On May 15th, 2015 the Dutch Department of Economic Affairs took an exceptional step by issuing guidelines on net neutrality for the Authority for Consumers and Markets (ACM). These guidelines (Net Neutrality Guidelines) serve as a basis for the enforcement by ACM of the net neutrality rules in Article 7.4a of the Dutch Telecommunications Act (Net Neutrality Act).
Pursuant to the Net Neutrality Act, providers of internet access services may not block or obstruct services and applications on the internet (except for a few strict exceptions). Furthermore, providers may not differentiate between tariffs for internet access services, and services and applications provided or used through these services. The Netherlands and Slovenia are currently the only European Member States with such strict net neutrality rules in force. Other Member States only require providers to be transparent about internet access restrictions and tariffs.
Net Neutrality Guidelines
It took the Department one year after the public consultation of the draft to come to the final version of the Net Neutrality Guidelines. The guidelines further clarify the material and subject scope of the Net Neutrality Act and essentially tighten up the Dutch net neutrality rules. Below is an informal translation of the Net Neutrality Guidelines:
Pursuant to article 7.4a Telecommunications Act (TA) the Authority for Consumers and Markets shall take notice that 'internet access service' as set out in article 7.4a TA is to be interpreted generously in order to prevent circumvention of the net neutrality provision. Delivering a stand-alone service or application is excluded from article 7.4a TA. Delivering more than one stand-alone service to an end-user though an internet access connection falls within the scope of Article 7.4a TA. The net neutrality rules apply also to a combination of internet access and a stand-alone service (i.e. access to one content service or application).
The internet access service as set out in article 7.4a TA is a public electronic communications service pursuant to article 1.1 (g) TA. Non-publicly available internet access services fall outside the scope of this article.
The explanatory memorandum explains that the material scope of the Net Neutrality Act is to be interpreted broadly by ACM. This means that the Net Neutrality Act only exempts the offering of one single so-called stand-alone service. A stand-alone service encompasses the internet access to one single application or content service only (i.a. email or a music streaming app) while blocking all other content services or applications. The Net Neutrality Act fully applies if access is offered to two or more content services or application, or if a complete internet access service is offered in a bundle with a single stand-alone-service. If the Net Neutrality Act applies, any negative or positive price discrimination (zero rating or sponsored data) is prohibited. The explanatory memorandum furthermore clarifies that the offering of internet content services or applications like Google, Spotify, Whatsapp and Skype as such does not fall within the scope of the Net Neutrality Act. This also goes for specialised services like IP-based services with Quality of Service characteristics (reserved bandwidth) delivered through a separate connection such as Voice over LTE, IP TV and LTE Broadcast. Such services are not seen as internet access services and therefore do not fall within the scope of the Net Neutrality Act.
The subject scope of the Net Neutrality Act is limited by Article 2 of the Net Neutrality Guidelines. Pursuant to this Article, the Net Neutrality Act does not apply to non-publicly available internet access services. This means inter alia, as explained in the explanatory memorandum, that internet access services offered by private companies and institutions to their customers or visitors through WiFi fall outside the scope of the Net Neutrality Act. However, publicly available internet access services will still fall within the scope of the Net Neutrality Act.
What does it mean
Guidelines by the Department are normally seen as a means of last resort to influence the independent regulator ACM. Until now, the Department had only issued such guidelines once, in 2005. Apparently, these guidelines are meant to counteract any liberal interpretation by ACM of the Net Neutrality Act.
In the past, ACM seemed reluctant to enforce the Net Neutrality Act. ACM officials had publicly expressed doubts about the necessity and desirability of the Net Neutrality Act. And ACM did not seem inclined to strictly enforce the Net Neutrality Act. Instead ACM took a soft approach and actively engaged in discussions with providers on use cases under the Net Neutrality Act. In these discussions ACM sometimes seemed to take a rather liberal position on the net neutrality rules. For example, in order to prevent potential congestion T-Mobile was permitted to block internet services such as YouTube and Netflix as part of free internet services on trains. The Dutch net neutrality rules in principle only permit traffic management measures in the event of actual congestion, provided that all equivalent traffic is treated equally.
No material effect of the guidelines
ACM had already abandoned this liberal approach before these guidelines entered into force, arguably under pressure from the Department of Economic Affairs, which is taking a strong stance towards the strict enforcement of net neutrality rules and is actively promoting this approach in the EU.
On 18 December 2014 ACM imposed a EUR 250,000 fine on Dutch provider KPN for blocking internet traffic on 176 Wi-Fi hotspot locations within the Netherlands. According to KPN it had intentionally not blocked all internet services and applications that used ports 80 and 443 including services such as VPN, Outlook, Bittorrent, FTP (File Transfer Protocol), SSH, Telnet and VoIP services of other providers.
And on the same day ACM also fined Vodafone for EUR 200,000 for zero-rating the HBO GO-app. ACM did not follow Vodafone's argument that the HBO Go-app had to be qualified as an exempted stand-alone service, since it was offered in combination with a complete internet access service. The Vodafone/HBO case in particular shows that in The Netherlands, internet access providers may not charge different internet access service rates connected with the use of specific apps. Providers are strictly prohibited from charging higher fees to consumers (surcharging) as well as zero-rating specific apps or services such as Whatsapp or Netflix.
The fines imposed to KPN and especially Vodafone illustrate that ACM abandoned is former liberal position and anticipated the Department's Net Neutrality Guidelines with a stricter interpretation of the Net Neutrality Act. Insofar the guidelines will have no material effect.
However, the guidelines certainly bring more clarity regarding the exact scope of the Net Neutrality Act. They make clear that providers may only offer one single stand-alone service under the exemption for stand-alone services. And with respect to internet access services offered by private companies and institutions through free WiFi for customers and end-users, the guidelines clarify that these services fall outside the scope of the Net Neutrality Act. Hence, Schiphol Airport or the Dutch Railway Services ('NS') may offer restricted internet access services on public grounds, stations and trains without violating the Net Neutrality Act. However, the likes of KPN and Vodafone may not offer restricted internet access. Specialised services remain unregulated in the Netherlands.
State of play in the EU
The Net Neutrality Guidelines also seem to aim to support the Dutch position in the current European debate on net neutrality rules. The state of play in that debate is that the Latvian presidency has initiated informal trilogue negotiations with the European Commission and the Parliament on the draft regulation on net neutrality and roaming. Next to roaming related issues, zero-rating and regulating specialised services are expected to remain major points of political controversy. The European Parliament is likely to aim for including a prohibition on zero-rating and ruling out specialized services.
For now the outcome of the trilogue negotiations is still uncertain. If the draft regulation is adopted, the Netherlands and Slovenia will be forced to abandon their strict national net neutrality rules and to permit zero-rating under certain conditions. Paid prioritisation does not seem to be a focus yet, but may become the next matter of political concern if specialised services are regulated.