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23 February 2016

Dear Fleet Street, Be Careful What You Wish For…

Written by: Ben Fenton, Senior Director at Edelman

Brexit, Corporate Reputation, Government Affairs

The debate about EU membership is going to make for some strange bedfellows in Britain in coming weeks. Some are more obvious than others.

The prospect of Jeremy Corbyn campaigning alongside George Osborne is one that might raise a laugh. George Galloway and Boris Johnson sharing a platform and a message would be good for a giggle too. But other peculiar alliances are deadly serious.

One such is between Fleet Street’s finest and the bureaucrats of Brussels.

In The Guardian, Emily Bell, an eminent academic with great credentials in the UK media, raised the prospect that mobile phone companies here could follow the lead of Denis O’Brien, the Irish entrepreneur who owns the Caribbean-based mobile company Digicel by blocking ads on their customers’ phones. Last week, Three, the Hong Kong-controlled company that is trying to merge with O2 in the UK, said that it certainly intends to do so.

Both of these companies, Digicel and Three, are working alongside a company called Shine Technologies, which is based in Israel.

Many analysts believe that this move is about more than just protecting consumer interests. It’s easy to imagine a move in which internet service providers (ISPs) begin to charge the big ad carrying sites (such as Google and Yahoo!) for access to customers’ mobiles. It’s easy, because that is precisely what Digicel is doing: it argues that these megacorps should pay some of the costs of the infrastructure that carries their enormous digital traffic.

Now, digital advertising, as Emily Bell points out, is a shield for many traditional publishers faced by the decline of print sales and the loss of advertising revenues to internet giants such as Google and Facebook. And within digital, mobile advertising looks like the area most likely to produce growth in the next few years.

So any threat to mobile revenues is a dagger aimed straight at the heart of the traditional publishing industry. The death of more than just The Independent is at hand if this spreads. Currently, the business models of TheGuardian.com, MailOnline and TheSun.co.uk, just for starters, breathe the oxygen of advertising.

If you apply Digicel’s argument that the bandwidth used by the Mail, say, in reaching its 238m unique users a month should be paid for by the Mail or else their ads will be blocked, then you could easily be sentencing the Mail to death. Doom awaits.

But wait, what is that noise of galloping hooves coming over the horizon? Could it be the cavalry coming to the rescue? Yes, yes, it’s…the European Union! Thank heavens for the EU cry The Sun, the Mail, The Telegraph!

For EU rules suggest that the Digicel technique would be illegal. It would breach what is called “net neutrality”, the principle by which no particular kind of content is allowed greater access to the web than any other. Analysts believe that Three’s move will be blocked by European regulators and – at least for a while – digital revenues for mainstream publishers will remain intact.

But what about a Britain outside the EU? How easy would it be to fight that battle alone, especially if the rest of Europe had already won it without us?

Talk about strange bedfellows. One thing is for sure: we can cast away doubts about the motivation of those newspaper groups who champion Britain’s exit from the EU. It must be a matter of principle, surely, if they champion the cause of Brexit knowing that it could well mean throwing away their shield and facing the daggers of web economics unprotected?

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