
which one). Please provide an estimate at EU-level or for an EU Member State of your choice.
We believe that this data collection publication should be undertaken by regulators or by other
organisations with the same level of independence and competence.
The advantages of having this activity undertaken by the NRA are the following:
Guarantee that the same methodology is used in all stages of the process
Independence and neutrality from market actors
Customers’ trust in the data
(Future) possibility to compare data with other countries via BEREC or other organisations
In terms of costs, a number of regulators have already undertaken this activity. We have data for the
Italian test campaign for fixed and mobile broadband:
The Italian NRA has launched in 2010 a 5-Year program to measure the fixed broadband quality in
predefined locations. The total cost of the initiative is around 2.5M€ and is shared among Italian
operators/ISPs according to market share.
The NRA identified 20 locations, one per each region where speed, latency and success rate
measurements are conducted for all Italian operators. Measurements run with a 24H schedule on
even and odd days of each month (operators are split in two sets, half runs measure in even and half
in odd days). On a 6-months basis, NRA aggregates all of the collected data and makes them publicly
available on a dedicated website (www.misurainternet.net).
The NRA has already started the drive testing campaign to measure and confront the quality of
mobile data services provided by Italian MNOs. The measuring initiative started in June on an
experimental basis. The measurements will take place twice a year.
Question 17.a: Do you consider it necessary to regulate the labelling as "Internet access" of
subscriptions that restrict access to some Internet services, content or applications?
Yes No x
Regulators are not well placed to decide how services should be marketed to users. Nor are they
well placed to decide when ‘internet access’ is used as a marketing term, or what other terms might
be used. This would be a very dangerous precedent which, if accepted, could be extended to any
other areas. The same logic would also apply to VoIP which does not offer a comparable service to
circuit switched voice calls (no emergency calls, not all call destinations available) and therefore
should not be marketed as a “voice” service. These are matters best left to the relevant advertising
29
bodies and to the courts. They have already extensive experience and jurisprudence on the matter.
As with all matters related to advertising and marketing communications, actual legitimacy will
depend on the context. Any ex-ante evaluation is likely to lead to wrong outcomes.
The transparent and clear communication of the limitations of specific broadband offers should
remain the key focus of both regulators and operators. Discussions on the term “internet access”
will become an unhelpful distraction from this key transparency objective.
Question 17.b: If yes, which restrictions would be acceptable before a subscription could no longer
be marketed, without qualification, as an “Internet access” product”?
See above
Question 17.c: What would be the consequences (including the cost) for ISPs if they were not
allowed to market as ‘Internet access’ an offer with certain restrictions, or if such marketing
was subject to mandatory qualification? Please provide quantification for your own company
or an ISP of your choice explaining your assumptions and methodology.
It is impossible to provide a quantification of impact in terms of costs. The important fact is that
prohibiting the use of the terms ‘internet access’ will not increase transparency and it will not
convey any value to users. It is more important that operators inform clearly customers about the
limitations or restrictions of a specific tariff plan.
2.2 Switching:
Question 18.a: Please explain what barriers to switching ISPs still exist (if any) and how they can
be overcome. Please mention in your reply all direct and indirect factors dissuading consumers
from switching (e.g. obstacles linked to the terminal equipment, burden of proof regarding a
possible breach of contract, etc.)
The combined effort of regulatory intervention, operators’ actions and standardised technology has
substantially reduced the barriers to switch operator. While the picture is different for mobile and
fixed, we believe that there are no systemic barriers to switching and that no further regulatory
interventions are necessary at this time.
As further explained below, in the mobile market customer churn levels are high (over 25%). This is
an evident demonstration that barriers to switch are low. An analysis of the various factors usually
mentioned as potential barriers is the following:
Terminal equipment: thanks to the GSM, UMTS and LTE standard used by operators in
Europe, terminals can be used with any network provided by only changing the SIM card of
the operators. Most terminals support different bands and standards allowing the customer
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to use any network. 2G-only terminals are disappearing from the market and, in any case,
they are outside the scope of Net Neutrality debate as they do not support mobile
broadband.
Operational switching process: the duration of the number portability process is now one
working day. Customers just need to go to the new operator that will take care of porting.
