Out-Law News | 28 Jun 2016 | 12:39 pm | 3 min. read
This is part of Out-Law's series of news and insights from Pinsent Masons experts on the impact of the UK's EU referendum. Watch our video on the issues facing businesses and sign up to receive our 'What next?' checklist.
Net neutrality is the principle that ISPs will deliver all content requested by customers equally, and where the speed and quality of content delivered to customers is not dictated by the price content producers are willing to pay ISPs for preferential treatment of their content as it passes over an ISP's network.
New EU net neutrality legislation came into effect in April which requires internet service providers to "treat all traffic equally" as it is directed over their networks, although they can block or throttle the delivery of content requested in certain circumstances, such as to preserve the integrity and security of their network or combat network congestion.
Although the EU net neutrality rules prohibit paid prioritisation of content delivery online, they do not prevent ISPs from entering into agreements to deliver certain content, applications or services at "optimised" quality provided optimisation is "necessary … to meet requirements of the content, applications or services for a specific level of quality" and the provision of such services has no detrimental impact on "the availability or general quality of internet access services" ISPs otherwise provide.
The regulations apply directly in all EU countries and will continue to apply to the UK until it leaves the trading bloc.
Telecoms specialist Reg Dhanjal of Pinsent Masons, the law firm behind Out-Law.com, said it will be open to the UK government to decide whether to transpose the existing EU net neutrality rules into UK law either word for word or with amendments.
"The Body of European Regulators of Electronic Communications (BEREC) is consulting on draft guidance, which, when finalised, will set out in detail how the EU net neutrality rules should be implemented by telecoms regulators," Dhanjal said. "Ofcom is a member of BEREC and has been contributing to this work. However, with the Brexit vote it may in time set out its own net neutrality guidance. Those guidelines will likely be informed by the EU approach to net neutrality but could potentially contain some differences to the EU regime."
"A lighter touch regime in the UK could provide opportunities for telecoms and content providers. Companies that operate in the EU market as well as the UK could face contrasting guidelines on which practices are acceptable, for example on issues such as zero-rating. Those businesses would then have to decide whether to operate two different business models to take advantage of opportunities in either framework or to simply comply with the higher of the two legal standards set. That decision will depend on whether the benefits of operating a separate model for the UK outweigh the cost of running two distinct operations," he said.
Dhanjal said that Brexit could impact on telecoms regulation in other ways too. He said that he expects the UK government to seek an EU exit deal that allows UK citizens to use mobile data services when in an EU country without incurring 'roaming' charges. Roaming charges across the EU are set to be abolished from 15 June 2017, subject to consumers not breaching a "fair use" cap on the use of mobile data services abroad.
"The end of roaming charges will come into force before the UK formally exits the EU," Dhanjal said. "The UK government will be keen to ensure that leaving the EU does not mean consumers go from paying nothing for using mobile data services when travelling in the EU to being charged for doing so."
In the short term, however, the UK's telecoms regulations are unlikely to change, Dhanjal said. The UK rules stem from EU legislation and the current regime appears to be working well, he said.
"To that end I don't think telecoms companies should expect any drastic departures from current rules, at least in the immediate aftermath of the UK's exit from the EU," Dhanjal said. "In the longer term, however, the UK may revisit certain aspects. An example of this may be the regulation of content providers by telecoms regulation. Currently providers of content services, that is services that involves supplying material or involves exercising editorial control over content, are excluded from the scope of EU telecoms regulation, but a diverging marketplace where the lines between traditional telcos and content providers are blurring could spur a rethink by UK policy makers."
Dhanjal also said that there might be greater freedom for the UK government to support the rollout of high-speed next generation telecoms networks through subsidies, grants, tax relief or other forms of aid that might currently be prohibited under EU state aid rules. However, this will obviously depend on whether or not the UK agrees to retain state aid principles as part of the exit-deal, he said.