DT gets slap on wrist for net neutrality naughtiness

Deutsche Telekom has found itself on the wrong side of right after its ‘Stream On’ offering was found to break European net neutrality rules.

After the Federal Network Agency (BNetzA) imposed restrictions on the telco on the grounds of net neutrality, DT took to the courts to fight the decision. Unfortunately, the lower courts and today in the Higher Administrative Court in Muenster, it was confirmed the telco would no-longer be able to offer the ‘Stream On’ value add feature in its current form.

The issue which the telco is facing boils down to the small print. DT customers have found themselves to have traffic throttled and are unable to make use of the ‘Stream On’ feature outside the German borders, violating European rules on roaming.

‘Stream On’ was first introduced to customers in the US, with the German business following suit after witnessing the success. Offering zero-rating benefits on video streaming, the proposition proved to be as successful in Europe, with two million German customers signed up.

It is of course a strategy which will sound attractive to the data-intensive consumers of today. With entertainment and gaming content from selected partners not bleeding the monthly data allotments, it sounds very interesting, however it seems DT is a victim of its own sluggishness.

One of the issues which BNetzA found was on the data throttling side of the offer. For cheaper data tariffs, download speeds were throttled with the critics arguing this violated one of the key principles of net neutrality, irrelevant as to whether the user consented to the downgraded speeds.

For the tariffs at the bottom end of the scale, download speeds had been throttled to 1.7 Mbps. This might have been sufficient at some point, but at this is not fast enough to deliver a HD quality resolution, the courts decided it was undermining the rules.

Secondly, in limiting the zero-rating offering of ‘Stream On’ to its own borders, DT has also been found to have broken European roaming rules. As the free data stream ended at the border, the courts agreed with regulators that the user was effectively being ‘charged’ for using video and gaming services when in another country. Charging more for services while abroad is a no-no when it comes to the European Union’s rules on roaming.

Although the telco will not be happy with the outcome of this case, it is not the end for the ‘Stream On’ proposition. With two million users signed up, it is clearly at attractive value add for DT, but the telco will have to tweak the small print and update some permissions to ensure it is compliant with current regulations.

ZTE gets ahead of the game with cybersecurity centre launch

With Huawei facing scrutiny over its alleged ties to the Chinese Government, it will only be a matter of time before ZTE faces the same questions considering its own, complex ownership structure.

Taking a page from the Huawei playbook, ZTE has officially opened its European Cybersecurity Centre in Brussels, Belgium. The lab will open its doors to current and potential customers, as well as national regulators, to access the external security verification of ZTE’s products, services and processes.

As with the Huawei Cybersecurity Centre, this is a transparency mission to improve the perception of the vendor at a time where Chinese firms are facing increasing scrutiny in the international arena.

“ZTE’s original intention of the Cybersecurity Lab Europe is to provide global customers, regulators and other stakeholders with great transparency by means of verification and communication,” said Zhong Hong, ZTE’s Chief Security Officer.

“The security for the ICT industry cannot be guarded by one sole vendor, or by one sole telecoms operator. ZTE is willing to play an important role in contributing to the industry’s security along with its customers and all other stakeholders.”

Although ZTE has largely managed to avoid criticism from the US in recent months, which has predominately been centred around collusion with the Chinese Government, it is surely only a matter of time. The complex ownership structure of ZTE has direct ties back to the Government, much more noticeable than the tenuous link at Huawei which has been presented countless times.

ZTE is owned by Xi’an Microelectronics (34%), Aerospace Guangyu (14.5%), Zhongxing WXT (49%) and Guoxing Ruike (2.5%). Xi’an Microelectronics a subsidiary of China Academy of Aerospace Electronics Technology, while Aerospace Guangyu is a subsidiary of CASIC Shenzhen Group; both groups are state-owned enterprise and responsible for nominating 5 of the 9 Directors of ZTE.

ZTE clearly has more of a direct link to the Chinese Government, though it has seemingly avoided the spotlight thus far as it does not have the same market share in the network infrastructure market as Huawei.

