Net neutrality is the principle that internet service providers (ISPs) should treat all data that travels over the internet in an equal and non-discriminatory manner.

The EU’s Open Internet Regulation (Regulation (EU) 2015/2120) harmonises the net neutrality rules across EU member states. It requires ISPs to treat all traffic equally and gives users rights to access and distribute content and to use services, regardless of their location, the location of their ISP or the nature of the content or service. The Regulation also provides that agreements between ISPs and end users, or commercial practices, must not limit these rights.

Despite this, the net neutrality principle is not absolute. ISPs are allowed to implement reasonable traffic management measures. These measures must be transparent, non-discriminatory and proportionate. An ISP may be permitted to throttle or block a user’s access to certain content for security reasons or to minimise network congestion. In some instances, an ISP is allowed to deliver services, applications and content at an optimised quality, provided that delivery does not have a detrimental effect on the availability or general quality of internet access services that the ISP otherwise offers.

Why does net neutrality matter?

If the principle of net neutrality is eroded there is a risk of a two-tier internet that allows those that pay more to have prioritised access to certain content and services. A lack of net neutrality could result in the best performance going to a premium tier of users to the detriment of other users. ISPs could end up favouring what they or their commercial partners offer by blocking or restricting access to competitors’ services.

Lawfulness of ‘zero tariff’ data plans

The Court of Justice of the European Union (CJEU) recently delivered a ruling in Telenor Magyarország Zrt v Nemzeti Média -és Hírközlési Hatóság Elnöke (Cases C-807/18 and C-39/19). This was the CJEU’s first judgment on the application of the net neutrality rules since that law came into force in 2016.

The case arose from the Hungarian telecom regulator’s decision that the following two packages that Telenor Hungary offered to its customers were unlawful under the net neutrality rules:

• Social media: the ‘MyChat’ package, offered customers unlimited access to certain messaging services such as Facebook, WhatsApp and Viber while all other usage was subject to the customer’s data cap.

• Music: the ‘MyMusic’ package, offered unlimited usage to certain music and radio services such as Apple Music and Spotify, while all other usage was subject to the customer’s data cap.

Once the user exhausted the data cap, their access to services other than those included in the bundle’s ‘walled garden’ of preferred services, would be slowed down or stopped entirely. This practice is commonly referred to as “zero-tariffing” or “zero-rating”.

CJEU’s ruling

In its ruling, the CJEU confirmed the principle of equality in the provision of internet services. It held that once a user has used up their data allowance, an ISP is not permitted to offer the user preferential access to certain services over others, as this practice does not align with the net neutrality rules.

The CJEU said that an agreement between ISPs and an end user that offers preferential access, such as zero-tariffing, was liable to infringe the net neutrality rules on treating all online traffic equally and in a non-discriminatory manner. This is because offering a zero-tariff package is likely to increase the use of certain favoured services and reduce the use of other available services, including those of competitors.

The CJEU added that taking scale into account, the more customers that take up zero tariff packages, the more likely it is that the overall effect of these packages would result in a significant limitation of users’ rights.

While the net neutrality rules allows ISPs to implement ‘reasonable traffic management measures’ these are subject to certain restrictions, including that they are based on objective technical requirements and not on commercial considerations. The CJEU’s view is that the zero-tariffing packages are incompatible with this requirement if they are primarily based on commercial considerations.

Analysis

The CJEU’s ruling is not a surprise in light of the recent guidance on treating internet traffic equally as set out in the Guidelines on the Implementation of the Open Internet Regulation published by BEREC - the Body of European Regulators for Electronic Communications earlier this year.

One of the aims of the net neutrality rules is to foster an open internet that promotes user choice and reflects advances in technology. The CJEU’s ruling makes it clear that ISPs slowing down or stopping access to services that fall outside of the preferred services included in a zero tariff plan is detrimental to users as it reduces their freedom of choice and may also limit innovation. Zero tariff plans will not be seen as implementing proportionate, reasonable traffic management measures if they are based on commercial considerations rather than objective technical requirements.

Irish view

ComReg, the Irish telecoms regulator, has been active in this space. Last year it issued a number of non-compliance notice to ISPs for alleged breaches of the net neutrality rules relating to transparency of consumer contracts. ComReg has indicated that it is monitoring the availability of zero-rated services in Ireland and their compatibility with the net neutrality rules. It also noted that some health and education websites have been zero-rated on a temporary basis as part of the overall response to COVID-19. However, a response to a national pandemic is more likely to be considered a proportionate and necessary traffic management measure than a commercial arrangement.

Where to from here?

It remains to be seen how the ongoing net neutrality debate on an ‘open internet for all’ vs. a ‘two-tier internet’ will develop. The interpretation of specific exemptions such as ISPs being allowed to deliver services at an ‘optimised quality’ may be tested over the coming months.

The CJEU’s ruling may have far reaching implications for national regulators, ISPs, content providers, and users across the EU. We expect that European ISPs will now carefully review their data plans and packages, especially those involving zero tariff options. The CJEU has left it up to national regulators to look at data plans on a case-by-case basis to see if they are discriminating against certain types of online traffic or limiting users’ rights. Before national regulators intervene, ISPs should consider if this ruling will have an impact on the packages they offer to customers and revise these packages if required.

You can read the CJEU’s full judgement here.

For more information contact a member of our Media & Telecoms team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.