Europe decides to punish Broadcom before its investigation is complete

The European Commission is in the process of investigating Broadcom for anticompetitive behaviour, but has imposed sanctions in advance of any conclusion.

Broadcom is considered to be dominant in the market for set-top box chips and some fixed line modems. The EC reckons it’s abusing that dominant position by persuading customers to go all-in on its products, thus unfairly restricting competition. The investigation was opened last June but the EC is so concerned about the effects of these practices that it has ordered Broadcom to stop them immediately.

“We have strong indications that Broadcom, the world’s leading supplier of chipsets used for TV set-top boxes and modems, is engaging in anticompetitive practices,” said EU Competition Commissioner Margrethe Vestager. “Broadcom’s behaviour is likely, in the absence of intervention, to create serious and irreversible harm to competition. We cannot let this happen, or else European customers and consumers would face higher prices and less choice and innovation. We therefore ordered Broadcom to immediately stop its conduct.”

The key word in that quote is ‘likely’. Vestager seems to be saying that mere suspicion is now reason enough for the EC to act against companies pre-emptively, in anticipation of the outcome of its investigation. What if the investigation concludes in favour of Broadcom? This seems to be a dangerous erosion of due process and an ominous precedent for any company that does business in Europe.

Broadcom now has 30 days to do the following or else:

  • Unilaterally cease to apply the anticompetitive provisions identified by the Commission and to inform its customers that it will no longer apply such provisions; and
  • Refrain from agreeing the same provisions or provisions having an equivalent object or effect in other agreements with these customers, and refrain from implementing punishing or retaliatory practices having an equivalent object or effect.

Those restrictions apply until the EC get around to concluding its investigation or three years, whichever is sooner. It’s common practice for big companies to chuck lawyers at these kinds of investigations in order to drag them out, so you can see where the EC is coming from with this kind of pre-emptive action. But due process exists for a reason and the EC seems to be saying it’s better that a few innocent companies may be hurt than any guilty ones go unpunished.

Europe’s security vision undermined by lack of compulsory requirements

For the most part, companies have to be forced to take security seriously, but perhaps these changes are on the horizon in Europe at least.

Cybersecurity is always a topic of conversation which is never too far away, though you have to question the substance behind the statements. Security and privacy are always top priorities for a company if you listen to the CEO, though the fact that security breaches still persist undermines these bold claims.

To be fair to the companies involved, this is a fast-paced and ever evolving aspect of the technology landscape. Is there such thing as 100% secure? No. Can the companies do more to protect their customers? Yes.

This is where the European Commission plays a critical role in developments. Speaking at Broadband World Forum in Amsterdam, Julie Ruff. Directorate for Digital Society, Trust & Cybersecurity, outlined the challenges, as well as the ways and means to combat these threats, and the telcos will be central to these efforts.

“First of all, they are obvious targets for cyber-attacks [the networks], very attractive targets,” said Ruff.

“The networks can be used as vectors for attack.”

The network is the lynchpin for tomorrow’s economy, the backbone of the virtual world. It’s the digital superhighway which connects anything, everything and everyone. The networks owners need to lead from the front, but they are not the only character in this nefarious saga.

As part of the latest iteration of the Cyber Act, the European Commission has introduced a certification framework for ICT digital products, services and processes. This framework will provide a comprehensive set of rules, technical requirements, standards and procedures to ensure consumers and businesses are protected from the dangers lurking in the dark corners of the world wide web.

This is all well and good, but here is the major problem; the certification process is currently voluntary.

At the largest companies, resources can be redirected towards such initiatives to ensure the demands and nuances of the framework are being adequately met. However, this is not going to be the biggest problem the digital economy will face. The start-ups and SMEs, those who can easily find other means to spend valuable and limited funds, will not voluntarily direct investment towards cost-centres and away from profit-builders.

However, with more risks being realised further afield in the ecosystem, a comprehensive approach to security is needed everywhere and anywhere. As Ruff pointed out during her presentation, the interconnected nature of the digital economy means that cybercriminals can infiltrate networks through weak points in the chain.

