Price discrimination – the Commission’s plan B to undermine net neutrality?

The European Commission is energetically defending the “right” of telecoms operators to use price discrimination, arguing that this is not a breach of net neutrality.

In price discrimination, the telecoms company establishes itself as a monopoly “gatekeeper” of access to its own customers. In other words, big online companies like Google and Facebook can pay to have their services accessible “for free”, while other services are paid for per megabyte or gigabyte downloaded.

In other forms of non-neutrality, the telecoms company establishes itself as a monopoly “gatekeeper” of access to its own customers. That means that big online companies like Google and Facebook can pay for preferential treatment for its services, while others are excluded due to blocking or throttling of their services.

Put simply, in one case, the big telecoms operators are allowed to create a new monopoly (access to the operator’s customers) while, in the other, the big telecoms operators are allowed to create a new monopoly (access to the operator’s customers).

The Commission argues that there is a fundamental difference in practice between an online service being disadvantaged by blocking and being disadvantaged by price discrimination.

The Commission also believes that the telecoms operators will not be able to levy specific charges to pay for particular online services, such as Whatsapp or Skype. However, if it is “free” to use an operator’s partner service while the use of Skype risks incurring additional download charges (particularly in the mobile environment), then this has the effect of a specific charge being levied.

While the Commission argues that this discrimination is not discrimination and that it is not possible to implement this kind of discrimination anyway, the Digital Fuel Monitor listed 75 different examples of this kind of abuse happening in the market in Europe.

Of course, the Commission’s position on price discrimination is simply what it inherited from ex-Commissioner Neelie Kroes. The new Commission appears not yet to have developed a clear position (although this has not stopped Commission officials from continuing to push the old arguments).

On the one hand, Digital Agenda Commissioner Günther Oettinger appears to be distancing himself from the great success of telecoms liberalisation in Europe, arguing that the market should be consolidated (less competition!) and that the EU’s regulatory actions should be focussed on giving profits to telecoms operators.

On the other hand, the Commission Vice-President Andrus Ansip, with overall responsibility in this field seems to have very different views. He defended policies in his nomination hearing which are the opposite of the Commission’s current position – “All the traffic in the Internet has to be treated equally, nobody has [the] right to abuse their dominant position in the market or gate keeper’s position.” “Treated equally” clearly covers both in the network and also in the bills of consumers.

No gatekeepers. No discrimination. Thank you Vice-President. We couldn’t agree more.