Cross-border data flow in the digital single market: study on data location restrictions (SMART 2015/0054)
Send or zip and send: Data holders send data to a user(s) directly or after compressing the data file, for example by email.
The study carefully examined the characteristics of the four transfer methods. It quickly became evident that point-to-point methods (sending data and device to device) are not commercially viable (nor ‘enforceable’) and therefore it was agreed that it was not sensible to include them for detailed investigation in the study. File sharing services enable data sharing at a commercial scale (one holder to several users). However, data volumes that can be transferred are relatively small. It is also notable that for many file-sharing services costs associated with data transfer can be zero. However, both the holder and user will need compatible software, but this can often be obtained for free. Examining detailed costs for these three services is therefore unnecessary since transfer can take place at no extra cost (as a result of restrictions to cross-border data flow) to the holder or the user47. Cloud is the only commercially viable transfer method in terms of volume data transfers and access by many users. It is also notable that this is a method that requires remote storage (potentially in a third country - across a border from the holder and/or the user(s)). It is also the only method that generally requires a data sharing account and thus incurs costs for the data holder. Therefore this study focused on cloud as the primary method of interest for this study for cross-border data transfers.
4.3 Costs of cloud data transfer At the beginning of the study it was thought that it would be relatively easy to examine additional costs for data transfer arising from cross-border data flow restrictions. It was assumed that one would look at the cost of storage (of fixed size of data – for example 1TB) from a provider to store data anywhere and then compare this with the cost to store data in a particular location or Member State. With hindsight it is evident this assumption was flawed and rather naïve, for two main reasons.
Most large cloud providers have adopted pricing schedules that stipulate a single price in US dollars for cloud data storage wherever in the EU the user is located. In essence these are flat rate pan-EU pricing policies.
As the next section demonstrates most of the large cloud providers only have cloud data centres in small number of EU Member States. They did not offer a service that enabled users to choose where their data would be stored.
Discussions with cloud providers also revealed that the price/subscription charged to users is independent of the cost of provision. Obviously over a long time period cloud service providers will need to obtain a return on their investment. But in the short-term other considerations, such as maximising market share, can take precedence. A strategy maximising market share at the start of technology service deployment is relatively common. In the early 2000’s Internet Service Providers initiated intense price competition, with some even offering free connections, to maximise market share. 47
Obviously hardware, software and ISP service costs are incurred but these are not solely related to data transfer.
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