UK telcos are potentially helpless in the European roaming debate

Brexit is now a reality for the UK, and despite the telcos asserting their commitments to the roaming status quo, the financial burdens could become too great to swallow.

With the January 31st deadline come and gone, the UK Government has started to warn its citizens of what Brexit actually means. Very little will change over the next 11 months, but come December 31st, the ‘grace period’ will have concluded and change will be a reality.

New passports might have to be ordered, the European Health Insurance Card (EHIC) will no-longer be valid, an international driving permit (IDP) might have to be sought and the Government cannot guarantee you won’t be charged a small fortune for cruising down the digital highways.

While it might seem like another era, EU roaming regulations were only introduced in 2017. Some telcos had built ‘roam like at home’ features into tariffs already, but this was a market reaction to impending regulation. Until the EU started making a fuss, the telcos and the GSMA were more than happy to charge ludicrous amounts and attempt to justify them in a truly laughable manner.

Using data when travelling to Europe has become almost second nature to UK consumers nowadays and few would want to return to the days of huddling around the wifi hotspots. The UK telcos have been keen to point out there are no intentions to return to the dark days of ‘bill shock’, but soon it might be out of their control.

“At O2, we are committed to providing our customers with great connectivity and value when they travel outside the UK,” an O2 spokesperson said. “We currently have no plans to change our roaming services across Europe. We will be working closely with the UK government to try to maintain the current EU ‘Roam like at home’ arrangements once the UK leaves the EU.”

Vodafone and Three have also confirmed Brexit will not have an impact on EU roaming for their customers, while BT/EE are yet to provide comment.

The issue which is at the heart of this debate is how much control the UK telcos actually have.

As it stands, termination fees on international networks are strictly managed and limited by the European Commission. This will no-longer be the case for UK telcos come January 1st, 2021; European telcos will be free to charge whatever termination fees they see fit for their network.

In the years passed since the introduction of EU roaming rules, telcos have effectively seen reciprocal revenues for roaming, as it was simply a case of any individual is equal to any other on a different network, irrelevant of destination or origin. However, should some nations decide to raise the termination fees, the telcos will have to decide whether to absorb these costs or raise prices for consumers to compensate and maintain profitability. This is a ‘doomsday’ scenario, though we suspect it wouldn’t take long for telcos to realise absorbing the cost in some areas is not feasible.

As you can see from the table below, the numbers do not add up.

Country Visitors from UK Visitors to UK
Spain 15.6 million 2.53 million
Germany 2.8 million 3.26 million
France 8.6 million 3.69 million
Netherlands 2.7 million 1.95 million

The question which remains is how much European telcos will decide on charging for termination fees for UK customers and how the UK telcos will react. For any telco, simply watching costs go up and doing nothing is not an option. If there are more visitors from the UK than going the other direction, termination fees will start to add up.

What is worth noting is that some telcos in the UK are more at risk than others. As part of the Telefonica Group, O2 could be protected in some European nations, as would Vodafone, but the risk cannot be completely mitigated. There is no-such thing as a genuine pan-European network, and partnerships might well be tested.

Some might suggest there is an opportunity for the UK and Europe to strike a deal, and while this might be the case, there is one significant argument against it; why would Europe want to help a post-Brexit Britain?

Brexit has looked like a painful procedure to anyone watching. What the material impact will be is anyone’s best guess for the moment, but there are some aspects we already know. The legislative agenda has slowed due to a disproportionate amount of time being spend debating Europe. Relationships have been damaged. Corporations face a restructure of some degree. Travel to Europe will be different for consumers.

We do not know how this will impact our day-to-day lives exactly, but Europe will only help to a degree. If they help too much or it looks attractive, leaving the European Union might become an option for some nations. This is a very cynical view to take, but it is probably also true.

The other factor you have to consider is the work some countries will put in to protect valuable tourism industries. The Spanish, Greeks and Portuguese will not want to lose the money which flows from the UK into their own economies and might be in a position to negotiate their own localised deals.

This is very much crystal ball gazing at the moment. There might be a deal to protect the UK consumer, but it is just as likely that there will not. The European powers control the roaming fate of the UK consumer, not the UK telcos.

Happy New Year, Europe! And let’s learn AI

Finland is offering free AI primer to all EU countries, aiming to provide basic AI literacy to 1% of the Union’s total population by 2021.