According to the Dell’Oro Group, ZTE featured in the top seven network infrastructure equipment vendors worldwide, alongside Huawei, Nokia, Ericsson, Cisco, Ciena and Samsung, with the group accounting for roughly 80% of global market share. Huawei is leading the rankings by some margin, though over the course of 2018, ZTE’s share dropped by two percentage points to 8% global market share.

That said, it does have some significant customers in Europe. Wind Tre in Italy is supposedly one of the biggest customers of the firm, perhaps explaining its 5G research centre being located in L’Aquila, about 100km north of Rome. Elsewhere, ZTE has signed MOUs with Hutchison Drei Austria, Portugal Telecom and Telefonica in recent years. ZTE might not attract the headlines Huawei does, but it has an established presence in 15 countries throughout Europe.

Perhaps the saving grace for ZTE in recent months has been it operates in markets the US isn’t that bothered about. The Trump administration seems to be very selective when it levels its national security concerns at allies, focusing primarily on the more prosperous economies.

ZTE has already been the focal point of a number of different scandals including bribery and violation of US trade sanctions, and it seems it will only be a matter of time before government collusion is thrown on the table again, especially if it starts making progress in the market share league. It seems this cybersecurity centre focused on transparency is an effort to get ahead of the game.

The US or cash? Huawei asks Poland to choose sides

Huawei has put its financially favourable foot forward, suggesting Poland will only get a cash boost if the vendor is allowed to participate in the 5G bonanza.

The role of Huawei in European networks has been under scrutiny for a considerable amount of time, and while it does appear it will be safe in numerous markets, Poland is one which is still hanging in the balance.

According to Reuters, Huawei is prepared to invest roughly $793 million in the country as long as it is allowed to sell equipment to the Polish telcos. While this might be enough to force some politicians into switching on the green-light, Poland is an area where Huawei has found itself in a bit of bother recently.

Back in January, a Chinese employee of Huawei and a Polish national working for Orange were both arrested on spying allegations by Polish security services. Evidence was not produced at the time, though concrete evidence has not been needed to ban Huawei in the US, or in countries such as Australia.

In terms of the US, Poland has had a strong relationship with the country for some time. Polish–US relations were officially established in 1919 and the country has remained one of the most stable allies of the US since. This filters down to the general public also, with Poland one of the most consistently pro-American nations in Europe and the world.

You also have to factor in more direct threats from the US. In February, the combative Secretary of State Mike Pompeo effectively suggested Eastern European nations would have to choose between working with the US or Huawei.

Looking at the Polish economy, a fractured relationship with the US would be difficult. Poland is the 24th largest export economy in the world, with the vast majority of exports heading to nations in Europe. However, the US is the largest single market outside of Europe for Poland, accounting for 2.7% according to Observatory of Economic Complexity, a MIT project.

With the US leaning so heavily on European allies to ban Huawei, seemingly as a means of putting pressure on the Chinese Government, Poland might turn out to be an interesting battle ground. Of course, you have to consider the cash incentive from Huawei.

Poland is effectively the Eastern European home ground of Huawei. The firm employs roughly 900 people in the country and will have a positive impact with its Polish supply chain. With further investments planned in the country, the direct impact of £793 million will keep the Polish Government happy, but there will be considerable knock-ons in other parts of the economy.

Another consideration for Poland will be market competition. Polish telcos will need a suitable amount of competition to ensure investments in network infrastructure is as low as possible. When you consider ARPU on mobile users, the demands become much more evident.

Orange’s Polish business currently has 9.7 million subscribers, each generating roughly £5.67 a month in revenue. For Play, Poland’s largest MNO, just over 12 million subscribers generate £6.71 a month for data services. For Polish telcos to generate ROI, competition between the network infrastructure vendors is clearly needed; banning Huawei might have some difficult implications to stomach.

Huawei knows this of course and is playing an excellent move. Poland will have to make a decision before too long; persist with its relationship with the US or effectively help Huawei gain traction in Eastern Europe.

European connected car arm wrestle swings in favour of 5G

The Byzantine European bureaucracy is trying to pick a winner between competing connected car technologies and inevitably it’s taking ages.

Back in March we reported on the GSMA’s hissy-fit after the European announced a preference for the wifi-based Cooperative Intelligent Transport Systems (C-ITS) approach to wireless networking between cars and the rest of the world. The mobile industry understandably prefers 5G-based cellular vehicle to whatever (C-V2X) technology and thinks the EC is barking up the wrong tree.