This is where the European Commission needs to move forward to ensure the certification framework is compulsory not voluntary. It might come as a financial burden to the start-ups, but it is the only way to most effectively mitigate risk. The investments being made by multi-nationals and telcos could be completely undermined by a rogue device connected to the network.

For the digital economy to be anywhere near ‘safe’, connected devices, whatever they may be, need to be secure out of the box and providers need to ensure timely and regular security updates. Unfortunately, this perfect scenario can only be achieved through effective regulation and a compulsory certification framework.

A good vision has been outlined by the European Commission, but this needs to be backed-up by effective and compulsory regulation.

Europe publishes 5G security report to state the obvious

After months of deliberation and consideration, the European Commission has published a report which comes to some fairly obvious conclusions on 5G security.

Although few would have expected something substantial from the bureaucrats, the published report seems to offer little to no insight or additional information. Once again, the Brussels brigade is showing how painfully slow progress can actually be.

“Today, Member States, with the support of the Commission and the European Agency for Cybersecurity published a report on the EU coordinated risk assessment on cybersecurity in Fifth Generation (5G) networks,” a statement reads.

“This major step is part of the implementation of the European Commission Recommendation adopted in March 2019 to ensure a high level of cybersecurity of 5G networks across the EU.”

In short, the report comes to a few conclusions:

  • Poor software development process could be a danger
  • Certain pieces of network equipment or functions are becoming more sensitive, base stations for example
  • State-backed threats are the highest concern
  • Telcos are too dependent on a small number of suppliers, some of whom could be considered a security right
  • Threats to communications infrastructure should be considered a security risk

Amazingly, the European Commission has managed to create a 33-page report, which says nothing significant or particularly useful. Everything which has been stated is already known by those paying attention, though we suspect there would be a few politicians who would benefit from reading the report.

So, what does the report actually mean? Nothing for the moment. If anyone was expecting any action will be wildly disappointed, though the European Commission is suggesting member states create action plans to compensate for the increased risk. As you can imagine, there is little rush to complete these action plans, as the European Commission has given a deadline of October 1, 2020.

Every now and then the European Commission reminds us how painful bloc-wide bureaucracy can be, and this report has proven to be an excellent example. At some point in the future, the bureaucrats might create official security guidelines and regulation for member states to follow, though this is unlikely to be done in a timely manner.

Europe steps up its censorship efforts

The European Commission wants to pay people to help ensure only the kind of information it approves of is allowed to be published online.

The initiative is being called the European Digital Media Observatory and it is the continuation of a digital censorship project the EC has been working on for some time. The stated aim is to counter ‘disinformation’, which is defined as “verifiably false or misleading information that is created, presented and disseminated for economic gain or to intentionally deceive the public.”

On the surface what’s not to like about this? Everyone knows the internet is awash with misleading and biased information that presumably, at least in part, is published with the aim of persuading the public of a certain point of view. If people are given the wrong information then they might make the wrong electoral decisions and that would be bad.

The main problem with censorship is subjectivity. Who decides what is false or misleading and who can possibly be sure of the motives for someone else’s actions? The answer to that question in this case seems to be anyone who fancies €2.5 million of European public money, because today the EC published a call for tenders to create the first core service of this new censor.

“The European Digital Media Observatory will allow fact-checkers and academic researchers to bring together their efforts and actively collaborate with media organisations and media literacy experts,” said the announcement. Don’t worry folks, the experts have got this, you’ll only get the purest, most correct information from now on.

The inclusion of the private sector in this project may be designed to create the impression of neutrality as well as expertise, but whoever wins the tender will be acutely aware of who pays their salary. Can we be sure that suspected disinformation which is helpful to the EU will be treated with the same severity as that which is harmful to it? The best counter to disinformation is public scrutiny, not censorship.

Politics is starting to turn in favour of telco – ETNO

Despite the promises made by politicians, few in the telco, technology or media industry would believe politics is designed to help, but ETNO think the tides are turning.