As her EU Presidency comes to an end, Finland is offering the 513 million people living in the European Union a parting / Christmas / New Year gift: the Nordic country is making “Elements of AI”, an online introductory course for non-professionals, freely accessible to everyone in the Union’s 28 member states. The target is for 1% of the total population, or about 5 million people, to take the course by 2021.

The course was jointly developed by the University of Helsinki and the technology consultancy Reaktor. It started as a private initiative by the creators, offered for free to anyone interested. The programme was soon integrated in the country’s “national AI strategy”. The initial target of training 1% of the Finnish population was achieved just over six months after the programme started. Created in English, the course content was later made available in Finnish, which helped accelerate the uptake by more people. Later the content was also made available in Swedish (Finland’s second official language) and Estonian (native language of the largest EU immigration community to Finland). So far more than 220,000 people in over 110 countries have taken the course. “Over 40% of our course takers are women (more than doubling the global Computer Science average) and over 25% are over the age of 45” according to Reaktor.

“As our Presidency ends, we want to offer something concrete. It’s about one of the most pressing challenges facing Europe and Finland today: how to develop our digital literacy,” said Timo Harakka, Minister of Employment. Announced in Brussels recently, the content creators, working with EU partners, are going to translate the course into all the other 20 official languages in the EU. The budget of the project, estimated to run up to EUR 1.7 million ($2 million), will be paid for by the Ministry of Economic Affairs and Employment.

“Our investment has three goals: we want to equip EU citizens with digital skills for the future; we wish to increase practical understanding of what artificial intelligence is; and by doing so, we want to give a boost to the digital leadership of Europe,” Harakka said. “The significance of AI is growing. To make use of it, we need digital skills. Changing labour markets, the transformation of work, digitalisation and intensifying global competition all mean one thing for the EU: we must invest in people. Every EU citizen should have the opportunity to pursue continuous lifelong learning, regardless of age and educational background.”

Teemu Roos, Associate Professor in Computer Science at the University of Helsinki, said, “Our University has a policy of making its research and expertise benefit society at large. As research into artificial intelligence is highly advanced in Finland, it came naturally to us to make AI teaching more widely accessible.” Roos came up with the idea of training AI to all in 2017.

Reaktor shares this view. Megan Schaible, COO of Reaktor Education, wrote in a post that new technologies like AI “can feel like an insider’s club that has left the majority of us behind.” The AI for all initiative is therefore developed to “prove that AI should not be left in the hands of only a few elite coders.”

Other EU leaders may see technologies differently. Ina Schieferdecker, a junior minister in Germany’s Federal Ministry of Education and Research, and a PhD in computer science by training, recently expressed a more elitist view that Europeans do not need to understand AI to trust it.

Among University of Helsinki’s alumni is Linus Torvalds, creator of the Linux operating system.

 

You don’t need to understand AI to trust it, says German politician

The minister for artificial intelligence at the German government has spoken about the European vision for AI, especially how to grow and gain trust from non-expert users.

Prof. Dr. Ina Schieferdecker, a junior minister in Germany’s Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung, BMBF), who has artificial intelligence in her portfolio, recently attended an AI Camp in Berlin (or KI-Camp in German, for “künstliche Intelligenz”). She was interviewed there by DW (Deutsche Welle, Germany’s answer to the BBC World Service) on how the German government and the European Union can help alleviate concerns about AI among ordinary users of the internet and information technologies.

When addressing the question that AI is often seen as a “black box”, and the demand for algorithms to be made transparent, Schieferdecker said she saw it differently. “I don’t believe that everyone has to understand AI. Not everyone can understand it,” she said. “Technology should be trustworthy. But we don’t all understand how planes work or how giant tankers float on water. So, we have learn (sic.) to trust digital technology, too.”

Admittedly not all Europeans share this way of looking at AI and non-expert users. Finland, the current holder of the European presidency, believes that as many people as possible should understand what AI is about, not only to alleviate the concerns but also unleash its power more broadly. So it decided to give 1% of its population AI training.

Schieferdecker also called for a communal approach to developing AI, which should involve science, technology, education, and business sectors. She also demanded that AI developers should consider users’ safety concerns and other basic principles from the beginning. This is very much in line with what has been outlined in the EU’s “Ethics guidelines for trustworthy AI” published in April this year, where, as guideline number one, it is stated “AI systems should empower human beings, allowing them to make informed decisions and fostering their fundamental rights. At the same time, proper oversight mechanisms need to be ensured, which can be achieved through human-in-the-loop, human-on-the-loop, and human-in-command approaches.” As we subsequently reported, those guidelines are too vague and lack tangible measurements of success.

