Bye-bye Unlimited Broadband Internet?

The days of cheap, unrestricted broadband Internet access in France may soon be over as revenue-hungry telecoms operators get together to squeeze domestic consumers.

Paris-based Organisation for Economic Co-operation and Development (OECD) issues a report praising current low cost global Internet access thanks to unsupervised competition. (Credit: Wikipedia)

According to two separate reports major telecom operators are discussing an end to unlimited broadband Internet access for French home users. The latest report is on the Rue 89 website and warns bluntly “prepare to forget unlimited Internet access at home”.

Earlier in August the French website OWNI claimed to have seen a working document prepared by the French Telecoms Federation (FFT) — basically Orange, SFR and Bouygues – discussing “maximum IP speeds” and “limited consumption” on broadband triple play and other deals offered to French domestic customers.

If such a regressive step were to be implemented it would end some of the best Internet access deals in Europe, and herald a return to the bad old days of dialup when Internet use was metered, clunky and costly.

More worryingly in unbundled (non dégroupée) areas —  that is where there is no competition to the former state-owned legacy telecoms monopoly provider (mainly remote and rural zones) — Orange would be able to impose the planned restrictions even though users have no viable alternatives.

As the Rude Baguette blog noted:

News began to circulate last Friday that Orange was taking the first steps towards changing it’s household internet pricing from a fixed cost to a ‘pay-as-you-go’ pricing. The news, originally picked up by La Lettre A & then reported on Rue89, cites Orange as saying it is “actively preparing different offers based on usage.” The same announcement also revealed Orange’s plans to work with Qosmos, a Deep Packet Inspection (DPI) provider, providing them with an uncomfortably large amount of information on customers’ internet usage. More interestingly announced was the fact that CNIL (- La Commission Nationale de l’Informatique et des Libertés) …  is also overseeing tests, currently being done with Alcatel-Lucent.

(Read more on threats to French net neutrality here and here)

This bad news development comes as the Paris-based OECD-Organisation for Economic Co-operation and Development released a report showing that an unregulated and unsupervised global Internet community has successfully demonstrated the benefits of free enterprise in keeping Internet traffic costs down.

The OECD report (download via the link) provides evidence that the existing Internet model works extremely well, has boosted growth and competition and brought prices for data down to 100,000 times less than that of a voice minute. A survey of 4,300 networks, representing 140,000 direct exchanges of traffic on the Internet, found that 99.5% of “peering agreements” were on a handshake basis, with no written contract and the exchange of data happening with no money changing hands. Moreover, in many locations, multilateral agreements are in place, using a so-called route server, where hundreds of networks will accept to exchange traffic for free with any network that joins the agreement.

France Telecom (Orange) is planning to return to the bad old days of pay as you go Internet access.

The OECD report aims to counter the arguments of some service providers that the current model of Internet traffic exchange does not provide sufficient revenue for access networks to fund the investments needed to build high-speed local broadband networks. It is also argued that the model does give online service providers the correct market incentives to optimise their use of network resources. This has helped drive down prices, in stark contrast to voice traffic exchange, which has been contentious, requires strong regulatory oversight, with contracts between networks sometimes totalling hundreds of pages and expensive computer systems calculating the incoming and outgoing revenues.

The OECD report thus appears to offer additional arguments for further unbundling in the telecoms networks ensuring domestic users continue to benefit from low price unrestricted access to technology that has transformed the social and working lives of tens of millions.

Orange spokesman Jean-Marie Culpin, interviewed by OWNI in August admitted the operators were in talks about broadband access “Yes, there are some packages on which a threshold could be imposed”, he told the OWNI reporter.If this were to happen, says OWNI, it would be unprecedented in France, where the ubiquitous “box” or router — most often a Livebox from Orange, but with thousands of dégroupée equivalents  —  offers access to one of the most competitive Internet services in the world with no web-surfing limits at home.

However as OWNI reports, the curtailment approach has already been successfully piloted on mobile networks. French operators, like their European and American counterparts, restrict Internet applications such as peer-to-peer, voice over IP on smartphones … So much so that SFR, Orange and Bouygues were earlier accused of violating network neutrality and the validity of their claims to offer “unlimited Internet” packages on mobiles was challenged. All to no avail says OWNI after national governments and European authorities ignored consumer complaints.

The French consumer rights group UFC-Que Choisir, calls the plans to curb broadband home use  “unacceptable”. Edouard Barreiro, a spokesman for the association, told OWNI: “Limiting fixed Internet access has no economic justification. Fixed costs do not vary with consumption users … operators are seeking a ransom from both sides: first from content enablers like Google and now from consumers. Operators seem to believe they are omnipotent”.

Orange has made it clear says OWNI that: “U.S.tariff practices are the dream of all operators”. Cable operators like Time Warner, Comcast and Verizon or even AT & T, offering a capped connection, usually 250 GB a month. Users keep an eye on their consumption by means of  a counter and beyond contractually fixed ” fair use ” service can be cutoff.Meanwhile another Internet war is brewing in France and elsewhere in the European Union.

French publishers have relaunched a discussion about the republishing of headlines and the first paragraph of articles by Google and other search engines without compensating the provider of the content. Plans to craft a law that allows publishers to charge search engines are back on the table after the German cabinet gave its support last week to a draft law that aims to do precisely that, said the French National Magazine Publishers’ Society (SEPM).

Google has rebutted efforts by governments to force it to share advertising revenues with national media outlets indexed in its vast search engine telling France it will stop linking to French media if the government pursues its planned tax. Google sends millions of hits to French and other online newspapers every day, a major source of page impressions and readers and in turn the main reason advertisers pay for space on their websites.

Story: Ken Pottinger

(Full disclosure: French News Online depends wholly on the Internet for its business and is based in an as yet unbundled zone)

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7 Responses to Bye-bye Unlimited Broadband Internet?

  1. Rod Harper October 31, 2012 at 10:20 am

    The problem for the Internet access providers such as Orange is that they are operating in a highly competitive market in which it is difficult to charge higher rates for their basic “data pipe” services to/from the Internet , while it’s the service providers of content for consumers such as Apple with iTunes, Amazon with e-books, Google with search, Facebook through social networks etc. which are makig the real money.

  2. admin October 31, 2012 at 11:37 am

    Thanks for your comment. Sounds a little like the arguments advanced by EU lobbyists currently trying to tax content providers rather than let the free market sort out the finance.(A solution the OECD appears to have demonstrated has been highly beneficial)

  3. Rodney Harper (@Voting_Rights) October 31, 2012 at 2:48 pm

    I agree with the OECD that it is more beneficial to let “the free market sort out the financing”. Orange for example needs to start providing more value-added content to differentiate its offering from those of its competitors, instead of seeking concerted action to increase the basic rates for access for all. It already manipulates the rates for internet telephony to include international calls to fixed line telephones for 100 destinations within the “unlimited” fixed price subscription but excludes calls to mobile telephones, the latter increasingly the terminals of choice.

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