At the 5G Core conference in Madrid this week, much of the attention has been directed towards the technological side of the business. Few would complain about this bias, it is a technology conference after all, however there has been a reminder of the challenging element of politics.

“We can all agree that 5G is a strategic challenge for Europe,” said Lise Fuhr, Director General of ETNO. “But there is another part and that is what is role of politics, policy and society? What are the obstacles and enablers of 5G? How do we partner with the different stakeholders to make 5G happen in a fast way?”

As mentioned above, almost every politician who is worth his or her salt has been breaching the benefits of a more favourable regulatory and policy environment to facilitate investment in the TMT segments, but there seem to be few real-world benefits. This however might well change in the near future.

A good sign of this optimistic future are the new appointments at the European Commission.

On November 1, Ursula von der Leyen will assume office as the new President of the European Commission. Although von der Leyen is a career politician, she first assumed political office in 2001, she has at least made the advancement of the digital economy in Europe a priority.

In her ‘manifesto’, future-proofing the European economy for the digital age was listed as the third priority. 5G is a key component of this message from von der Leyen, as is artificial intelligence and high-performance computing. von der Leyen might not have experience in the technology industry, but at least she realises the importance and is prioritising advancement in the field.

The second appointment is Sylvie Goulard as Commissioner for the Internal Market. In this role, Goulard has been tasked with overseeing the progression towards a digital economy, with one component to ‘enhancing Europe’s technological sovereignty’ and another to define ‘standards for 5G networks and new-generation technologies’.

From Fuhr’s perspective, this is a sign of positive intent. From the outset of her tenure, von der Leyen has set digital as a top priority. It is an add-on as it might have been considered for other politicians, it isn’t necessarily a plug for headlines, it is a proactive progression towards the digital economy.

Looking at the policy side, the European Electronic Communications code is ‘a compromise’ according to Fuhr. The policy could have been more ambitious to help the industry, but at least it isn’t doing any harm. New spectrum will be released, ownership of licences has been extended for telcos and there is positive work in the small cells area as well.

While these are not definite signs politics and policies are going to be enablers of digital progress, there is plenty of opportunity for something to go wrong, all the right noises are being made by the European Commission. There is still plenty of risk, but it looks promising.

Apple and Ireland begin appealing €14.3bn tax bill

Lawyers representing Apple and the Irish Government has begun their arguments in the EU’s lower General Court in an attempt to protect the suspect corporate tax environment.

In 2016, the European Commission ordered the Irish Government to collect back-taxes off Apple to the tune of €14.3 billion, including interest. Apple does not want to pay tax. Ireland does not want to collect it. Europe wants a level playing field. The lawyers are looking forward to nuance to bolster their bank accounts.

During the opening arguments, Apple’s lawyers suggested the European Commission decision “defies reality and common sense,” according to Reuters. Both the iPhone manufacturer and the Irish Government will argue against the decision to tax environment contravenes state aid rules.

Let’s be clear. Ireland is a tax haven. It is facilitating corporate tax avoidance. It is helping corporates collect greater profits without rewarding the societies they strain. Irish Government officials should be embarrassed they are helping technology giants abuse its European partners, the very same European partners which bailed it out of financial doomsday a decade ago.

This is a selfish position, and just at the time when the country is looking to Europe to protect it as Brexit looms large on the horizon.

Some might argue the Irish Government is entitled to charge whatever tax it wants. However, a modern society works because the general public and corporations pay taxes. It pays for roads, schools, hospitals, police officers and postal workers. There are technology giants out there who are asking consumers to strain their wallets further each year and care less about their right to privacy, but they are not willing to contribute to the societies which are fuelling the monstrous profits reported every three months.

With international borders being broken down, much to the distaste of some, irregular taxation policies can be taken advantage of. This is what is happening here. It beggars belief that Ireland can argue the benefits of the single economy, and still maintain this position, weakening the position of partners, depriving them of much needed taxes.

This is not the position the European Commission has taken, but it is the one each of Ireland’s partners in Europe should. Why should Ireland be able to collect all the benefits of Apple’s assaults on the European digital economy when it is citizens of every other nation which is fuelling the iLeader’s growth?

