Regulators in Europe have so far generally taken a hands-off approach to operator’s zero-rating practices. Of 20 cases observed by Assembly in the last two years, only three have resulted in a regulator banning the offer. In most cases, regulators do not intervene or simply require some changes rather than a ban. This is in line with the objectives of the EU Regulation on Open Internet Access, which strikes a balance between net neutrality principles and the need to facilitate partnerships between operators and content providers, and comes at a time when BEREC is reviewing the guidelines for the application of the Open Internet rules. In October 2019, it published a revised version which are under consultation until 28 November 2019. BEREC appears to have taken on board the feedback from stakeholders who have asked for an even more flexible approach in light of the development of 5G, and warned about the lack of openness in zero-rating practices, which are often inaccessible for small tech companies.
Our research suggests regulators have so far only blocked a small number of zero-rated offers
Between 2017 and 2019, we observed 18 investigations of zero-rating practices, across 10 EU countries (this rises to 20 if Norway is included, which has close regulatory alignment with the EU and has adopted the telecoms regulatory framework). Our Net Neutrality and Zero-Rating Tracker found that, of these 20 cases:
Seven investigations concluded with the regulator deciding not to intervene;
In nine instances, the regulator allowed the offers to stand, but ordered changes;
In three cases, offers were banned altogether (two in Hungary, one in Sweden);
In one case in Croatia, the regulator withdrew the investigation as the operator made changes to the offer before the end of the investigation period.
Where NRAs have demanded changes to the offer, the most common requirement has been to remove the difference between the use of the plan in the home country and that made while roaming. Other common requirements relate to refraining from throttling bandwidth of streaming services. This is consistent with BEREC’s view that the guidelines, in the current version, have worked well in ensuring a consistent implementation of the Open Internet rules. The Regulation adopted in 2015 aimed to strike a balance between upholding the principles of net neutrality and enabling partnerships between ISPs and CAPs, resulting in innovative offers for consumers. It is expected that the new guidelines will require regulators to continue down the same path, with a view to increase participation of CAPs and improve the openness of MNOs’ zero-rating practices.
On the other hand, legislation to complement the Open Internet rules has not always been consistent across countries, particularly with regard to the financial penalties operators may face when breaching the rules. Some countries, such as the UK, have ruled sanctions up to 10% of a company’s annual turnover; others, such as Germany, have adopted maximum fines of €500k for breaches of the rules on traffic management techniques. Some countries have yet to legislate at all on penalties such as in Portugal, where ANACOM’s latest report on the application of the Open Internet rules notes that operators have not fully complied with its 2018 rulings on zero-rating. Here, the regulator is only committing to continued monitoring of the market, with no further action planned to enforce its previous rulings.
Guidelines on specialised services are changed to facilitate 5G
BEREC’s position is that the guidelines adopted in 2016 have generally been effective in ensuring a consistent application of the Open Internet rules. In an opinion published in December 2018, BEREC concluded that the regulation and the guidelines are striking the right balance between the views of different stakeholders. It is therefore unsurprising that the proposed guidelines (subject to consultation until 28 November 2019), only bear minor changes. Most of these changes amount to simple clarifications of the existing text. The only significant ones relate to two aspects: one is the treatment of zero-rating, where BEREC aims to open zero-rated offers up to smaller tech companies; the other is the assessments of specialised services, which stakeholders have argued are necessary to facilitate the development of 5G.
Industry has argued that certain services related to 5G will require specific network conditions, and the assessment of specialised services should take place over a longer timescale. There have even been some concerns that wording in the current guidelines is restrictive, and could prevent ISPs from implementing specialised services in relation to 5G. BEREC has taken these points on board and now makes a clearer distinction between “categories of traffic” and “specialised services”. The resulting provision is that BEREC now clearly states in its guidelines that, while NRAs should assess whether a service qualifies as a specialised service on a case-by-case basis, this should not result in a constant review of what constitutes a specialised service. In case of reassessment, this would be expected to take place over a longer timescale, usually several years. When an NRA decides that a service no longer qualifies as a specialised service due to the improved quality of the internet access service, the ISP should be allowed a reasonable transitional phase for phasing out of the specialised service.
BEREC wants to open zero-rating to more participants, particularly smaller tech companies
While BEREC considers the current guidelines to have generally worked well, it is determined to make changes in some respects which appear to warrant room for improvement. In particular, BEREC appears to have listened to the concerns voiced by some representatives of small tech companies in a workshop hosted by BEREC in May 2019, in preparation for the update of the guidelines. Stakeholders there argued that zero-rating practices are often less accessible for small businesses than they are for tech giants; the process can be lengthy, and with little certainty as to whether a service will end up being included in an operator’s zero-rated offer. This ends up biasing user choice, putting non-zero-rated apps at a disadvantage, and more broadly favouring the largest tech companies against startups and smaller tech firms.
To tackle this problem, BEREC has included best practice recommendations in the new draft guidelines, to make sure the application process becomes more open and transparent. A new set of criteria has been included for regulatory authorities to consider whether zero-rating practices of MNOs can be considered as “open programmes”. NRAs may consider the extent to which the programme is open to all content and application providers (CAPs) of a given category and, for open programmes, whether the terms on which CAPs may join the programme are transparent, non-discriminatory, fair and reasonable. More specifically, NRAs will have to check whether conditions apply to all CAPs equally (e.g. regardless of turnover or number of users); whether the process has the same length and stages for all CAPs; and whether it is transparent and straightforward for companies wishing to apply. They should also ensure that the terms for joining a programme do not form barriers to entry (e.g. fees which may be considered unreasonable). These provisions translate into a new annex BEREC added to the draft guidelines.