One of the few advantages of having such a bloated, multi-layered approach to running things is that every decision made by Europe has to be approved by countless parliaments, councils, committees and cabals. After a few months it was the turn of yet another of these to mull the matter over and it announced its decision this morning.

The Committee of the Permanent Representatives of the Governments of the Member States to the European Union is so morbidly obese they had to split it in two and it was the duty of Coreper II to make a call on the ‘delegated act’, which is what the word of the EC gets packed up us for consumption by lesser bodies.

While there had been considerable lobbying in favour of C-V2X in the build up to the decision, it still came as a pleasant surprise to see Coreper II dare to stand up for the Commission and reject the wifi C-ITS plan. A consortium of mobile industry lobbying bodies – GSMA, GSA, ETNO and 5GAA had written at length last month about what a bad idea excluding cellular from the continent’s connected cars would be and they seem to have been rewarded.

“GSA, along with other leading mobile and automotive industry associations, believe the Cooperative Intelligent Transport Systems  (C-ITS) ecosystem should neither be limited by technology nor place Europe and mobile and automotive companies at a clear disadvantage to other regions of the world,” said Joe Barrett, President of GSA.

“The decision by EU Member States to reject the Delegated Act on C-ITS and request the European Commission to reconsider its scope is great news for technology neutrality and signals a positive future for connected intelligent transport systems in Europe.”

The European Commission does allow light dissent every now and then, to maintain the illusion of accountability and due process. Normal procedure when something like this happens is for the EC to make cosmetic tweaks and keep putting the matter back to the vote until it gets what it wants. On such a binary matter of whether or not to back wifi-based C-ITS, however, it’s hard to see how such a fudge will be possible, so maybe this will end up being a rare defeat for the unelected Commission.

Europe publishes stance on AI ethics, but don’t expect much

The European Commission has revealed its latest white paper detailing guidelines on an ethical and trustworthy approach to AI, but whether it actually means anything remains to be seen.

The guidelines themselves are now open for public comment with the Gaggle of Red Tapers seeking feedback on how to make improvements and increase applicability to the world of today. However, the industry continues to operate under the semblance of oversight but in the reality of the digital wild-west.

Such is the top-line nature of the guidelines, you have to wonder whether there have been any real efforts to integrate the thinking into business. At the moment, the guidelines do not seem to have any substance to them, simply stating the obvious, or at least what you would hope is obvious to the developers creating the algorithms and applications. These guidelines would have been useful 2-3 years ago, but now it seems a bit of a redundant statement. AI regulation needs action not philosophical thinking.

After reading the guidelines, there is a sense of ‘so what’. What was the point in making this statement aside from cosmetically attracting headlines for the European Commission? There doesn’t seem to be anything new in there, just the European Commission making a statement for the sake of making a statement.

The seven guidelines are as follows:

  1. Humans should have oversight of AI at all times
  2. AI systems need to be resilient and secure
  3. Governance measures should be introduced to protect privacy
  4. Transparency should be ensured
  5. Bias should be removed
  6. AI should benefit all
  7. Accountability for AI should be introduced

Having the guidelines is all well-and-good, there needs to be a yard-stick, but we would expect at the least for some sort of accountability model. It seems a bit half-arsed at the moment as there are still numerous questions.

Firstly, how is the European Commission going to judge whether these guidelines are being followed by industry? What will the metrics be? What will be the punishments for not taking the principles into account or negligible behaviour? Where are the reporting mechanisms for ‘unethical’ behaviour and complaints?

The next steps for the Commission is to consult with industry and run various pilot programmes across the bloc. After these initiatives have been completed, another consultation period will be entered into before the Commission will review the assessment lists for the key requirements in early 2020. At some point in the ill-defined future, Europe might have some rules on AI.

Considering the posturing which has taken place over the last couple of months, Europe has promised it will lead the world on AI, this announced seems nothing but superficial. These generic comments and guidelines should have been put out years ago, now is a time for action and a time for rules.

AI is already in the world and having a fundamental impact on our day-to-day lives. We might not realise it all the time, but it is increasingly interwoven into the services and products which we use each day. Now is the time for action from regulators, not posturing and pondering.

