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Europe’s top court slaps down ‘zero rating’ again
Europe’s top court has dealt another blow to “zero rating” — ruling for a second time that the controversial carrier practice goes against the European Union’s rules on open internet access.
“Zero rating” refers to commercial offers that can be made by mobile network operators to entice customers by excluding the data consumption of certain (often popular) apps from a user’s tariff.
The practice is controversial because it goes against the “level playing field” principle of the open internet (aka “net neutrality”).
EU legislators passed the bloc’s first set of open internet/net neutrality rules back in 2015 — with the law coming into application in 2016 — but critics warned at the time over vague provisions in the regulation which they suggested could be used by carriers to undermine the core fairness principle of treating all internet traffic the same.
Some regional telcos have continued to put out zero rating offers — which has led to a number of challenges to test the robustness of the law. But the viability of zero rating within the EU must now be in doubt, given the double slap-down by the CJEU.
In its first major decision last year — relating to a challenge against Telenor in Hungary — the court found that commercial use of zero rating was liable to limit the exercise of end users’ rights within the meaning of the regulation.
Its ruling today — which relates to a challenge against zero rating by Vodafone and Telekom Deutschland in Germany (this time with a roaming component) — comes to what looks like an even clearer conclusion, with the court giving the practice very short shrift indeed.
“By today’s judgments, the Court of Justice notes that a ‘zero tariff’ option, such as those at issue in the main proceedings, draws a distinction within internet traffic, on the basis of commercial considerations, by not counting towards the basic package traffic to partner applications. Such a commercial practice is contrary to the general obligation of equal treatment of traffic, without discrimination or interference, as required by the regulation on open internet access,” it writes in a (notably brief) press release summarizing the judgement.
“Since those limitations on bandwidth, tethering or on use when roaming apply only on account of the activation of the ‘zero tariff’ option, which is contrary to the regulation on open internet access, they are also incompatible with EU law,” it added.
We’ve reached out to Vodafone and Telekom Deutschland for comment on the ruling.
In a statement welcoming the CJEU’s decision, the European consumer protection association BEUC’s senior digital policy officer, Maryant Fernández Pérez, subbed the ruling “very positive news for consumers and those who want the internet to stay open to all”.
“When companies like Vodafone use these ‘zero tariff’ rates, they essentially lock-in consumers and limit what the Internet can offer to them. Zero-rating is detrimental to consumer choice, competition, innovation, media diversity and freedom of information,” she added.
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Europe’s top court says net neutrality rules bar ‘zero rating’
The European Union’s top court has handed down its first decision on the bloc’s net neutrality rules — interpreting the law as precluding the use of commercial ‘zero rating’ by Internet services providers.
‘Zero rating’ refers to the practice of ISPs offering certain apps/services ‘tariff free’ by excluding their data consumption. It’s controversial because it can have the effect of penalizing and/or blocking the use of non-zero-rated apps/services, which may be inaccessible while the zero rated apps/services are not — which in turn undermines the principal of net neutrality with its promise of fair competition via an equal and level playing field for all things digital.
The pan-EU net neutrality regulation came into force in 2016 amid much controversy over concerns it would undermine rather than bolster a level playing field online. So the Court of Justice of the EU (CJEU)’s first ruling interpreting the regulation is an important moment for regional digital rights watchers.
The #ECJ interprets, for the first time, the #EU regulation enshrining #InternetNeutrality with regards to the #Internet users’ rightshttps://t.co/ATb3CgbPxg
— EU Court of Justice (@EUCourtPress) September 15, 2020
Despite the existence of a net neutrality regulation, European carriers have continued offering packages that ‘zero rate’ certain apps, such as Facebook-owned WhatsApp, for example — raising questions over whether such offers comply with the rules. Today’s ruling suggests they do not.