Schieferdecker was more confident. She believed when Germany, which has presumable heavily shaped the guidelines, assumes the European presidency in the second half of 2020, it “will try to pool Europe’s strengths in an effort to transform the rules on paper into something real and useable for the people.”

The interview also touched upon how user data, for example shopping or browsing records, are being used by AI in an opaque way and the concerns about privacy this may raise. Schieferdecker believed GDPR has “made a difference” while also admitting there are “issues here and there, but it’s being further developed.” She also claimed the government is working to achieve a data sovereignty in some shape and “offer people alternatives to your Amazons, Googles, Instagrams” without disclosing further details.

The camp took place on 5 December in Berlin as part of the Science Year 2019 programme (Wissenschaftsjahr 2019) and was co-organised by the BMBF and the Society for Information Technology (Gesellschaft für Informatik, GI), an industry organisation. The interview was subjected to a vetting process by the BMBF before it could be published. As DW put it, “the text has been redacted and altered by the BMBF in addition to DW’s normal editorial guidelines. As such, the text does not entirely reflect the audio of the interview as recorded”.

EU public WiFi program has met strong enthusiasm

The EU’s third round call for tenders to build public wifi networks has received over 11,000 applications in one day from municipalities across the Union.

The latest round of the WiFi4EU programme, which has 1,780 ‘vouchers’ to offer, was over-subscribed by more than six times during the one day window. More than 2,000 municipalities and municipality groups sent in their applications within two seconds of the opening of the call on 19 September, the Innovation and Networks Executive Agency (INEA), the EU Commission’s executive agency in charge of implementing the WiFi4EUEU said in a statement. The winners would be selected on first-come first-served basis, but geographical distribution would also be considered. Each member state has a minimum guarantee of 15 vouchers and a maximum cap of 142.

WiFi4RU was designed to build free, high speed, and secure wifi connections to the internet in public spaces across the member states, for example in parks, squares, libraries, public buildings, for residents and visitors alike. The recipients of the ‘vouchers’, each of which is worth €15,000, will then choose their subcontractors to build the access network, not in duplication with other existing free public or private wifi networks. The municipalities should commit to provide free internet access for at least three years, including free from advertising.

The total budget for WiFi4EU is €120 million, which is handed out in batches. After the first two rounds of applications, which took place in November 2018 and April 2019, a total of 6,200 vouchers have been awarded, worth a total value of €93 million. With €26.7 million earmarked for the current round of applications, the budget is all but spent. However, the INEA announced there will be new opportunities to apply in 2020.

The public-funded free internet access will be welcomed by municipalities that receive large numbers of tourists, especially from outside the EU, to whom roaming charges would be high. It would also be good news for entrepreneurs or freelance workers that need to meet in small groups and work on their computers. Despite that 4G and even 5G connection is becoming more ubiquitous, very few computers, where heavy computing is being done, will be equipped with cellular connection in the near future. Public libraries, for example, would become ideal places for such meetings. It is already a common practice in places like Finland’s public libraries.

The programme will be a small negative for some ‘start-up incubators’, which are barely more than a place that leases a work desk and a high speed internet connection. It may even be a minor negative for places like the coffee shops, where many individual entrepreneurs would go for the internet connection, at the price of a coffee.

In 2016, the European Union published its digital vision, titled “Connectivity for a Competitive Digital Single Market – Towards a European Gigabit Society”, by which it aimed to achieve internet access downlink speeds for all European households of at least 100 Mbps. The current WiFi4EU program is a good complement for the out-of-home environment, despite that there is no speed guarantee.

France told to stay in its lane over ‘right to be forgotten’

Google has won a landmark case against French regulator Commission nationale de L’informatique et des libertés (CNIL) over the ‘right to be forgotten’ rules.

After being fined €100,000 for refusing to de-reference certain references in markets outside of the CNIL jurisdiction, Google took the regulator to the Court of Justice of the European Union. And Europe’s top court agreed with the search giant.

“The operator of a search engine is not required to carry out a de-referencing on all versions of its search engine,” the court ruling states.