The procedures at national level are well-established. The overall process cannot be
considered a barrier
Duration of contract: operators offer all types of contract to their customers from 2-year
post-paid contracts to pay as you go prepaid offers. Longer contracts guarantee a stream of
revenues thus allowing the operator to offer better economic conditions (initial acquisition
costs are spread over a longer period of time). In addition, longer contracts allow operator
to subsidise terminals. Some of the most sought after terminals can be expensive (up to over
900 Euro for the top of the range new iPhone). Many customers like the convenience of not
having to pay a high up-front fee for the terminal, but paying it via monthly instalments or
higher recurring fees. However, there are also many well-functioning smartphones at much
lower prices (even less than 100 Euro) that allow customers to pay the full price of the
terminal and opt for shorter contract durations (or lower prices).
Breach of contract: breach of contract is regulated by general civil law (in the same way as
any other contract) and specific rules for the electronic communications sector.
Jurisprudence is well established and in all Member States customers have the right to use
low-cost alternative dispute resolution procedures as provided by the EU directives. It is
possible that some of these mechanisms are still not functioning in the best way possible.
However, this may require focus on how to improve these processes and possibly to
dedicated more resources, but there is no need at this stage for further or different rules on
the matter
In the fixed market, there are some additional barriers that are however intrinsic to the technology
and industry structure. The local access network is still controlled by the incumbent and any switch
to another operator requires the involvement of the incumbent. This activity requires a manual
process to physically connect the line from the old operator to the new one. In addition, contrary to
mobile, voice (i.e. number portability) and the switch of the broadband line are two processes that
need coordination to function properly.
Question 18.b: How should an ISP inform consumers of changes to their packages?
There are already procedures defined at national level on how customers should be informed about
changes to tariff packages (either prices or other conditions of the plan). Depending on the market,
the requirements may foresee a communication in the bill (for post-paid customers only), an sms,
emails, web pop-up, etc.
The same procedures should be and are already used also for fixed and mobile broadband offers.
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Question 18.c: What actions by an ISP would constitute a breach of contract or modifications to
the contractual conditions which would enable a consumer to be released from a contract?
Also in this case, there are well-established procedures defined at national level. They should
continue to be used. The general principle is that the change or breach should be of material
detriment to their customers.
Question 18.d: Should customers be able to easily opt out from certain contractual restrictions (up
to a completely unrestricted offer) by the same operator? If yes, how could this be facilitated?
Yes No
All operators should offer a number of unrestricted offers in addition to restricted ones. The BEREC
investigation shows that this is the case already for the great majority of EU operators. Customers
have already sufficient choice of restricted and unrestricted tariffs. In addition, in the case of VoIP,
most operators offer tariff add-ons allowing VoIP to be purchased additionally . Imposing a
requirement to have an opt-out (while maintaining all other conditions of the plan) for all pricing
plans would be a too cumbersome and costly requirement without real benefit for users. However,
we support the right of users to move to unrestricted tariffs (usually more expensive) even before
the minimum duration of the contract (provided that relevant handset subsides can be recovered).
Question 18.e: Do you think that a customer should be allowed to switch to another operator
within a reduced contract termination period in case his/her current operator does not at all
offer an unrestricted Internet access product or does not allow switching to such unrestricted
offer?
Yes X No
This requirement will increase incentives to operators to offer unrestricted tariffs. In any case, as the
BEREC data collection shows, the operators providing restrictions on VoIP or P2P on all tariff plans
are a small minority in Europe.
Question 19: While there may be valid (technical) reasons why consumers do not always get the
advertised service speed or quality, should there be a limit on the discrepancy between advertised
and actual service parameters (e.g. speed)? If you consider that there should be a limit on the
discrepancy, how should this limit be defined?
Yes X No
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As mentioned earlier, on mobile networks guaranteeing speed or QoS is impossible. This means that
the advertised speed or QoS may not be respected in all occasions. If the service speed or quality is
substantially and constantly below the advertised speed and quality, the customer can already
switch operator before the term of the contract. Consumer law principles are already available in
national legislation to allow this as for any other type of product or service.
However, the ex-ante definition of a threshold for the discrepancy is going to be difficult and almost
impossible for mobile broadband.
Question 20: Pursuant to Article 30 (6) of the Universal Service Directive conditions and
procedures for contract termination shall not act as a disincentive against changing service
providers. How could changing of operators be facilitated? Please provide examples and explain
your response.
In the mobile market, changing operator is already very easy as demonstrated by the high numbers
of customer churn.
In fixed market, as described in the answer to question 18.a, there are some additional barriers to
switch which are peculiar to the fixed market structure and fixed broadband technology that result
in complex inter-operators processes. The issues are well-known to regulators and they affect
particularly the competitiveness of non-incumbent providers. The situation has slowly improved in
recent years. This positive trend is likely to continue in the future.
Question 21: How could the transparency of bundles (packages including telephony, Internet, TV)
be improved for consumers and how could switching be facilitated in the presence of bundles?