Speed more than security is key for eCommerce success

New research from GoCardless has suggested extended authentication processes is costing online retailers sales as a notable chunk of consumers favour convenience over security.

Security is an on-going issue in the technology industry and while it should have been addressed years ago, it wasn’t. What we are now seeing it a desperate attempt to catch-up and put in place the technologies, processes and regulations to create what would be deemed an acceptable level of security. The result is a tsunami of changes which are causing complications all over the place.

One such example is the introduction of Strong Customer Authentication (SCA), a European-wide initiative to set in place two-stage verification for authentication of online purchases. The rules are slated for September and will likely see some notable changes in the way retailers engage customers.

Worryingly for the retailers, the GoCardless research suggests consumers are already frustrated with the authentication process as is. Any further changes could see heightened churn on sales.

According to the research, 43% of UK respondents to the survey said ‘speed and ease of payment’ was the most important factor when purchasing products online. The numbers are certainly smaller in other European nations, but very notable. Security is a consideration in all the markets in question, as you can see in the table below, though it seems there is only a certain amount consumers will stomach before looking elsewhere.

UK France Germany Spain
Speed is the most important factor 43% 32% 33% 17%
Security is a large consideration 55% 62% 61% 58%
Abandoned purchase because of security process 44% 33% 48% 40%

As you can see from the final row, a notable number of customers can become easily frustrated by extended security, validation and authentication processes. This might be down to the idea that too much is being thrown at the consumer at once.

Generally, consumers seem to favour being eased into a change. Take Facebook for example, what the platform is today is remarkably different from when it started, and this includes the amount of personal information which is being requested and processed. If all of these changes were introduced at once, there would have been uproar, but like the boiling frog, consumers were eased into the current situation.

For years, the technology industry ignored the importance of security, refusing to make it a priority voluntarily. Now governments and regulators are stepping in to force through changes; it might give the consumer a shock and a negative experience.

“In the eyes of UK consumers, convenience is virtually neck and neck with security in terms of importance when shopping online,” said Duncan Barrigan, VP Product at GoCardless. “Protecting shoppers from fraud when they pay online is crucial, and new regulation which achieves this should be welcomed.

“The flipside is that these measures, if implemented badly, could significantly disrupt consumers and lead to a significant conversion drop off for businesses. Online retailers must work with their payment providers to find the right balance between security and convenience at checkout – not waking up to this new reality could seriously harm e-commerce. Major retailers like Amazon are already sounding the alarm.”

Europe missing its ultrafast targets

With only 20% of European customers adopting broadband services over 100 Mbps, the European Commission is falling behind its own targets with six months to go.

While the targets are certainly ambitious, the European Commission has decided it would like to have 50% of all broadband customers across the bloc subscribing to 100 Mbps by 2020. With only 20% subscribing to an ultrafast service, it looks like it is becoming a big ask as we head towards the mid-point of the year.

There will of course be numerous reasons for a lack of adoption. Some will suggest the telcos are not deploying suitable infrastructure to enough people, while others will say they are charging too much. That said, a more sensible explanation is that irrelevant as to how cheap a 100 Mbps service is, it is still too much; why would a normal person need such speeds today? Without the applications, customers would be paying for redundant speed.

What is worth noting is that connectivity is improving on the whole. The availability of ultrafast broadband has increased to 60% across Europe, up from 57% in 2017, while there have been gains on the mobile side as well. The DESI Report claims that 4G coverage is now almost universal in European homes, while rural coverage is also increasing.

Europe told it can force Facebook to do more on illegal content

An opinion revealed by Advocate General Macief Szpunar, a prominent advisor to the European Commission, has suggested Facebook can be forced to do more to crack down on illegal and offensive content.

Limiting and blocking content on social media sites is an incredibly difficult topic to address. Not only do you have the risk of alienating individuals by drawing a strict line on what is deemed offensive, there is also the danger of invading freedom of speech rights. Facebook has always tried to stay at arm’s length from the tricky conundrum, but the opinion from Szpunar might offer ammunition for red-tapers throughout Europe to hold the social media giant more accountable.