In another example from Hungary, one of carrier Telenor’s 1GB data tariffs (screengrabbed below) touts unlimited domestic data consumption for a number of social apps, including Facebook, WhatsApp, Messenger, Instagram and Twitter — meaning all other apps/services are at a disadvantage as usage is throttled by the user’s 1GB allowance.
A Budapest court hearing two actions against Telenor, related to two of its ‘zero rating’ packages, made a reference to the CJEU for a preliminary ruling on how to interpret and apply Article 3(1) and (2) of the regulation — which safeguards a number of rights for end users of Internet access services and prohibits service providers from putting in place agreements or commercial practices limiting the exercise of those rights — and Article 3(3), which lays down a general obligation of “equal and non-discriminatory treatment of traffic”.
The court found that ‘zero rating’ agreements that combine a ‘zero tariff’ with measures blocking or slowing down traffic linked to the use of ‘non-zero tariff’ services and applications are indeed liable to limit the exercise of end users’ rights within the meaning of the regulation and on a significant part of the market.
“Such packages are liable to increase the use of the favoured applications and services and, accordingly, to reduce the use of the other applications and services available, having regard to the measures by which the provider of the internet access services makes that use technically more difficult, if not impossible. Furthermore, the greater the number of customers concluding such agreements, the more likely it is that, given its scale, the cumulative effect of those agreements will result in a significant limitation of the exercise of end users’ rights, or even undermine the very essence of those rights,” the court writes in a press release.
It also found that no assessment of the effect of measures blocking or slowing down traffic on the exercise of end users’ rights is required by the regulation, while measures applied for commercial (rather than technical) reasons must be regarded as automatically incompatible.
The full CJEU judgement is available here in French and Hungarian. (Update: And in English here.)
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Bangladesh regulator orders telcos to stop providing free access to social media
Bangladesh’s regulator has ordered telecom operators and other internet providers in the nation to stop providing free access to social media services, becoming the latest market in Asia to take a partial stand against zero-rating deals.
Bangladesh Telecommunication Regulatory Commission, the local regulator, said late last week that it had moved to take this decision because free usage of social media services had spurred their misuse by some people to commit crimes. Local outlet Business Standard first reported about the development. Bangladesh is one of the largest internet markets in Asia with more than 100 million online users.
Technology companies such as Facebook and Twitter have struck partnerships, more popularly known as zero-rating deals, with telecom operators and other internet providers in several markets in the past decade to make their services free to users to accelerate growth. Typically, tech companies bankroll the cost of data consumption of users as part of these deals.
In Bangladesh, such zero-rating deals have been popular for several years, said Ahad Mohammad, chief executive of Bongo, an on-demand streaming service, in an interview with TechCrunch (Extra Crunch membership required) .
Grameenphone and Robi Axiata, two of the largest telecom operators in Bangladesh, enable their mobile subscribers to access a handful of services of their partners even when their phones have run out of credit. Both telecom firms have said they are in the process to comply with Dhaka’s order.
It remains unclear whether Free Basics, a program run by Facebook in dozens of markets through which it offers unlimited access to select services at no cost, will continue its presence in Bangladesh after the nation’s order. Facebook relies on telecom networks to offer data access for its Free Basics program.
In Bangladesh, Facebook struck deals with Grameenphone and Robi Axiata, according to its official website, where Facebook continues to identify Bangladesh among dozens of markets where Free Basics is operational.
Several nations in recent years have balked at zero-rating arrangements — though they have often cited different reasons. India banned Free Basics in early 2016 on the grounds that Facebook’s initiative was violating the principles of net neutrality.
Free Basics also ended its program in Myanmar and several other markets in 2017 and 2018. Facebook did not respond to requests for comment.
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FCC voices ‘serious concerns’ over AT&T’s zero-rating scheme
The FCC may be on the verge of being rebuilt under a very different administration, but reports put together under the current one are still being issued — and just such a one released today offers a critical view of some current “zero-rating” plans from AT&T, T-Mobile and Verizon. Read More
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