Net Neutrality Challenges in the World: Zero-Rating in the European Union

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We all hate running out of mobile internet data. The solution? Unlimited mobile data plans that are usually too expensive for the average consumer, or in many places simply not available. In these circumstances, zero-rating (where a network operator offers unlimited data for specific applications or services) may appear to be an appealing answer. But, as economists like to say, there’s no such thing as a free lunch.

At Public Knowledge, we are vigilant to the possible implications of zero-rating for the future of the Open Internet. In this post, I explore zero-rating practices in the European Union, a much more common practice than what many may think on this side of the Atlantic.

Zero-Rating in the EU: Preliminary Findings

According to our preliminary research, there is some form of zero-rating in 20 out of 28 European nations. Zero-rating spans EU economies of all sizes, from the United Kingdom to Romania, Germany, and Spain. This finding is consistent with Digital Fuel Monitor’s reports: in 2014, European Internet Service Providers offered at least 75 zero-rated apps; in 2015, they offered at least 35 zero-rated apps; and in 2016, they offered at least 62 zero-rated apps. Our preliminary research has found that today, in 2017, there exists at least 73 zero-rated apps across the continent.

Generally, the top zero-rating categories (in order) are messaging, social media, music streaming, and video streaming, with Facebook/Messenger and WhatsApp being the most commonly zero-rated applications. Some ISPs only zero-rate specific features in applications. For example, text in messaging apps may be zero-rated, but not photos, videos, audio, or calls. Some ISPs provide zero-rated music, but deduct the data of everything that is not music, i.e. the album artwork, text, etc. Other ISPs will truly zero-rate full applications as with Netflix, HBO GO, and YouTube.

How Is This Possible? The Legal Framework.

The short answer is that zero-rating is not banned by the EU’s net neutrality rules (Regulation 2015/2120, the “Telecom Package”). The Body of European Regulators of Electronic Communications (“BEREC”) has read Article 3 Section 2 of the Telecom Package to allow some degree of zero-rating as ISPs and end users reach private agreements over price, speed, and other “characteristics” of internet access service. In addition, BEREC created guidelines for the identification of permissible vs. impermissible zero-rating within the EU net neutrality rules. For example, “where all applications are blocked or slowed down once the data cap is reached except for the zero-rated applications,” zero-rating is clearly prohibited.

However, for other zero-rating practices, BEREC urges a case-by-case analysis: national telecom regulators must balance the enforcement of net neutrality rules prohibiting carriers from blatant discrimination with protecting private agreements over internet access service. The BEREC guidelines weigh the general aims of the Telecom Package, market positions, reduction of application use/availability, effects on Content and Application Providers, and the scale of the zero-rated practice.

Since the Telecom Package and BEREC guidelines are relatively new, their practical interpretation in particular cases is still evolving. Recently, in a case that involved a T-Mobile zero-rating offer, the District Court of Rotterdam held that the Dutch Telecommunications Act’s ban on zero-rating violated the Telecom Package (although the Court did not decide whether T-Mobile’s zero-rating all music services was in violation of the Telecom Package or the BEREC guidelines). The case, however, is still appealable, and there is news that the national Dutch regulator is still looking at T-Mobile´s offer. The takeaway from this ruling: the EU rules are not clear, and the European courts and national regulators are still navigating the Telecom Package and BEREC guidelines. As a consequence, the extent of permissible zero-rating in the EU is still being worked out. How the EU regulates zero-rating has global consequences, since many countries will look at the EU example for guidance.

In our research, we also found that more transparency and information on the different zero-rating arrangements is necessary. ISPs typically do not always advertise zero-rated content with their wireless contracts. Instead, zero-rated content is listed under individual applications. Additionally, some fine print in zero-rating offers is disclosed in adhesion or click-wrap contracts, which are inaccessible until purchase.

More to Come

This blog post is the first part of a broader analysis of zero-rating across the world, investigating how prevalent zero-rating is in the EU, how European regulators are rightly cautious about the regulation of zero-rating, and the overall concern for zero-rating implications on net neutrality.

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