The document states:

“In today’s opinion, Advocate General Maciej Szpunar considers that the Directive on electronic commerce does not preclude a host provider which operates a social network platform, such as Facebook, from being ordered, in the context of an injunction, to seek and identify, among all the information disseminated by users of that platform, the information identical to the information that has been characterised as illegal by a court that issued that injunction.”

As with most legal matters, this is a highly complicated and nuanced case, not only because it deals with the intersection of speech moderation and freedoms, but also due to the fact that social media platforms are incredibly complex machines. It is not straight-forward applying new rules, especially when you consider the platforms are extended over multiple geographies, languages and legal jurisdictions.

In short, Szpunar suggests social media platforms can be forced to remove all content which is related to illegal content, and that the conditions can be applied to Facebook globally.

This case dates back to 2017 and a speech made by Austrian Green Party Eva Glawischnig. Glawischnig claimed that comments about her made on Facebook were defamatory, to which an Austrian court agreed, and Facebook was ordered to take down the posts. Facebook complied, but only in Austria, to which Glawischnig argued the action should be extended across the entire social media platform while also including any verbatim re-postings.

Further filings were made to the Court of Justice for the European Union, leading towards Szpunar’s opinion today. What is worth noting is that the court does not have to follow the opinion of Szpunar, but in most cases it does follow the opinions of the eleven appointed Advocate General’s.

In the opinion of Szpunar, Facebook can be told to spread the net further, suggesting there are no limitations in forcing social media platforms to comply globally, while it will also have to do more to remove identical content which has already been deemed illegal by the courts.

What some might find more objection to is some slight mission creep from the European Commission. The opinion suggests there is no reason Facebook cannot be forced to apply these rules globally, though over sovereign nations might object to be told how to govern their own states. This is another very sensitive area, especially at a time where international relations are fragile.

Europe is taking a much more stringent stance against the internet giants than many other nations around the world, though we suspect there will be critics suggesting it is overstepping the mark here. And to be fair, they would have a point. What right does Europe have in imposing its own opinions on free speech principles on other territories? Why should their approach be considered more appropriate than anyone elses?

This is not the first time it has been suggested Europe is overstepping the mark. The same Advocate General came to the conclusion Europe had the right to force Google to remove archive listings of some news stories on a global level last year.

In this case, two businessmen had served criminal convictions, but were arguing the cases should be deindexed as the punishment had been served, and there was a risk of future employment being impacted should the stories have been discovered.

This is a slightly different case, as the ‘right to be forgotten’ saga with Google leans on the principles of privacy and the fact the two individuals in question had been ‘rehabilitated’. The complication with Glawischnig is that it is based on the legal definition of defamation, which might vary from jurisdiction to jurisdiction.

Alongside the implications to freedom of speech, this does also force Facebook to become a more active moderator of the content which is published on its platform.

This is where Facebook has been able to dodge many bullets over the past decade; it is not a publisher, therefore should not be held accountable for the opinions, and management of those opinions, which are published on its platform. It has painted itself as the role of curator and platform provider, avoiding the term ‘publisher’, as this would imply it has more influence and control than it wants to have.

The selling point of many social media platforms is that it is ‘unmoderated’ content. Users can put anything they want online. In the early days, this freedom democratized opinion though there are now elements of society who use the platforms in ways deemed nefarious or contrary to societal benefit.

Not only does Facebook want to avoid the difficulty and legal complexities of becoming a more active moderator of content, it wants to remain true to initial function of the platform; freedom to do and say whatever the user wishes. This was attractive to users in the first years, and should Facebook want to re-engage the masses, it will have to offer an experience which is appealing.

And while the technology giants might not like the direction this case is heading, some governments certainly will.

Governments around the world are increasingly looking for ways to strengthen the grip they have on the internet industry. Part of this will be down to abuse of tax loopholes, some will be protecting the innocence of those reading material online and a slice is on increasing the capabilities of intelligence agencies and police forces.

There are of course numerous different approaches from governments when addressing illegal content and hate speech. Australia, for example, has passed the Sharing of Abhorrent Violent Material bill imposing harsh penalties on those who do not take down what the law decides is ‘abhorrent violent conduct’, though it still has it critics. In this case, there is some sympathy for the internet giants as everything they currently do is reactive, reliant on complaints from those who are already exposed to the materials.