“It is, however, required to carry out that de-referencing on the versions corresponding to all the Member States and to put in place measures discouraging internet users from gaining access, from one of the Member States, to the links in question which appear on versions of that search engine outside the EU.”

In short, Google must de-reference inside the European Union, while also preventing internet users inside the bloc from accessing de-referenced content which is hosted elsewhere. Preventing those inside the European Union from seeing de-referenced content on versions of the search engine outside of the bloc will be complicated, there is always a workaround if you know what you are doing, however it is a win for Google.

For the CNIL, this is a humbling ruling however. The regulator has effectively been told to stick to its job and not try to force its will upon companies where it has no right to. And we whole-heartedly agree.

The French regulator has no right to impose its own rules on Google when it is operating in other sovereign nation states.

This case dates back to 2015 when the idea of ‘right to be forgotten’ was forced upon Google. In France, and generally across Europe, an individual or company can request Google de-reference search results which are damaging or false. This does not give individuals freedom to remove any reference to them which they don’t like, but it does allow for the removal of false information. These are reasonable rules.

In reaction to the rules, Google geo-fenced internet users in the European Union, but refused to de-reference information on versions of the search engine outside the bloc. This is a reasonable response and course of action.

This is what the French regulator had an issue with, though it has quite rightly been told to stay within its remit. This is a reasonable judgement.

What the French regulator was trying to do was wrong and would have set a damaging precedent. No government or regulator should be allowed to apply its own rules outside its border. The European Union is a tricky situation, as rules can be extended to member states, though there is a hard border at the edge of the bloc.

Thankfully the Court of Justice of the European Union has applied logic to the situation.

France next on the list to be teased with Trump’s tariffs

The United States Trade Representative (USTR) has opened an investigation into France’s digital sales tax, a move which could lead to the European nation facing trade tariffs.

The digital sales tax in France has been viewed as a means to force internet companies to play fair. The creative accounting practices of these companies has ensured nominal tax has been paid to various European states, and France has had enough. The proposed tax has passed through the lower parliamentary house, the National Assembly, and is expected to get the final thumbs-up today from the Senate.

As a result, US Trade Representative Robert Lighthizer has announced the launch of an investigation under Section 301 of the Trade Act of 1974 of the Digital Services Tax (DST) into the French government. This is the very same tool used by the Trump administration to justify the introduction of tariffs against China due to the alleged theft of IP.

“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” said Lighthizer.

“The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”

What is worth noting is that while many US companies might find themselves paying more tax, this is not necessarily a move to raid the US economy. This tax has been directed towards all digital companies who abuse the international tax system to the detriment of the French government and society irrelevant as to their nationality, it just so happens the US dominates the internet industry.

Many will view the French move as a gallant effort to hold the internet economy accountable, though it seems the US does not feel the same way; its own economy and society does of course benefit from the tax skulduggery.

The suggestion of the US imposing tariffs on the US comes two days after President Trump declared Indian tariffs on US goods should be a thing of the past.

The tax itself has been in the pipeline for some time, as European nations have become increasingly frustrated by the taxation strategies of the digital economy. Companies such as Google, Facebook and Amazon have been shifting profits freely throughout the world to ensure lower taxation rates are paid. This move from France, to impose a 3% sales tax on revenues realised within its borders, seems like an effective counter-punch.

What is worth noting is it is not just the US firms who are abusing this taxation system. Sweden’s Spotify is another which has played the system well. In the UK, as an example, the company reported revenues of £444 million over the course of 2017 but paid £891,425 in tax as it only reported advertising revenues in the country. Revenues associated with the ‘Premium’ subscription product were moved to Sweden where it could pay less tax.

France is not alone with its frustrations either. The UK is another nation which is considering its own digital tax reforms, while the European Commission attempted to pass bloc-wide rules recently. These rules were blocked by the likes of Ireland and Luxembourg, two countries who benefit significantly from the fleecing of other nations.

Now onto the US response. Section 301 and related provisions of the Trade Act offer the USTR the opportunity to investigate what it or the White House deem as a foreign country’s unfair trade practices. There will be a public consultation and lobby efforts from Silicon Valley and should the USTR conclude France is unfairly persecuting US business, tariffs could be directed towards imported cheese and garlic.

Tariffs are a popular weapon for Trump and the White House hacketmen on the international trade scene, as it is becoming increasingly common for US diplomats to huff and puff, while banging their chest and showing off their biceps when things don’t go their way.

