On September 11, 2013, the European Commission (EC) published its long-awaited proposal for a Regulation on a European Single Market for Electronic Communications. The proposal was leaked during the summer and sparked such a heated debate (both inside and outside of the EC) that Commissioner Neelie Kroes’ staff made significant revisions to the initial draft, apparently up until the very last minute.

One of the most important aspects of the proposed Regulation is net neutrality. Net neutrality is the principle that all electronic communications passing through a network must be carried on a non-discriminatory basis, regardless of their source, content, or destination. Apparently, the EC decided to take action to safeguard net neutrality following the publication of a study conducted by the Body of European Regulators of Electronic Communicators (BEREC) in 2011, which found that in receiving online services many European consumers face practices of blocking or throttling of content.

The proposed Regulation seeks to end such practices and give every European consumer the “right to an open internet.” It provides that end-users shall be free to enter into agreements on data volumes and speeds with internet service providers (ISPs) and, on the basis of such agreements as well as reasonable traffic management measures, access and distribute information and content, run applications and use services of their choice via their internet access service. In practice, this means that ISPs will now be prohibited by law from blocking European consumers from using any online services on their computers, tablets or smartphones – for example, Voice over Internet Protocol (VoIP) or Video on Demand (VoD) services – throughout the EU market.

However (and here appears to lie the starting point of the on-going controversy), the proposed Regulation also provides scope for providers of electronic communications to the public (including ISPs) to offer premium connectivity services. In that respect, end-users will be free to agree with ISPs – or with providers of content, applications, and services – on the provision of specialized services with an enhanced quality of service. In order to enable the provision of such specialized services to end-users, the proposed Regulation allows ISPs and providers of content, applications, and services to enter into agreements with each other to transmit the related data volumes or traffic as specialized services with a defined quality of service or dedicated capacity.

Allowing the conclusion of such agreements sits somewhat awkwardly with the very concept of net neutrality, as explained above, and may in the medium to long term have anti-competitive effects on various segments of the EU digital market. To provide an example, the conclusion of specialized service agreements between large companies providing VoIP services and ISPs could raise barriers to entry for smaller companies providing competing VoIP services: not only may the latter not be able to pay the (higher) commercial fees that the provision of specialised services implies (which immediately puts them at a competitive disadvantage) but, moreover, the technical limits that may apply to transmission capacity could result in the degradation of their service.

In an effort to avoid the creation of a two-tier internet (i.e. a high-level quality tier and a degraded quality tier), the EC has included in its proposal a requirement that the provision of specialized services does not impair “in a recurring or continuous manner the general quality of internet access services.” The strength of this general safeguard will of course depend on how it is applied in concrete circumstances. At what point is impairment considered to be recurring or continuous? And how is the “general quality” of internet access defined in the first place?

In addition, the EC proposes to entrust to national regulatory authorities (NRAs) the responsibility of monitoring the situation in the various EU Member States and ensuring the continued availability of non-discriminatory internet access services at levels of quality that reflect advances in technology and that are not impaired by specialized services. Provided certain conditions are fulfilled, NRAs will also be empowered to impose minimum quality of service requirements on ISPs.

Some have already indicated that the proposed safeguards contain a number of loopholes and lack clarity and particularity. It is therefore questionable whether the proposal will satisfy net neutrality advocates. With the European Parliament elections fast approaching, it is also questionable whether there will be enough time to reach a consensus on a final text. This is even more so given that the debate is expected to be heated.

The proposal will now undergo review and revisions in the European Parliament and the Council of the EU, with the very ambitious goal of being adopted before the European Parliament elections in May 2014.

The proposal presents interesting parallels to the Open Internet rules, promulgated in the United States by the Federal Communications Commission in December 2010. Steptoe & Johnson represents the Open Internet Coalition in defending the rules against a still pending appellate challenge, and argued the case in the federal Court of Appeals for the D.C. Circuit on September 9, 2013.