Germany was one of the first, and strictest, countries to tackle the conundrum, while the UK has developed its own AI to identify the content which it has deemed as terrorist. The US is taking a much more hands-off approach, though there are clearly PR points to win for politicians here; the Senators and Congress representatives might find themselves being drawn into the debate before too long.

This is an immensely complicated area of social media. The courts will only want to make firm judgments when absolutely necessary, as many are cautious when it comes to precedent. Anything written in stone can be cleverly massaged by well-paid lawyers, expertly practiced in the field of nuance, to mean a variety of things.

This is also not the final judgment. The Court of Justice for the European Union usually follows the Advocate General’s opinion three to six months later, leaving plenty of opportunity for different arguments to be heard.

We’ve been keen to avoid the word censorship in this article, as it can be a very inflammatory way to describe an incredibly complicated and sensitive issue, but this is of course one of the risks which the world trends when you impose restriction on freedom of speech.

Pompeo reiterates intelligence threat over Huawei

US Secretary of State Mike Pompeo is on another European road trip just to make sure those rational and pragmatic Europeans understand the threats from the US.

Speaking at a press conference with German Foreign Minister Heiko Maas, Pompeo underlined the US stance with the thickest of marker pens and reiterated the US threats with serious authority.

“We also had part of conversations about other elements of China,” said Pompeo. “We’ve been pretty clear about how we view the risk connected to Huawei and 5G infrastructure. The internet of the future must have Western values embedded in it.”

Pompeo’s first mission is to address the Chinese threat, of which Huawei is considered a major cog, but that is not taking up all of his time.

“We have a second mission which is to educate our friends about these risks as well,” said Pompeo. “We talk to them plainly and openly. They’ll make their own decisions, Germany is thinking about it, but we will speak to them openly about the risk we see and how we think they can be mitigated. In the case of Huawei, our concern it that it is not possible to mitigate those [risks] anywhere inside of a 5G network.”

Pompeo clearly feels his European counterparts do not comprehend the severity of the Huawei threat, and he has taken it upon himself to lead the crusade in educating the world on the risk.

And if the world doesn’t understand, access to US intelligence will be withdrawn.

One of the issues which might cause further friction is the inability for the US Government to distinguish between core and non-core elements of the network. This is what Europe is basing its decisions on, allowing Huawei to operate in the ‘dumb’ parts of the network but not the core. For the US, this is not good enough, and never will be.

We expect a lot more huffing and puffing from the White House propaganda machine and the fear-mongering puppets of Trump over the next couple of weeks, though it will be interesting to see whether the US follows up on threats to reduce visibility of its intelligence data.

Vivendi media mission continues rolling through Europe

Vivendi-subsidiary Canal Plus has announced the €1 billion acquisition of pay-TV operator M7, expanding the business into seven new European markets.

The deal, which is still subject to approval from the European Commission, will take Vivendi across the borders of the Netherlands, Belgium, Austria, Czech Republic, Slovakia, Hungary and Romania. M7’s subscriptions currently total more than three million across its European footprint and revenues of just over €400 million.

“We are particularly pleased with this acquisition project made possible by Vivendi. The operation would allow Canal Plus Group to approach 20 million subscribers worldwide,” said Maxime Saada, Chairman Canal Plus’ Board of Directors.

“Our global subscriber base will have almost doubled in five years, with a clear acceleration starting in 2015. This major operation will allow us to strengthen our distribution capacity in order to leverage content originating from our library and our numerous production operations in Europe.”

The Vivendi media mission is not a secret in the industry. Acquisitions have been somewhat of a guilty pleasure for the business, and this move is intended to further increase the influence of Canal Plus over the European continent, and worldwide. With M7 in the armoury, Canal Plus will have 20 million subscribers worldwide, including 12 million in Europe.

M7 is currently an aggregator of various local and international content, though the acquisition would create additional avenues for Canal Plus to distribute its own content. Canal Plus claims it currently spends €3 billion a year creating content, putting it in the same league as Netflix when you factor in the scale of the subscription bases (Netflix spent $8 billion in 2018 with a subscriber base of roughly 140 million).