What’s the issue?

Net neutrality is the concept that everyone should have equal access to all kinds of online content (email and high-quality video, alike) without operators being able to throttle, block or discriminate against any type of content. The issue has come increasingly into focus with the massive expansion of content being downloaded and streamed on the internet and concerns that major players may try to buy or leverage content prioritisation at the expense of smaller companies and start ups.

What’s the development?

From 30 April 2016, for the first time, Europe will have in place a regime mandating an open and neutral internet across Europe.

While the current EU directives on telecoms do aim to preserve the neutrality of the net at a high level, until now, Europe has had no express legislation mandating an open internet. This changed on 27 October 2015, when the European Parliament adopted the Connected Continent Regulation (2015/2120) which amended the data roaming rules and created the first EU-wide net neutrality rules.

What does this mean for you?

At a glance, the new EU net neutrality rules provide that every European must be able to have access to all content on the internet. Blocking and throttling content will be illegal; an individual’s access to the internet cannot be restricted; and there can be no discrimination between the types and sources of data travelling across the networks.

The rules were heavily debated by the European institutions over a period of two years and, as adopted, leave a number of loopholes in the legislation which, critics argue, may result in a not-so-open internet.

While the Regulation does tick the box of legislating for net neutrality in Europe – which has been lagging behind the US in this regard – arguably, it does not go quite far enough, and the exceptions leave a good amount of wiggle room for the larger operators to shape the market. In particular, the practice of zero-rating (see below) allows the larger operators to exempt certain sites and applications from the consumers’ data limits, thereby driving away traffic from competitors – in effect, this could mean that consumers develop a preference for certain content at the expense of other content. This is likely to impact the less established, smaller start up players who may be unable to compete with the larger content houses whose content is favoured on the bigger networks.

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The legislation provides for the following exceptions from the basic net neutrality premise:

  • ‘Specialised services‘: providers of certain services will have access to special transmission quality if there is network capacity and there will not be an adverse effect on overall internet access. The scope of this exception is left rather vague but could arguably include critical services such as remote surgery, driverless cars and preventing terrorist activities;
  • ‘Zero-rating‘: this practice would allow operators not to count the use of certain ‘preferred’ applications or sites towards the data limit of the end-user. Effectively, this could act as a form of content prioritisation, particularly in respect of mobile data usage;
  • Traffic management measures: these allow operators to monitor network performance and impose data controls in order to manage the efficient use of the network and optimise overall transmission – any such measures will have to be transparent, non-discriminatory and proportionate.

Notwithstanding these rather broad exemptions, intense negotiations regarding the details of the final draft of the rules, including the exemptions, did result in Member States having relatively significant leeway to implement and enforce the new rules in each Member State. For example, in the UK, Ofcom can decide on the minimum quality requirements for a provider to be able to benefit from the ‘specialised services’ exemption. Equally, Ofcom is likely to have mandate to decide on abuses against the ‘zero-rating’ exemption, as well as rules on congestion.

As such, how the rules will work in practice in Europe remains, to some extent, to be seen. Further guidance from BEREC on exactly how the rules should be implemented is expected in August 2016.

The US telecommunications regulatory watchdog, the FCC, has introduced similar rules, including the zero-rating carve-out; however, the FCC rules go a step further and prohibit telecoms companies from accepting money from internet businesses to prioritise their content. In the US, this has resulted in the likes of telecoms giant, T-Mobile, recently introducing the ‘Binge On’ data package, which allows users to stream unlimited Netflix, HBOand other video, without such usage counting towards their data limits.

While under this deal no money has exchanged hands between the content providers and T-Mobile, it is still likely to have an effect on consumer behavior in terms of shaping the end-user’s preference towards a certain content provider – the exact extent of such distortion is, as yet, unclear. More than likely, the allowance of zero-rating in the EU rules will result in the introduction of similar offers from European operators. The FCC has said that it will not ban free offers such as the T-Mobile ‘Binge On’, but that it will assess each of these practices on a case-by-case basis. Perhaps this is the approach that European national regulators will follow – assessment on a case-by-case basis. 2016 is certainly set to be an interesting year for the development of net neutrality law in Europe.