For some, it might sound bizarre that the Irish Government doesn’t want to collect €14.3 billion off Apple, but there are two reasons for this.

Firstly, if the Irish lawyers were not to fight back against the enforced tax run, it is effectively conceded to the assertion that it is a corporate tax haven. The last thing the Irish Government wants to do is admit that it is helping the already richly rewarded residents of Silicon Valley rip-off neighbouring governments further with creative tax strategies.

Secondly, Ireland needs to ensure it is viewed as a friendly corporate-tax environment moving forward if it is to continue to attract corporations to its borders. Ireland doesn’t necessarily have the best talent, it doesn’t have the largest economy and it doesn’t have a local supply chain for manufacturing. It needs a plug to interest the likes of Apple, Facebook, IBM, Intel, Twitter, Pinterest, PayPal and Amazon to house their European HQ in the country.

The value of the technology industry to both the Irish Government and society should not be undervalued. The Irish economy entered severe recession in 2008, and then an economic depression in 2009. The country was in tatters, though it was saved by the technology industry.

Over the last decade, technology giants thrived in the tax haven, creating new jobs directly and indirectly, and continues to be one of the biggest drivers today. Silicon Docks is as important to Dublin as Silicon Valley is to California.

That said, the European Commission does not agree this dynamic should be allowed to continue.

Should the Irish Government continue this favourable tax regime for certain companies, a competitive advantage is offered. The Commission, ably led by Margrethe Vestager, has been tackling anti-competitive business practises for years. If such a monstrous company like Apple is given a competitive advantage, state aid to run riot, start-ups will always be on the back-foot. Competition will likely never emerge, and the consumer will be in a precarious position.

Over the next couple of days, lawyers representing Apple and the Irish Government will argue against the opinion of the European Commission, attempting to overturn an order to collect back-taxes and create a more reasonable tax environment. It will argue that it is perfectly reasonable for it to help Apple bleed the consumer dry and then hide profits from governments who are asking for a fair contribution back to society to pay nurses.

Ireland should be embarrassed.

Silicon Valley-busting Euro Commissioner gets additional digital role

Not content with continually fining US tech companies in her role as European Competition Commissioner, Margrethe Vestager is now in charge of all things digital too.

The extra responsibility was bestowed upon her by new EC President Ursula von der Leyen, who was given the role to allow her predecessor Jean-Claude Juncker to devote himself entirely to Oenology. Von der Leyen had had an early cabinet reshuffle in which she gave her favourite EVPs some extra work on top of their day jobs.

So Frans Timmermans gets a bunch of green stuff on top of his work covering regulation, rule of law, etc, Valdis Dombrovskis, adds some kind of watered-down socialist agenda to his normal work keeping an eye on the financial side of things and Vestager is being asked to keep a special eye on the entire digital sector, which is pretty much what she had already been doing as competition commissioner anyway.

“Digitalisation has a huge impact on the way we live, work and communicate,” said von der Leyen, showing the kind of vision that propelled her to the top of Europe. “In some fields, Europe has to catch up — like for business to consumers — while in others we are frontrunners — such as in business to business. We have to make our single market fit for the digital age, we need to make the most of artificial intelligence and big data, we have to improve on cybersecurity and we have to work hard for our technological sovereignty.”

This will have been the last thing the likes of Google and Facebook wanted to hear as their own country gears up to punish them for abusing their dominant positions in various digital markets. Vestager couldn’t have hoped for a better start to her new role than to be able to watch 50 AGs go after Google, and will presumably watching closely for top tips when she gets her turn.

Europe set to join the facial recognition debate

With more authorities demonstrating they cannot be trusted to act responsibly or transparently, the European Commission is reportedly on the verge of putting the reigns on facial recognition.

According to reports in The Financial Times, the European Commission is considering imposing new rules which would extend consumer rights to include facial recognition technologies. The move is part of a greater upheaval to address the ethical and responsible use of artificial intelligence in today’s digital society.

