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Why a Facebook Deal Has Outraged Swedish Media

May 09, 2016

Facebook's(fb) strategy of striking so-called zero-rating deals with telecoms operators, where the operators offer Facebook to their customers without charging for the data usage, really isn't popular with everyone.

First India shut down Facebook's zero-rating deals in that country on net-neutrality grounds, and now Sweden's media is up in arms about an arrangement that they claim threatens press freedom—and that is being investigated by the Swedish telecoms authority.

This time the deal is with Telia, the partly state-owned and market-leading telco in Sweden. According to a joint letter signed last week by 27 Swedish broadcasters, publishers and media associations, the model is a "direct attack on net neutrality" that could ultimately lead to higher prices for accessing the open Internet.

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They wrote:

What Telia and Facebook are creating here is a self-perpetuating closed system—a dominant player in the media industry (Facebook) makes a deal with a dominant player in the telecom industry (Telia), giving Facebook an advantage over all other media players that are dependent on the Internet, while giving Telia an advantage over other telecom companies. The rest of the industry is then forced to follow the lead of the two giants who are now setting the rules.

The European Union recently introduced new net neutrality rules that skirt around the issue of zero-rating—despite the best efforts of politicians from countries such as the Netherlands, which already ban zero-rating and now may have to loosen those regulations in order to fall in line with the new EU-wide rules.

According to the Swedish media representatives who signed the letter, the Telia-Facebook deal falls into a legal gray area and is "an attempt to test and push the limits of how far telecom companies can go to control web content."

"Imagine what an advantage BMW would have if it made a deal with the Swedish Transport Administration that only BMWs were allowed to drive in the bus lane, or that BMWs didn’t have to pay congestion fees or vehicle tax!" they wrote.

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Of course, this is hardly the first zero-rating deal in Sweden, which has so far had a light-touch approach to net-neutrality regulation. For example, the mobile operator Three Sweden lets people stream music from services such as Spotify and SoundCloud without the data being deducted from their monthly limit (a similar arrangement to T-Mobile U.S.'s controversial Binge On arrangement for video traffic).

Telia's new zero-rating drive isn't even specifically about Facebook — it's also letting customers surf selected other social networks for free.

However, the Facebook element has clearly touched a nerve with media companies that already find themselves increasingly having to play on Facebook's terms, as the social network becomes the primary news portal for many people.

"It will be even harder for small and medium-sized players to gain a local foothold–if they don’t want to submit to Facebook’s business logic and publication rules," they wrote. "In practice, this means that the priority of local news in Härjedalen, Sweden will increasingly be managed by algorithms on the West Coast of the United States."

As of last week, the Swedish telecoms authority (PTS) is now investigating complaints about the net-neutrality implications of Telia and Three's zero-rating schemes, although Telia has denied contravening the net-neutrality principle on the basis that no-one is technically paying to have their traffic prioritized.

Emma Närvä, the head of the electronic communicications unit at the PTS competition department, told Fortune that the agency does not necessarily see zero-rating as a problem, but there are aspects of what Telia and Three are doing that might clash with the new EU legislation.

"The one aspect we have started investigating is how the traffic is handled within the offers; if there is discrimination of traffic within these offers," she said. "The basic rule in net neutrality regulation says traffic is supposed to be treated equally, and we have concerns that this is not what is happening in these offers."

Facebook did not respond to a request for comment, and Telia would not offer any comment either.

This article was updated to include details of the Swedish telecoms authority's investigation.

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