Bundle offers may create additional complexity to the user in the decision to switch providers.
However, this is a possible task that requires some planning by the user. These are some possible
scenarios (fixed market):
- A customer with a triple play offer that wants to switch to a new provider for all three
services: the customer will simply have to choose a new triple play provider or subscribe to a
double play offer from one provider and get TV service from another one
- A customer with a triple play offer that wants to switch to a new provider only for TV: the
customer will have to choose a new double play offer from the current provider and switch
to a new one for TV
For the mobile market, there are even less issues as all players offer single (voice plans or data plans)
and double play (voice and data).
Question 22.a: How important would be the benefits for end-users of improved transparency and
facilitated switching?
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Very important X Important Slightly important Not important
Transparency and low barriers to switching are key components of any pro-consumer view of net
neutrality. Transparency allows consumers to make informed choices between competing services,
and low barriers to switching allow them to act on those choices. Taken together, this enables
consumers, rather than operators or regulators, to determine how the industry should allocate
scarce resources between competing demands and thereby to perform the function of properly
competitive markets. The allocation of scarce resources between competing demands is at the heart
of the net neutrality debate.
Low barriers to switch enhance the benefits brought by transparency. The evidence in mobile
markets is that barriers to switching in the European mobile market today are low as churn rates
consistently exceed 25% per annum. In addition to inter-operator churn, a high number of
customers choose new tariffs or renew commitment every year while remaining with the same
operator. For example, in Ireland, Spain and the UK the number is above 35%8.
The implementation of new regulatory framework over the last months (not yet completed in some
countries), supplemented by specific initiatives in individual Member States, will further reduce any
remaining barriers to switching in the mobile sector. For example:
number portability is now subject to stricter time limits and subject to pro-consumer
conditions (in terms of porting costs, processes, ease of use, penalties for delays, etc.)
rules on contract duration are intended to reduce barriers (max 24 months and need for
the availability of at least one offer of max 12 months)
availability of prepaid and postpaid offers without minimum contract duration
pro-user national rules on the application of penalties in case of early cancellation of
contracts
rules and commercial practices on SIM-locking to reduce barriers to switching
Question 22.b: What would be the expected benefits in terms of innovation by new
businesses (content or applications) as a consequence of improved consumer choice and
increased competition between ISPs?
Consumer choice and competition in the mobile markets are already at an extremely high level with
prices still going down, new services being offered, and broadband performance still increasing. We
do not see how this could be further improved.
In the fixed sector, the market dominance at the access level is unlikely to fade away. There is still
room to further improve the level of competition with positive effects on innovation. However, this
consultation is unlikely to be the right place to go into an in-depth analysis of the issue.
8 Calculation made for postpaid customers that move to different tariffs or actively renew commitment to
specific plan.
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Question 23: Would the facilitation of switching for consumers trigger any (administrative) costs
for ISPs?
Yes X No
Any new feature to facilitate transparency and switching will generate costs for the operators but
that will be worthwhile if the number of users benefiting and the benefits themselves are
substantial. For this reasons, a cost-benefit analysis should always be used before introducing new
measures and obligations. The best approach would be for the regulator to define the objective and
for the operators to find the best and least costly solutions to implement them.
In addition, excessive churn determined by wrong regulation could lead to inefficient outcomes too.
Changing operator has some administrative costs that will need to be recovered from prices. Churn
rates that are higher than what should be expected from a competitive market will raise costs for
operators (and indirectly prices), but without providing additional benefits to users.
3. IP interconnection issues
Question 24.a: In your view, are there any problems regarding IP interconnection arrangements
(between network operators, ISPs, transit providers and/or content providers) that could have an
impact on the quality of the best effort Internet?
Yes No X
The IP interconnection market is currently functioning well in the absence of regulation. The
presence of different, competing methods of IP-interconnection – transit, peering, content
distribution networks (CDNs)/caching - constrains the behaviour of market participants and reduces
the potential for market power. Regulators should not focus on whether market players that
previously had market power in the telephony world (network operators) will have market power in
the IP world.
Question 24.b: Are there any specific issues related to the vertical integration of ISPs and
transit providers?
Yes No X
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At the moment there is no evidence of specific issues (e.g. discrimination or margin squeeze
practices) by vertically integrated players. This has been confirmed also by the recent decision by the
French Competition Authority on the Cogent complaint against France Telecom. No anticompetitive
practices have been found, but the Authority has decided for some transparency remedies in the
relation between Orange and Open Transit (the France Telecom branch offering transit/peering
services). The requirement is to draw up a formal internal protocol between the two companies to
verify that no anticompetitive practices are taking place. This transparency measure may be
necessary in other peering/transit arrangements by incumbent fixed operators.
