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EU takes tough stance on 'zero-rating' practices in new net neutrality guidelines

Internet service providers (ISPs) that set limits on the amount of data users can download when using their service will breach EU net neutrality rules if they allow users to access certain applications but not others once that data cap has been exceeded, according to new guidelines.

The Body of European Regulators of Electronic Communications (BEREC) has published finalised guidance to help telecoms regulators based across the EU enforce new net neutrality laws that came into force in the trading bloc earlier this year.

In its guidance, BEREC did not go as far as to ban 'zero-rating', the practice of omitting internet users' use of specific applications or categories of applications when applying caps on data use on internet access services (IAS). However, it confirmed some zero-rating practices would breach the new rules.

"A zero-rating offer where all applications are blocked (or slowed down) once the data cap is reached except for the zero-rated application(s) would infringe [the net neutrality rules]," BEREC's guidelines said.

"The ISP could either apply or offer zero-rating to an entire category of applications (e.g. all video or all music streaming applications) or only to certain applications thereof (e.g. its own services, one specific social media application, the most popular video or music applications). In the latter case, an end-user is not prevented from using other music applications. However, the zero price applied to the data traffic of the zero-rated music application (and the fact that the data traffic of the zero-rated music application does not count towards any data cap in place on the IAS) creates an economic incentive to use that music application instead of competing ones," it said.

"The effects of such a practice applied to a specific application are more likely to 'undermine the essence of the end-users’ rights' or lead to circumstances where 'end-users’ choice is materially reduced in practice' … than when it is applied to an entire category of applications," BEREC said.

Under the EU net neutrality laws that came into force in April, internet users have the right to "access and distribute information and content, use and provide applications and services, and use terminal equipment of their choice, irrespective of the end-user’s or provider’s location or the location, origin or destination of the information, content, application or service, via their internet access service". Internet service providers (ISPs) must "treat all traffic equally".

Notwithstanding those rights and requirements, however, the regulations permit ISPs to implement "reasonable traffic management measures" which are "transparent, non-discriminatory and proportionate", such as blocking or throttling the delivery of content requested by users of their network, for reasons such as preserving the integrity and security of the network or combatting 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 in certain circumstances. That optimisation must be "necessary … to meet requirements of the content, applications or services for a specific level of quality" and the provision of such services must have no detrimental impact on "the availability or general quality of internet access services" ISPs otherwise provide.

BEREC said it had received an "unprecedented" 481,547 responses to a consultation it held on draft net neutrality guidelines earlier this summer. It said it had amended approximately a quarter of the paragraphs in its draft guidance to take account of the input it had received when finalising the document.

The regulatory body advised national regulatory authorities (NRAs) on what to take into account when assessing whether "agreements or commercial practices like zero-rating" accord with the net neutrality rules.

The regulators should review whether the arrangements fit within the aims of the rules to "safeguard equal and non-discriminatory treatment of traffic” and to "guarantee the continued functioning of the internet ecosystem as an engine of innovation", BEREC said. The regulators should intervene to put a stop to agreements or practices which "by reason of their scale, lead to situations where end-users’ choice is materially reduced in practice", or where they would "[undermine] … the essence of the end-users’ rights", it said.

In their assessment the regulators should look at the "respective market positions of those providers of internet access services, and of the providers of content, applications and services, that are involved", the guidance said.

"When assessing whether an ISP limits the exercise of rights of end-users, NRAs should consider to what extent end-users’ choice is restricted by the agreed commercial and technical conditions or the commercial practices of the ISP," BEREC said. "It is not the case that every factor affecting end-users’ choices should necessarily be considered to limit the exercise of end-users’ rights under [the rules]. The Regulation also foresees intervention in case such restrictions result in choice being materially reduced, but also in other cases that could qualify as a limitation of the exercise of the end-users’ rights under [the rules]."

Telecoms expert Reg Dhanjal of Pinsent Masons, the law firm behind Out-Law.com, earlier this year said that the UK's net neutrality guidance could differ from the EU's after Brexit.

"A lighter touch regime in the UK could provide opportunities for telecoms and content providers," Dhanjal said. "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."

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