The Body of European Regulators for Electronic Communications (BEREC) published revised Guidelines on the Implementation of the Open Internet Regulation (EU) 2015/2120 (Regulation) on 9 June 2022. The revisions were made in light of European Court of Justice (ECJ) judgments, stating that the practices by two German mobile operators (Telekom Deutschland and Vodafone) were incompatible with the Regulation.
According to this interpretative guidance, which is primarily addressed to national regulators, so-called zero-rating options are a clear violation of the principle of net neutrality enshrined in the Regulation. It is expected that national regulatory authorities will take this finding of BEREC as an opportunity to look closer at the existing zero-rating options.
The principle of net neutrality provides for the equal treatment of all data in the networks regardless of their origin, content, application, sender and recipient. It pursues the goal of ensuring the free use and usability of information and services on the one hand, and equal opportunities for all users on the other. Data traffic may therefore not be discriminated against, blocked, throttled or prioritised by internet access service providers.
Reason for the revision
Despite the establishment of the principle of net neutrality in the Regulation, many so-called zero-rating options have been implemented in recent years – perhaps due to a lack of review by the national regulatory authorities. According to the ECJ, zero-rating options are a business practice by which an internet access service provider offers a zero tariff or at least a cheaper tariff either for all data traffic or at least for part of it in connection with a certain (category of) application(s). This means that certain data or the use of certain services is not counted towards the user’s monthly agreed data volume.
Such a differentiated pricing practice can – according to the ECJ – influence the user’s choice and possibly contribute to a distortion of the balance of power on the market. This is because smaller companies in particular regularly have neither the capacities nor the technical possibilities to meet the (high) requirements of the internet access service providers for inclusion in the zero-rating options. In its most recent ruling, the ECJ assumes that a bandwidth limitation based on a zero-rating option is not compatible with the obligations under Article 3 Paragraph 3 Subsection 1 of the Regulation. These obligations preclude any measures based on commercial considerations which are contrary to the equal treatment of traffic.
Implications for practice
In line with the decision of the ECJ, the new BEREC guidelines explicitly oppose the use of all zero-rating options throughout Europe. They are to be understood as an interpretative guidance for the national regulatory authorities, which are expressly required to monitor strict compliance with the principle of net neutrality and to enforce it within the scope of the far-reaching possibilities granted to them by the Regulation. It is therefore within their responsibility to ensure that internet access service providers will from now on no longer be factually able to control network utilisation through differential pricing. It is anticipated that national regulatory authorities will soon comply with the new BEREC guidelines. For example, the German Federal Network Agency (BNetzA) reacted even before the new guidelines had been published: stating on 28 April 2022 that new contracts with zero-rating options may no longer be concluded from July 2022 and existing contracts must expire by March 2023 at the latest.
This intervention by national regulators (which is expected to continue and even increase) should lead to more competition in the market. This will affect both the online service providers and the internet access service providers; the latter at least to the extent that the abolition of the zero-rating options means that they no longer have the possibility of differentiating themselves from competitors with such offers. Market-watchers have already seen internet access service providers draw up new tariff options in the short term, which – in the most customer- or user-oriented case – include the provision of higher data volumes.
However, certain practices remain permissible. These include, on the one hand, appropriate, ie transparent, non-discriminatory, proportionate and non-commercial, management of data traffic to guarantee technical requirements for the quality of service as such or network security in the public interest. On the other hand, the so-called application-agnostic zero-rating is still allowed, ie the option offered to users of, for example, monthly free hours or free weekends, which can be granted for the free use of all services and precisely not only those of the partner providers.
I thank Katharina-Isabelle Prenzel for her valuable contribution to this article.