Across the world, police forces and intelligence agencies are imposing technologies which pose a significant risk of abuse without public consultation or processes to create accountability or justification. There are of course certain nations who do not care about privacy rights of citizens, though when you see the technology being implemented for surveillance purposes in the likes of the US, UK and Sweden, states where such rights are supposedly sacred, the line starts to be blurry.

The reasoning behind the implementation of facial recognition in surveillance networks is irrelevant; without public consultation and transparency, these police forces, agencies, public sector authorities and private companies are completely disregarding the citizens right to privacy.

These citizens might well support such initiatives, electing for greater security or consumer benefits over the right to privacy, but they have the right to be asked.

What is worth noting, is that this technology can be a driver for positive change in the world when implemented and managed correctly. Facial scanners are speeding up the immigration process in airports, while Telia is trialling a payment system using facial recognition in Finland. When deployed with consideration and the right processes, there are many benefits to be realised.

The European Commission has not confirmed or denied the reports to Telecoms.com, though it did reaffirm its on-going position on artificial intelligence during a press conference yesterday.

“In June, the high-level expert group on artificial intelligence, which was appointed by the Commission, presented the first policy recommendations and ethics guidelines on AI,” spokesperson Natasha Bertaud said during the afternoon briefing. “These are currently being tested and going forward the Commission will decide on any future steps in-light of this process which remains on-going.”

The Commission does not comment on leaked documents and memos, though reading between the lines, it is on the agenda. One of the points the 52-person expert group will address over the coming months is building trust in artificial intelligence, while one of the seven principles presented for consultation concerns privacy.

On the privacy side, parties implementing these technologies must ensure data ‘will not be used to unlawfully or unfairly discriminate’, as well as setting systems in place to dictate who can access the data. We suspect that in the rush to trial and deploy technology such as facial recognition, few systems and processes to drive accountability and justification have been put in place.

Although these points do not necessarily cover the right for the citizen to decide, tracking and profiling are areas where the group has recommended the European Commission consider adding more regulation to protect against abuses and irresponsible deployment or management of the technology.

Once again, the grey areas are being exploited.

As there are only so many bodies in the European Commission or working for national regulators, and technology is advancing so quickly, there is often a void in the rules governing the newly emerging segments. Artificial intelligence, surveillance and facial recognition certainly fall into this chasm, creating a digital wild-west landscape where those who do not understand the ‘law of unintended consequence’ play around with new toys.

In the UK, it was unveiled several private property owners and museums were using the technology for surveillance without telling consumers. Even more worryingly, some of this data has been shared with police forces. Information Commissioner Elizabeth Denham has already stated her agency will be looking into the deployments and will attempt to rectify the situation.

Prior to this revelation, a report from the Human Rights, Big Data & Technology Project attacked a trial from the London Metropolitan Police Force, suggesting it could be found to be illegal should it be challenged in court. The South Wales Police Force has also found itself in hot water after it was found its own trials saw only an 8% success rate.

Over in Sweden, the data protection regulator used powers granted by GDPR to fine a school which had been using facial recognition to monitor attendance of pupils. The school claimed they had received consent from the students, but as they are in a dependent position, this was not deemed satisfactory. The school was also found to have substandard processes when handling the data.

Finally, in the US, Facebook is going to find itself in court once again, this time over the implementation of facial recognition software in 2010. A class-action lawsuit has been brought against the social media giant, suggesting the use of the technology was non-compliant under the Illinois Biometric Information Privacy Act.

This is one example where law makers have been very effective in getting ahead of trends. The law in question was enacted in 2008 and demanded companies gain consent before any facial recognition technologies are introduced. This is an Act which should be applauded for its foresight.

The speed in which progress is being made with facial recognition in the surveillance world is incredibly worrying. Private and public parties have an obligation to consider the impact on the human right to privacy, though much distaste has been shown to these principles in recent months. Perhaps it is more ignorance, short-sightedness or a lack of competence, but without rules to govern this segment, the unintended consequences could be compounded years down the line.

