Layton

KPN was fined €250,000 for what amounted to blocking on a free wifi network. The
company admitted its mistake, a setting that had been on place its wifi networks, which
it forgot to update once the net neutrality rules came into effect. About one third of the
wifi traffic was at Schiphol Airport and the free service was designed as a convenience for
travelers for a short and quick internet connection upon landing, for example to check
messages and email. Bittorrent, FTP, SSHA, Telnet and VoIP were blocked to ensure the
smooth functioning of the free service. The blocks are now removed but presumably the
free basic internet service doesn’t run as well. Interestingly a number of comments
under the BoF blog mention that they have 4G services so wifi not important to them
anyway.
In May 2015 KPN was ordered to end zero rated Spotify contracts, though the traffic
generated by Spotify traffic is negligible on KPN networks. It is interesting to note that
while zero rated offers of Spotify may be maligned by net neutrality advocates, for
Spotify, one of only a handful of successful European startups, the partnership with
telecom operators has proven important for its growth. 85 Not only can Spotify leverage
an operator’s billing system (avoid the cost of using its own system and give customers
the benefit of not having to enter payment credentials into a new system), Spotify earns
valuable paying customer. Most free users of Spotify never upgrade to the premium
version, but in a telco partnership, subscribers who are already paying for a mobile
subscription are more willing to take on an additional paid service because of the
convenience of the bundle.
Not only is the sale of premium subscriptions essential for Spotify’s survival, the revenue
earned plays an important role to lessen music piracy and to help bring revenue to the
music industry. Sweden’s music industry was decimated by the rise of digital music on
the Internet; revenues declined steadily from 2002 to 2009. With the introduction of
Spotify, however, the industry has managed a 20% gain in the last three years. 86
The Netherlands fared even worse with its traditional music industry than Sweden, but
Spotify helped to reduce piracy in the country, with 29% of the 1.8 million Dutch
BitTorrent pirates taking just 1 music file in 2012. The top 10% of the pirates account
for half of the content obtained illegally, some 16 files each or more. 87 Passive pirates
don’t bother to pirate material when then can get a reliable, quality music experience for
a good price.
In Sweden, digital music revenues account for almost 60% of all music industry revenue.
In Netherlands the amount is just 27%, but if it could increase to the level of Sweden,
ideally with more uptake of services such as Spotify, there would be an additional $124
million for the music industry and musicians. In any case, digital music sales grew by
increased by 66% in the country in 2012, the highest of any country in Western
Europe. 88
While music piracy may be on the wane as a number of viable music streaming
alternatives have emerged, piracy of film is going strong. Having more Spotify-like
solutions for film is preferable to criminalizing pirates. And yet HBO Go, one such
solution, is maligned by net neutrality advocates.
In a statement on June 1, 2015, the ACM praised the state of Dutch 4G networks and
increased mobile data consumption. They note, 89
85 “Adventures in the Netherlands:” (Spotify, July 17, 2013), https://press.spotify.com/dk/2013/07/17/adventures-innetherlands/.
86 Ibid p. 9
87 Ibid p. 1
88 Ibid p. 24
89
“Investeringen uitrol 4G bijna voltooid, apps besparen op dataverbruik,” Nieuwsbericht, ACM, (June 1, 2015),
https://www.acm.nl/nl/publicaties/publicatie/14305/Investeringen-uitrol-4G-bijna-voltooid-apps-besparen-opdataverbruik/.
Zero Rating - Layton/Calderwood
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