CJEU applies net neutrality rules against 'zero rating'

The Court of Justice of the EU (CJEU) said the practice runs contrary to the principle of the openness of the internet, known as 'net neutrality', which is enshrined in EU law.

Dr. Nils Rauer of Pinsent Masons, the law firm behind Out-Law, said it was the first time that the CJEU had considered the implementation of the EU's Open Internet Regulation, which came into force in 2016. He said the ruling is in line with updated guidelines on the net neutrality rules which the Body of European Regulators for Electronic Communications (BEREC) published earlier this year.

"By its ruling, the CJEU has given a strong signal, clearer even that the recent BEREC guidelines on the matter: blocking or throttling applications outside of the scope of a zero tariff offer can stifle competition and innovation, it restricts the users’ freedom to use the service it chooses, and commercial considerations do not constitute a valid legal ground to operate traffic management measures," Rauer said.

Under the EU Open Internet Regulation, internet users have the right to "access and distribute information and content, use and provide applications and services, and use terminal equipment of their choice, irrespective of the end-user’s or provider’s location or the location, origin or destination of the information, content, application or service, via their internet access service". Internet service providers (ISPs) must "treat all traffic equally".

Notwithstanding those rights and requirements, however, the regulations permit ISPs to implement "reasonable traffic management measures" which are "transparent, non-discriminatory and proportionate", such as blocking or throttling the delivery of content requested by users of their network, for reasons such as preserving the integrity and security of the network or combatting network congestion.

Although the EU net neutrality rules prohibit paid prioritisation of content delivery online, they do not prevent ISPs from entering into agreements to deliver certain content, applications or services at "optimised" quality in certain circumstances. That optimisation must be "necessary … to meet requirements of the content, applications or services for a specific level of quality" and the provision of such services must have no detrimental impact on "the availability or general quality of internet access services" ISPs otherwise provide.

The CJEU was asked to provide further clarity on the application those rules by the Budapest High Court in Hungary which has been considering a dispute between telecoms provider Telenor Hungary and Hungary's media regulator. The dispute centres on the terms of internet packages on offer from Telenor Hungary.

Telenor Hungary offered two packages with data usage restrictions in place, one oriented towards social networks, the other towards music applications. Under both packages consumers could access certain applications without the provider deducting the data used in doing so from their overall data allowance, while data used in accessing other applications was counted for the purposes of that allowance. Even once the data allowance was exhausted, users could still continue to access these applications, while access to all others was restricted.

The CJEU said that this services offered with preferential access, known as ‘zero tariff’ or 'zero rating', are "liable 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". It said this infringes the Open Internet Regulation's provisions on treating all online traffic equally and goes further than what the Regulation provides in terms of agreements between internet providers and end users.

"The greater the number of customers concluding subscription agreements to such packages, 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 end users’ rights," the court said.