Unfortunately, the US doesn’t really have a leg to stand on here, though the presence of logic will not persuade the hawks from their flightpath. Internet companies, all over the world for that matter, are taking advantage of a dated taxation system which allows them to grow bank accounts without recontributing to the country which has fuelled this prosperity. There is little which can be said to counter this position.

Interestingly enough, the move could spark wider tensions. The relationship between the White House and the European Union is already stressed and targeting a single member state might not be received well by the bloc. The US feels targeting a single member state is legitimate, though there might well be a bigger conversation to be had in Brussels.

With the clouds of tariffs already lurking above the European automotive industry, the US might find itself with another trade disagreement on its hands before too long.

A post-Brexit Ofcom worries us – Vodafone

With the anti-China rhetoric dominating the headlines in recent months, Brexit chatter has become unfashionable. But with the deadline fast approaching, what will Ofcom look like in the future?

Speaking at a breakfast briefing in London, Vodafone UK Chief Counsel and External Affairs Director Helen Lamprell let loose on the UK regulator. Cell tower height, rural roaming, potential reintroduction of international roaming charges, dark fibre and auction dilemmas, there seemed to be a lot of venting going on.

“The UK remains a challenging environment [regulatory], one of the most challenging in the world,” said Lamprell. “But we are seeing positive change.”

The issue which Vodafone is keeping an eye-on is Brexit. According to Lamprell, Ofcom is one of the most conservative regulators throughout the bloc, though when it is freed from the tethers of the Body of European Regulators for Electronic Communications (BEREC), there is a risk it could become even more so.

There isn’t necessarily one massive bugbear from the telco, but several little aggravations which all combine to a much larger nuisance. Let’s have a look at mast height to start with.

Everyone wants signal, but no-one wants towers

As it stands, UK cell towers are limited to 25 metres in height. This obviously doesn’t take into account those masts which are placed on the top of buildings, just the actual structure itself. In most cases, this doesn’t have a massive material impact on operations, such is the population density of the UK, but when you look at countryside locations it becomes a much larger discussion.

Part of the up-coming 5G spectrum auctions will place coverage obligations on telcos. This is a reasonable request by the government, as telcos have shown they will not bridge the digital divide on their own, though as it stands 99% of the UK population is currently covered. Geographical coverage is no-where near this figure, though as there is little commercial gain from providing coverage to these remote locations, reaching the 90% objective is difficult.

One way which this could be done is by providing exemptions to the 25-metre limit in certain situations, such as the countryside, as CTO Scott Petty pointed out, for every 10-metres you go up the coverage ring is doubled.

All four of the major UK MNOs (EE, O2, Vodafone and Three) are meeting with the Department of Digital, Culture, Media and Sport (DCMS) this afternoon, and this will be a point on the agenda. Should these exemptions be granted, it opens the door for shared infrastructure also, as the main cost of these structures is civil engineering and construction, not the equipment on the tower. Both of these developments combined would aid the telcos in reaching the geographical coverage objectives.

This brings us onto another interesting point raised by Lamprell, rural roaming.

My restless, roaming spirit would not allow me to remain at home very long

“Rural roaming takes away our incentive to invest,” Lamprell said. “It’s a really, really dumb idea.”

Three are one of the companies pushing for rural roaming, but as the Vodafone team points out, it is the only MNO which hasn’t built out its rural infrastructure. However, should rural roaming be introduced it would cause a stalemate for investment.

As Petty points out, why would any MNO invest in its own infrastructure when it could force its way onto a competitor’s? All the telcos would be sitting on the starting line, waiting for another to twitch first, such is the pressure on the CAPEX spreadsheet column when investing in future-proofed infrastructure.

Moving onto the international roaming question, Vodafone is staying pretty agile right now. As it stands, the status quo will be maintained, though the team will react to the commercial realities of a post-Brexit landscape. Currently, as a member of the European Union, Vodafone is protected from surcharges when it comes to termination charges, though those protections will end with Brexit.

Vodafone has quite a significant European footprint, in most cases there is little to worry about, but for those territories which fall outside the Vodafone stomp, negotiations will have to take place.

