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Here’s How the Ad-Blocking Debate Just Collided With Net Neutrality in Europe

February 19, 2016, 11:56 AM UTC
A new ad-blocking feature is set to come to iOS 9, setting up a confrontation between Apple and Google.
Photograph by Justin Sullivan—Getty Images

The mobile carrier group Three is rolling out ad-blocking technology on its networks, starting with trials in the U.K. and Italy.

It claims it is doing so because it’s unfair that its customers have to pay for the data chewed up by mobile ads. However, it’s also trying to get money out of the big ad networks, and the nature of this technology means Three is heading for a clash with regulators over net neutrality.

The tech comes from an Israeli company called Shine, which has been aggressively courting mobile operators over the last year — last November it even managed to add Philipp Humm, a former T-Mobile USA(TMUS) CEO and senior Vodafone(VODPF) executive, to its board.

This is not the same kind of ad-blocking technology that’s recently had the publishing industry in a tizzy. That’s been all about tools that people install themselves in their browsers or on their phones, in order to stop seeing advertisements. Shine’s tech operates at the network level, putting the operator of the user’s Internet connection in the driving seat.

If put to use, this network-based system can go a lot further than app- or browser-based ad-blocking technology. According to a Three spokesman and Shine itself, it will block most pre-roll video ads and about 95 percent of banner ads and popups — not just in browsers, but in smartphone apps as well.

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For now, there’s frustratingly little detail. Three will trial Shine’s technology later this year, but it won’t say yet to what extent the customer will be in control. Will Three try to get ad networks to pay to have their ads show up even if a customer wants to see no ads at all? At this point, it’s impossible to tell.

What is clear is that Facebook(FB) and Twitter(TWTR) can breathe easy for now — the ads showing up in their users’ feeds won’t be affected by Shine’s current technology. But that may change.

“What we don’t do yet, and it’s more a matter of yet than anything else, is block native advertising,” said Roi Carthy, Shine’s chief marketing officer.

The arrival of this ad-blocking model in Europe could make things really interesting. Before Friday, the only operator to publicly adopt Shine’s system was Caribbean carrier Digicel. European operators are playing with fire by following suit, because of the EU’s recently-adopted net neutrality laws.

These laws may be weak sauce in some regards, but they most definitely do not allow operators to block or degrade any kind of Internet traffic for the kinds of purposes outlined in Three’s rationale.

What is that rationale? In a statement, Three said its customers should not be paying for the data that used by chunky ads. The operator thinks advertisers — Google(GOOG) being one of the biggest beasts in the room — should be paying for that.

Three is also going for the privacy and security angle, noting that some mobile ads “extract and exploit data about customers without their knowledge or consent.”

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Fair enough, but under the new EU net neutrality laws (which aren’t yet in force), the only kind of outright traffic shaping that will be allowed will be for highly specialized services — think dedicated packages for Internet TV or cars or medical applications.

Regular Internet access, or anything resembling it, will have to stay neutral. Even a proposed exemption for network-level parental controls fell by the wayside during EU negotiations, although individual countries can still mandate parental controls through specific legislation.

According to a European Parliament source, network-level ad-blocking would be illegal under the new rules unless countries pass similar legislation to legalize it.

Experts in the European Commission also said the only exceptions to the net neutrality rules would be for content covered under national legislation, content that has to be filtered out to protect network security and integrity (such as malware), and cases where Internet traffic must be shaped to minimize temporary or exceptional network congestion.

“The rules do not foresee any exception for ad blocking,” the Commission’s experts said (in underlined text).

Remember, one of the main points of net neutrality is to stop carriers trying to wrest revenue out of content providers’ hands by charging for access to the carriers’ customers. However unpopular they may be, the ad networks, and the publishers carrying those ads in order to fund their businesses, are the content providers in this equation.

It’s worth noting that French broadband provider Free tried turning on network-level ad-blocking a few years back, in a bid to get money out of Google, but the government told it to stop.

“This is another effort from the operators to sell online services access to their customer base,” said Joe McNamee, the executive director of digital rights group EDRi, which campaigned hard for strong net neutrality laws. “This is essentially another type of abuse of net neutrality.”

A Three U.K. spokesman said the carrier’s legal team had looked into it and was confident there was no clash with net neutrality here.

Three might be the lucky carrier group to test out this theory, but don’t forget that its U.K. operation is about to merge (pending regulatory approval) with local rival O2, meaning around 40 percent of the country’s subscribers might find themselves with network-level ad-blocking on the menu. Other European operators may also be on the horizon.

Carthy said that, although Digicel and Three are the only ones to have gone public so far, other operators are also testing Shine’s technology “with internal groups” without having announced they are doing so. “We are sure to have more customer announcements in 2016,” he said.

This article was updated to include the European Commission’s experts’ opinion.