Another point worth noting is the gathering momentum to stop the wrongful implementation of facial recognition. Aside from Big Brother Watch raising concerns in the UK, the City of San Francisco is attempting to implement an approval function for police forces, while Google is facing an internal rebellion. Last week, it emerged several hundred employees had signed a petition refusing to work on any projects which would aid the government in tracking citizens through facial recognition surveillance.

Although the European Commission has not confirmed or denied the report, we suspect (or at the very least hope) work is being taken on to address this area. Facial recognition needs rules, or we will find ourselves in a very difficult position, similar to today.

A lack of action surrounding fake news, online bullying, cybersecurity, supply chain diversity and resilience, or the consolidation of power in the hands of a few has created some difficult situations around the world. Now the Commission and national governments are finding it difficult to claw back the progress of technology. This is one area where the European Commission desperately needs to get ahead of the technology industry; the risk and consequence of abuse is far too great.

Europe not happy about Czech network sharing arrangements

The Czech Republic’s two dominant mobile operators are sharing one network and the European Commission thinks this is taking things too far.

When the EC thinks something might be dodgy, but hasn’t totally decided yet, it likes to kick things off by sending a statement of objections to all concerned. This puts them on notice that it’s looking into the situation and initiates an investigation. Hence the network sharing arrangement between the Czech versions of O2 and T-Mobile is now under the EC microscope.

“Operators sharing networks generally benefits consumers in terms of faster roll out, cost savings and coverage in rural areas,” said Commissioner Margrethe Vestager. “However, when there are signs that co-operative agreements may be harmful to consumers, it is our role to investigate these and ensure that markets indeed remain competitive. In the present case, we have concerns that the network sharing agreement between the two major operators in Czechia reduces competition in the more densely populated areas of the country.”

This is an intriguing conundrum; how can something good suddenly become bad when it’s done too much? To be fair, between them T-Mobile and O2 account for almost three quarters of Czech subscribers. If the only other MNO of note – Vodafone – is frozen out of this arrangement that would appear to put it at a massive disadvantage. The EC is also concerned that their collective dominance means they have a disincentive to provide a decent service.

Europe opens consultation on uniform termination rates

The European Commission has opened up a new public consultation which eases the bloc towards more regulation and towards a maximum EU-wide mobile voice termination.

While it might not be the sexiest aspect of the telco world, termination rates is an issue which has yet to disappear despite efforts of the European Commission to create a bloc where all the member states get along.

In short, maximum EU-wide mobile voice termination, both fixed and mobile, are necessary when an operator needs to connect a customer where the receipt of the call is on someone else’s network. As few operators have 100% geographical coverage in their markets, this is an example of coopetition, where the telcos work together to ensure commitments can be delivered to the customer.

However, in some markets, though the Commission is steering clear of finger pointing, there might be a dominant player with a network which exceeds anything rivals could muster together, opening the door to market abuse. The European Commission is particularly sensitive to monopolies or any scenario which could lead to distorted competition, therefore this seems like a perfect opportunity to step-in with the red tape.

Should there be an instance where a dominant market leader looks to abuse this position by increasing termination charges for rivals, we suspect the cost could be passed onto customers. This could potentially harm competition by forcing more subscriptions onto the dominant players network, further distorting the concept of reasonable.

Although this consultation will aim to create a compulsory and consistent approach to termination rates across the bloc, it is not the first time Europe has attempted to intervene.

In 2009, the European Commission published a recommendation with the aim of achieving consistency between the various approaches applied by national regulatory authorities when regulating wholesale termination rates. Of course, the word you have to take note of is Recommendation. Divergences between the maximum termination rates in Member States still remain, and it seems Brussels has had enough.

Interestingly enough, one of the reasons the European Commission is allegedly looking into this area once again is the idea of cross-border competition. Although this is an assumption on our part, looking to increase cross-border competition in the telco space suggests there is one-eye on moving towards pan-European operators. This in turn could lead to greater market consolidation across the bloc.

The move towards more pan-European operations is something which would certainly be of interest to the telcos, though there are too many variances when it comes to the regulatory landscape. It should of course be considered a goal for those who have the financial capabilities, as scale offers numerous benefits when it comes to the business of making money.