There are several countries, Estonia is an example, which has higher termination rates than the UK. If the reality of a post-Brexit world is Vodafone is swallowing up too many charges from international calls/SMS/data, roaming charges might have to re-introduced in certain markets. This is all very theoretical currently however Ofcom will prevent Vodafone from replicating these charges from the European nations. Vodafone is sitting and waiting for the realities of Brexit right now, though it will not be a broad-brush approach.

“Our position today is to maintain the position we are in, but we will have to evaluate the situation at the time,” said Lamprell.

Ignore Luke, the Dark Side is great

Dark fibre. It used to be a popular conversation, but everyone seems to have forgotten about it recently.

Not Lamprell.

The focus of Ofcom over the last 12 months or so has been on opening-up ducts and poles, and while this certainly is progress, it only addresses part of the problem. Dark fibre is an aspect of the regulatory landscape which could add significant benefits to the industry but has seemingly become unfashionable.

Dark fibre, fibre cabling which is not currently being utilised by Openreach, could answer the backhaul demands of the increasingly congested networks quickly and efficiently. Mainly as it is already there. There is no need to dig up roads, apply for planning permission or procure new materials, it could be as simple as flicking a switch.

Openreach resistance and Ofcom’s aggressive focus on ducts and poles is perhaps missing a trick.

Going, going, maybe not yet

The UK is currently in somewhat of an unusual and unprecedented situation. It is one of the nations leading the world into the 5G. This is not to say it is in a podium position, but compared to the 4G era, the UK is sitting pretty.

Part of the reason for this has been early auctions to divvy up spectrum assets, however, moving forward there are some irregularities which is causing some head-scratching.

Later this year, Ofcom will kick-start another auction which will see 120 Mhz of spectrum in the 3.6-3.8 GHz bands, as well as 80 MHz in the 700 MHz band go up for sale. For both Lamprell and Petty, this auction doesn’t make sense. These are two bands which will be used for different purposes (coverage and speed) so why auction them off together.

If Vodafone had known this was going to happen back in April 2018, during the first spectrum auction, it might have altered its strategy.

“We could end up with a very fragmented spectrum situation,” said Petty.

From the team’s perspective, it seems Ofcom has only just woken up to the coverage demands of the UK government, and is using this auction as a blunt tool to meet the objectives. From an engineering perspective it doesn’t seem to make much sense to Vodafone.

“We are not happy with the rules,” said Lamprell. “But it’s rare for us all [MNOs] to be happy.”

Looking good but looking suspect

The UK is currently in a good position ahead of the 5G bonanza from an engineering perspective. With test hubs being set up around the country and telcos who are acting proactively, the UK looks like an attractive environment to invest in for R&D. It is by no-means leading the global 5G race, but it is in a healthy position.

However, political and regulatory uncertainty are a threat to this perception. The activities and culture of both DCMS and Ofcom over the next couple of months will has a significant impact on the 5G fortunes of the UK, as well as the ability to attract new talent, companies and investment.

“No way US can crush us” – Huawei founder hits back

The usually publicity-shy Huawei founder Ren Zhengfei has hit back at what he perceives as a politically motivated attack, declaring if “the lights go out in the West, the East will shine”.

Although the US government has sustained the anti-China rhetoric over the last couple of months, with Huawei being the focal point of any aggression, the firm is holding strong. That is the message from Zhengfei, a usually media-adverse individual who is currently being carted around Europe in a show of strength against the White House. The aim for Huawei is to demonstrate transparency, and it does seem to be working in Europe.

“There’s no way the world can crush us,” said Zhengfei, in an interview with the BBC. “The world needs Huawei because we are more advanced. Even if they persuade more countries not to use us temporarily, we could just scale things down a bit. And because the US keeps targeting us and finding fault with us, it has forced us to improve our products and services.

“If the lights go out in the West, the East will shine. And if the North goes dark, there is still the South. America does not represent the world.”

While these comments are unusually aggressive for a man who does not like the limelight, they could prove as the perfect antagonistic weapon against President Trump. Zhengfei is sending a simple message across the Atlantic in this interview; the world is not siding with you in this quest.

Huawei has become a proxy in the overarching conflict between the US and China, though it is certainly faring better now than it did a couple of months back. During the initial exchanges, there was a considerable amount of collateral damage heading Huawei’s direction. Banned from providing equipment in Australia, New Zealand and Japan, plus other omissions in countries such as South Korea, it was an ominous sign. But Europe is seemingly not agreeing with Trump.

