[x-pubpol] France Rejects Plan by Internet Provider to Block Online Ads

[Joly MacFie]

http://www.nytimes.com/2013/01/08/technology/france-rejects-plan-to-block-online-ads.html

By ERIC PFANNER

PARIS — In a potential test case for Europe, the French government on
Monday ordered a big Internet service provider to stop blocking online
advertisements, saying the company had no right to edit the contents
of the Web for users.

The dispute has turned into a gauge of how France, and perhaps the
rest of Europe, will mediate a struggle between telecommunications
providers against Internet companies like Google, which generate
billions of dollars in revenue from traffic that travels freely on
their networks.

European telecommunications companies want a share of that money,
saying they need it to finance investments in faster broadband
networks — and, as the latest incident shows, they are willing to flex
their muscles to get it.

Until now, European regulators have taken a laissez-faire approach, in
contrast to the U.S. Federal Communications Commission, which has
imposed guidelines barring operators of fixed-line broadband networks
from blocking access to sites providing lawful content.

On Monday, Fleur Pellerin, the French minister for the digital
economy, said she had persuaded the Internet service provider, Free,
to restore full access. The company, which has long balked at carrying
the huge volume of traffic from sites owned by Google without
compensation, had moved last week to block online ads when it
introduced a new version of its Internet access software.

“An Internet service provider cannot unilaterally implement such
blocking,” Ms. Pellerin said at a news conference Monday, after
meetings with online publishing and advertising groups, which had
complained about a possible loss of revenue.

While she acknowledged that it could be annoying “when five ads pop up
on a site,” she added that advertising should not be treated
differently from other kinds of content. “This kind of blocking is
inconsistent with a free and open Internet, to which I am very
attached.”

While rejecting the initiative by Free, Ms. Pellerin said it was
legitimate for the company to raise the question of who should pay for
expensive network upgrades to handle growing volumes of Internet
traffic.

French Internet analysts said advertisements appearing on Google-owned
sites or distributed by Google appeared to have been the only ones
affected — fueling speculation that the move was a tactic to try to
get Google to share some of its advertising revenue with Internet
service providers. Google’s YouTube video-sharing site is the biggest
bandwidth user among Internet companies.

Google was not represented at the meetings Monday with Ms. Pellerin.
In an interesting twist, its case was effectively argued by other Web
publishers, including French newspapers, even though these sites, in a
related dispute, are seeking their own revenue-sharing arrangement
with Google. Separately, French tax collectors are also looking into
the company’s fiscal practices, under which it largely avoids paying
corporate taxes in France by routing its ad revenue through Ireland,
which has lower rates. One proposal that has been discussed would be
to use receipts from a tax on Google to support local Web sites.

In yet another dispute involving Free and Google, the French
telecommunications regulator is investigating complaints that the
Internet provider has been discriminating against YouTube. In that
case, a French consumer organization, UFC-Que Choisir, said it
suspected that Free was limiting customer access to YouTube because of
the high amount of bandwidth that the site consumed.

Ms. Pellerin said these issues would be examined separately. Still,
the timing of Free’s move raised questions, given that it came only
days before a scheduled meeting among Ms. Pellerin, Internet companies
and telecommunications operators to discuss the financing and
regulation of new, higher-speed networks.

“Should users be held hostage to these commercial negotiations? That
is not obvious to me,” said Jérémie Zimmermann, a spokesman for La
Quadrature du Net, a group that campaigns against restrictions on the
Internet.

European telecommunications companies have the right to manage the
flow of Internet content that travels on their networks, by favoring,
for example, tiny e-mail messages over bandwidth-heavy videos. They
say such network traffic control is essential, as online video takes
up ever more of their capacity, especially at peak hours.

But Internet companies like Google say all traffic should be treated
equally, an idea known as net neutrality.

In the United States, the Federal Communications Commission in 2010
imposed regulations requiring telecommunications companies to uphold
this principle, at least in general terms. The decision stemmed from
fears that without rules guaranteeing net neutrality, broadband
providers could favor certain Internet content and reject other
material, based on business agreements or even political whims.

These concerns were heightened by the unusual structure of the U.S.
broadband business, in which telecommunications companies often have
local monopolies or duopolies, giving consumers little choice over
their provider.

In Europe, by contrast, broadband competition is rampant. Regulators
at the European Commission in Brussels and at the national level have
said this is sufficient to prevent abuses or censorship. If one
service provider were to cut off access to certain content, regulators
have said, consumers could simply switch to another network.

Competition has also driven down the price of access in Europe, but
this means that network operators have less profit to invest in
upgrades. The French government has estimated the cost of rolling out
high-speed fiber-optic networks to 50 percent of the country’s
territory at €25 billion, or about $33 billion, over 15 years.

Some European video sharing sites have contributed to the cost of
equipment that Internet service providers need to carry huge volumes
of video traffic. But Google, which has maintained a studied silence
throughout the dispute with Free, has balked at subsidizing Internet
service providers or online publishers.

UFC-Que Choisir said it hoped that the latest twist in the dispute
between Free and Google had demonstrated the inadequacy of existing
net neutrality protections. Instead, the group is campaigning for
legislation.

“More than ever, the public authorities must act in 2013 to guarantee
consumers a neutral, quality Internet,” wrote Alain Bazot, the
president of UFC-Que Choisir.

Free, which is controlled by a French technology entrepreneur, Xavier
Niel, has attracted 5.2 million broadband customers, roughly 25
percent of the French market, with a €20-a-month offer that undercut
established providers like France Télécom, the former national phone
monopoly. It is the second-largest broadband provider in France, after
France Télécom.

While Mr. Niél is considered an outsider in French business circles,
he drew closer to the establishment two years ago when, with two
business partners, he bought a controlling stake in the newspaper Le
Monde.

Free declined to comment on the meeting with Ms. Pellerin, who hinted
that the company might still get something out of the dispute, despite
her order to restore advertising.

“What is the financial incentive for operators to invest billions in
their networks without seeing any return?” she said. “We have to put
in place a win-win system.”


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