European probe clears telcos of throttling Internet service

While there was no breach of competition rules, the sector will still be monitored closely

A European Commission investigation into whether telecom operators were throttling Internet traffic in order to gain an unfair advantage over rivals has turned up no smoking guns, but one of the companies that prompted the probe isn't happy with the result.

The Commission's investigation into Deutsche Telekom, Telefónica and Orange highlighted concerns about net neutrality and the openness of the Internet in Europe. The telecom providers were suspected of throttling high bandwidth traffic when it entered their networks, eventually deteriorating service quality for end users. But the Commission found no evidence the operators shut out competitors from either the Internet transit market or content markets, so there was no breach of EU competition rules.

The probe was set in motion with unannounced raids on the telecom operators last July. Those came after a complaint by U.S. network operator Cogent Communications, which filed grievances with the Commission along with other Internet backbone operators.

"We are disappointed," said Cogent CEO Dave Schaeffer, who said that Cogent and others are still experiencing limited access to the networks of the three operators. "There was probably political pressure from three large operators. I'm sure that weighs on the decision," he said.

"The facts clearly show they have abused their market powers and hurt customers. They are really limiting the consumers ability to reach the Internet," Schaeffer said.

Content providers like YouTube and Netflix typically buy connectivity from companies like Cogent to reach the global Internet. Those backbone providers have connections with telecom operators and they exchange traffic with each other in peering arrangements.

However, Cogent says the European telcos are refusing to increase the number of ports at peering points, allowing the points to get congested resulting in packet loss, bad connections and increased buffering times. And instead of upgrading the connections the telcos are looking to establish a direct connection with parties like Netflix, probably charging more than companies like Cogent. Netflix has already struck such deals in the U.S.

These direct connections at a higher price would improve service quality for end users. But that also means the operator gets paid twice for offering the service, once by their own customer and once by the content providers, Schaeffer said.

"We and other backbones are all experiencing limited access to these networks and consumers are unaware why these problems exist. That seems like an abuse of market powers to me," he said.

The Commission said however that it "found no evidence of behavior aimed at foreclosing transit services from the market or at providing an unfair advantage to the telecoms operators' own proprietary content services."

Even though the Commission found no breach of the rules, it said it is important that users are aware of the interconnection policies pursued by their Internet access providers and their possible impact on the quality of service obtained from providers whose content requires a high bandwidth, and it will continue to monitor the sector closely.

Schaeffer said he hoped that the new Commission, which is seated on Nov. 1, is willing to reexamine the issue, which centers on net neutrality. The European Parliament has been very clear in its support for network traffic, he said, adding that he was planning to meet the new digital commissioner's staff when they take office.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, open-source and online payment issues for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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