In the wider US/China dispute, Europe is a critical battle ground. As a bloc, the European Union is the second largest economy in the world. For both China and the US, winning favour would go a long-way to establishing political and economic dominance over the other. And Europe does not seem to share the same deep-rooted distaste for China as the US is currently harbouring.

Many European economies have established trade relationships with the Chinese, and while there are long-standing partnerships with the US also, none of these countries seem to want to readily shun the Chinese. This is the advantage which Huawei has in Europe, these are not nations which will so easily bow to the outside influence of the US.

In the UK, for instance, China is the 5th largest trade partner, as it is also in Germany. Its down in 7th for France, but still accounts for 4.3% of total trade, as it is in Italy for 3% of the total. For Belgium, China is the third largest partner outside of the European Union, while it is the second largest outside the bloc for the Netherlands. Trade with China is too important for the member states to consider siding with the US in the larger international conflict.

Of course, what you have to bear in mind is the over-arching European Commission supposedly considering ways to ban Chinese companies from contributing to critical infrastructure programmes. US Vice President Mike Pence has been touring Europe to talk up the importance of making a stance against China, and also dropping hints other European nations should ditch the Union, but success with the individual member states is looking far more limited.

With Germany and the UK seemingly favouring an approach which would heighten security protocols but still allow Huawei to operate, the Chinese firm is seemingly winning on the continent. With the US throwing political heavyweights at the nation states, Secretary of State Mike Pompeo was another to join the crusade of fear-mongering, the US might soon become quite agitated. Huawei’s resistance might infuriate the Oval Office, but the inability to bend Europe into its own image of perfection might will frustrate.

Europe was supposed to be a political boost for the US ambitions against China. This is of course the bloc which the US saved from the ravages of World War II and also a steadfast set of allies over the last few decades. Whatever the US has done, Europe has generally agreed to. But it seems the brash and aggressive style is not palatable to the conscientious and risk-adverse Europeans.

For Huawei, this is a massive battle. Europe as a whole is the largest market outside of China for Huawei, representing billions of dollars’ worth of business. However, its not just the network infrastructure ambitions at risk her, let’s not forget the consumer business has been making considerable progress across the bloc as well. The fact Huawei is wheeling Zhengfei around demonstrates how important this region is to the company.

President Trump sees himself as one of life’s winners. As the self-proclaimed ‘deal marker’, this is a man who is used to getting his way. With the power of the White House and US economy behind him, this is not an outcome he would have imagined. The stubbornness of the Europeans might force the White House into more drastic action before too long.

Europe has not been great at net neutrality – report

Nearly three years after the EU net neutrality regulations came into effect, neither service providers nor national regulators have been role models in following the rules, a new report concluded.

The Vienna-based non-profit organisation Epicenter.works recently published a report to present its multi-year research into how the EU’s net neutrality regulation has been implemented. The report, titled “The Net Neutrality Situation in the EU: Evaluation of the First Two Years of Enforcement”, examined how the regulation was interpreted differently by the regulators and how the service providers have taken it into their own hands to decide what to implement, or not implement in the 28 EU member states as well as the three EEA nations ((Norway, Iceland and Liechtenstein). The results were not the most encouraging reading.

The EU regulation on net neutrality came into effect on 30 April 2016. The Body of European Regulators for Electronic Communication (BEREC) was mandated to lay down guidelines on the implementation for the national regulators. However, unlike other laws like GDPR, the net neutrality rules give member states the authority to decide the level of penalties if the rules are broken.  “This has lead (sic.) to a situation where some member states have not laid down rules for violations of net neutrality protections two years after the regulation entered into force,” the report says.

More specifically, 17 out of the 31 countries examined have not defined “effective and dissuasive penalties”, while in those countries that have defined monetary penalties, the amounts varied from a symbolic €9,600 in Estonia, to up to 10% of relevant turnover in the Netherlands or the UK. The report finds that, as a result of the less than strict implementation, “the largest telecom companies in Europe can choose not to comply with the law because it is financially advantageous for them.”

The area that the most offences were committed was differential pricing practices, in particular zero-rating data for selected applications and services. Although only Bulgaria and Germany have excluded “illegal commercial practices” (price discrimination when providing access to specific applications and services, in this case, zero-rating certain apps or services) from their penalty provisions, a total of 186 differential pricing products are being offered in all but three member states (Finland, Slovenia, Bulgaria), the majority (144 offerings) of them zero-rating (the rest are application-specific data volume). 17 countries’ regulators have started formal assessment processes into the differential pricing products offered by the service providers in their countries since the regulation came into effect, while the other 14 have not.