Question 25.a: Direct peering, Content Delivery Networks (CDN) or Quality of Service
Interconnection (between ISPs and content providers) are being developed to propose an
enhanced quality of service for content providers and end users. What role can they play in
reducing the risk of network congestion?
Direct peering and CDNs are already available and widely used in the market by CAPs. They bring
benefits in terms of lower latency resulting in a better customer experience. QoS interconnection is
still in the infancy stage, but it has the potential to reduce the risk of network congestion in an
indirect way. Additional revenues from charging CAPSs for prioritised QoS services will make new
investments to increase network capacity financially viable. This will then have positive effects on
network congestion for all users.
Question 25.b: What opportunities and threats do they constitute for:
(i) ISPs,: new business models and higher revenues leading to higher investments in network
capacity
(ii) content providers,: new business models based on higher/guaranteed QoS (e.g. new applications
or services that at the moment are not feasible due to QoS issues)
(iii) transit providers: they are the likely intermediaries (between operators and CAPS) for these new
business models, but they are also likely to lose revenues to CDN providers
(iv) end users?: new applications, better services.
Question 25.c: Are there any barriers of a regulatory, technical or business nature that prevent
market players other than ISPs from playing a more important role in reducing the risk of
network congestion?
Yes No X
There are already market players who consider reducing network congestion as a competitive
differentiator. For example, push-email systems such as the Blackberry platform already optimise
data consumption to make sure that users get emails as soon as possible (attachments and long
email threads are transmitted to the terminal only after the specific request of the user).
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CDN providers such as Akamai already perform a key role in reducing the risk of congestion at the IP
transit backbone level for both mobile and fixed networks.
Question 26.a: Do you consider that intervention by public authorities is necessary at this stage? If
so, what would be the appropriate level of such intervention?
Yes No X
As mentioned earlier, we do not think that there is a need for regulatory intervention in this area.
Moreover, Vodafone does not support the ITR review campaign launched by some fixed incumbent
providers.
Question 26.b: What would be the consequences of divergent interventions by public authorities
in the EU Member States?
A divergent approach will put at risk the internal market for internet services, undermine innovation
and reduce investment. For example, a content provider operating on a EU-wide scale will be able to
offer a product based on prioritised QoS in some countries and not in others.
Question 27.a: Have you made use of the dispute resolution powers under the Framework
Directive in relation to a dispute about traffic management practices?
Yes No X
Question 27.b: Have you also made use of these dispute resolution powers also in relation to
disputes between an ISP and a content provider?
Yes No X
Question 27.c: If you have made use, please explain under which circumstances. If you have not
made use, please explain whether you consider that these dispute resolution powers would be an
appropriate tool for such Internet traffic management disputes?
The current regulatory framework does not allow the use dispute resolution mechanisms for
internet traffic management disputes for the following reasons:
art. 20 of the Framework directive applies to disputes between electronic communications
providers (most Over The Top players are not)
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art. 34 of the Users’ Rights directive applies only to consumers and, in any case, to situations
where a contract exist between the two parties
In any case, there are NRA complaint procedures at national level that could be used to raise traffic
management disputes. In addition, complaints can always be filed to National Competition
Authorities (as it happened with the Cogent/France Telecom case)
Question 28: Do you consider that regulators should monitor interconnection agreements
between providers?
Yes No X
Interconnection agreements between SMP operators and other operators are already subject to
monitoring by NRAs to verify that SMP regulatory requirements are respected. We do not see, at
this stage, any reason why agreements between operators/ISPs and content/application providers
should be subject to monitoring taking into account that there are no SMP requirements.
Question 29: Under article 22(3) USD NRAs have the power to set minimum quality of service
requirements on undertakings providing public communications networks. In a scenario where in
a given Member State no unrestricted offer is available (for instance because all operators actually
block VoIP), do you consider that the "minimum quality of service tool" should be applied by the
NRA to require operators to provide certain unrestricted offers?
Yes No x
We agree that operators should offer both restricted and unrestricted offers. However, we believe
that this is not the right regulatory tool to require operators to offer unrestricted offers. This tool
was defined to tackle real QoS issues and not to prevent/correct anticompetitive behaviour. If such
practices arise in some markets, this should be tackled via ex-ante SMP regulation (if applicable) or
competition law tools. These issues are not dissimilar to any other access issue that should be
evaluated on a case by case basis taking into account market context.