Regulations a Barrier to Cloud Growth in Europe

Europe needs to become not only cloud-friendly but cloud-active to fully realize the benefits of cloud computing. That's the view of ETNO (The European Telecommunications Network Operator‘s Association) in a recently-issued paper on cloud computing development in Europe.

Olafur Ingthorsson

August 29, 2011

3 Min Read
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Europe needs to become not only cloud-friendly but "cloud-active" to fully realize the benefits of cloud computing. That's the view of  ETNO (The European Telecommunications Network Operator‘s Association) in a recently-issued paper on cloud computing development in Europe, which emphasized the importance of relieving obstacles surrounding data privacy and security.

Fragmented regulations are a particular problem in Europe, where sometimes restrictive legislation of the EU and individual Member States has stifled the development of cloud computing services. ETNO reiterates that rules governing data transfer should be simplified, especially if the transfer is within the same group of companies. Furthermore, ETNO concludes that there is no need for applying specific regulatory or legislative action on cloud computing in Europe. It should suffice to apply general rules of data protection and consumer protection to cloud computing – as with other sectors of industry.

Unified Standard Needed
What will be most beneficial for cloud computing development in Europe is the creation of an international standard based on a unified and consistent approach to online privacy, enabling companies to compete on the same level as US market leaders, the ETNO says. Such a global framework would give providers equal foundation for offering cloud services and the same level of protection for all cloud users.

Unfortunately for the EU, regulations are currently fragmented between the 27 EU Member States when it comes to consumer contracts – increasing compliance costs significantly for service providers that want to offer cross-border cloud services.

Contractual agreements are imperative

ETNO makes a clear distinction of cloud services for companies/organizations and for individuals, and points to the importance of service contracts between service providers and companies always clearly including clauses that specify the applicable law and jurisdiction in the event that any disputes or controversies arise between the parties. This is very important, as the jurisdiction of the service provider often coincides with the location of the end-user, i.e. where the service is provisioned. However, national consumer laws should normally apply when it comes to cloud services for individuals.

Cloud federation addresses interoperability and portability issues

One of the problems intrinsically linked to cloud computing service provisioning may be the complex value-chain of multiple entities or service providers that may be subject to divergent jurisdiction and regulations. These interlinked value-chains must then apply to certain contractual rules and agreements that are homogeneous and transparent to the end-user.

Also, ETNO acknowledges the potential lock-in situation end-users can experience, not being able to easily transfer their service from one service provider to another. The way to address the portability and interoperability problem is to deploy the "federation model," where end-users establish a business relationship with a "home" cloud provider or broker and obtain the requested cloud resources they need online – regardless of who the seller might be.

This is similar to well-known models from the travel industry including online services like Expedia and Orbitz that offer a single interface to multiple source service providers (flights, hotels, car rentals, etc.).  At the same time, it’s important to understand that the federation model may not always be feasible due to additional costs incurred.

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