The report went on to analyse the impact of zero-rating offers on the consumer data price, and discovered that over a two-year period, the average data price (€/Gb) in countries with zero-rating offers largely held or slightly rose while the comparable price in those countries without zero-rating products went down by about 10%.

net neutrality data price

The reason for the steady price can be attributed to competition dynamics created by zero-rating, according to the report. Since the large service providers (e.g. Deutcshe Telokom) often have the biggest sway in partnering with content and application providers, the authors reckon, they create a “unique selling proposition” to attract consumers and no longer need to compete on the data package size or prize, which MVNOs and smaller operators can match their offers. This in effect has led to a slow-down in the growth of data package sizes or drop in prices in these markets.

It is not only the consumers that have been denied benefits by zero-rating, the authors find, there is also cost on the content and apps providers. In most zero-rating deals, the content and app providers will pay the fee for the traffic to the service providers (according to a report published by the Polish regulator UKE), which will then offer it to consumers at zero-rating. In this case, zero-rated data is actually sponsored data.

On top of the fees, in order for the billing to be correctly done, operators would require the content and app providers to make special data transport setup for the partnerships, e.g. change CDN contracts. This will also add operational cost to the content providers. In a high-profile case, when Vimeo did not participate in Deutsche Telekom’s “StreamOn” programme, it stated in an open letter to the German regulator that, although they are a 200 employee strong company, they cannot sustain co-operations with all the service providers whose customers they want to reach with their service through special programmes like this.

Two knock-on effects also come out of such partnerships. Due to the demand on fees and increased operational cost, most app and content providers can only afford to enter into limited deals. By the authors’ count, the large majority of app and content providers entered no more than three pricing programmes.

net neutrality number of programs

On the other hand, more often it would only be the Silicon Valley heavyweights that could afford to tie multiple partnerships with different operators in different markets, they occupy most of the spots on the leader table of differentially priced services being offered. “Among the top 20 zero-rated applications only three are from the EEA,” the report calculated.

net neutrality Silicon Valley heavy

The findings by the organisation has caught some attention. The Austrian regulator RTR will conduct its own research into the impact of zero-rating on data prices into more recent years and on operator level. The European Commission will also provide an evaluation report of the net neutrality provisions of the regulation by 30 April 2019, three years after the regulation came into effect.

France takes on Apple in tax dispute… and wins

The French government has bagged a win in its quest to hold Silicon Valley accountable to fair and reasonable taxation rules with €500 million secured from Apple.

Apple has confirmed to Reuters it has settled a dispute over taxes due to the French purses over a 10-year period, though local newspapers are suggesting the figure is roughly €500 million. France is leaking the European battle against the slippery accountants of the internet giants, though whether this has any knock-on effect across the rest of the bloc remains to be seen. We suspect there will be a mixed reaction.

“As a multinational company, Apple is regularly audited by fiscal authorities around the world,” Apple France said in a statement to Reuters. “The French tax administration recently concluded a multi-year audit on the company’s French accounts, and those details will be published in our public accounts.”

The taxation strategies of the internet giants have become infamous over the years, as many feel the frat-boys of the technology industry are taking advantage. With such incredible revenues, governments will be keen to hold these companies accountable and France is showing that it can actually be done.

Over the last few months, the European Commission has been tabling various different ideas to ensure the internet giants pay a fair and reasonable tax rate. A 3% sales tax on all revenues generated in the specific territories looked to be the best option moving forward, but the power of the bloc proved to be its downfall; getting 28 nations to agree to the same idea was never going to be easy.

With countries like Ireland and Luxembourg building successful economies around enabling tax havens, and other countries such as Sweden giving birth to companies which benefit from the rules, some were always going to offer opposition. Why would these countries want to be the architect of their own downfall?

What this victory for France shows the rest of the bloc is that results can be achieved by going alone. Some of the other critics of the creative taxation strategies of the internet giants, such as the UK and Germany, may well move forward aggressively.

The residents of Silicon Valley, and some in Washington DC, might suggest US companies are victims of sticky-fingered bureaucrats, though it is difficult to have sympathy for companies which have become experts at finding and widening gaps in regulations.

The big question is who is next on France’s hit list.