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The EU’s top court just closed a major loophole in Europe’s net-neutrality rules

September 15, 2020, 10:05 AM UTC

Telecommunications providers in the European Union will have to pare back the practice of “zero rating,” where they bundle their Internet access with services whose use is exempted from customers’ data caps—data-intensive content-streaming services such as Spotify and Netflix, as well as operators’ own rivals to those services, are popular examples.

In a landmark ruling handed down Tuesday morning, the EU’s highest court, the Court of Justice of the EU (CJEU), confirmed it is illegal to block or slow down traffic once the user’s data cap is reached, just because that traffic isn’t part of a zero-rating deal.

This was the first time the court had been asked to interpret the wording of the EU’s 2015 net-neutrality law—the term “net neutrality” refers to the principle of equal treatment for all the traffic that passes over operators’ networks.

At the time of the law’s passage, net-neutrality advocates were deeply concerned that loopholes would allow operators to get away with practices that prioritize some traffic over other traffic, for commercial rather than technical reasons.

Zero-rating was a particular worry, because the law did not specifically mention it. Therefore, it seemed operators might be able to get away with blocking or slowing down customers’ general Internet use once they reached their data caps, while still allowing favored services to run unimpeded.

Clearer rules

The EU’s telecoms regulators decided in 2016 that the law’s terms technically allowed zero rating, as long as an assessment shows customers aren’t being steered away from services that compete with the bundled offer. Net-neutrality advocates took that as a victory, but it is only now that the CJEU has confirmed that zero rating is off the table.

And then some. The court didn’t just say it was illegal to block or slow down traffic just because it’s not part of a zero-rating deal—it said there was no need to assess the effects of such a policy on customers’ rights; just having the policy was bad enough.

“The requirements to protect Internet users’ rights and to treat traffic in a non-discriminatory manner preclude an Internet access provider from favoring certain applications and services by means of packages enabling those applications and services to benefit from a ‘zero tariff’ and making the use of the other applications and services subject to measures blocking or slowing down traffic,” the court said in its ruling.

The ruling does not stop operators from offering zero-rated services that are exempted from the customers’ data cap, as long as those services are also throttled like everything else when the general cap is reached.

The case involved Telenor Hungary, a former subsidiary of the Norwegian telecoms giant Telenor. The Hungarian telecoms regulator had told Telenor to scrap two packages that included zero-rated services—one package provided free data for messaging services such as WhatsApp; the other covered music services such as Spotify—but the operator appealed and the case ended up with the CJEU, which the Budapest High Court asked to interpret the EU law.

“Telenor Hungary has read and regrets the decision of the European Court of Justice,” the carrier said in a statement. “Nevertheless, our company remains committed to providing services that meet the real needs of our customers as an internet service provider.”

Net-neutrality advocates are ecstatic.

“We welcome this judgment,” said Maryant Fernandez, a senior digital policy officer at the European Consumer Organization (BEUC). “It draws a very strong red line for telco companies who try to deviate from the EU’s net neutrality rules. Zero-rating is detrimental to consumers, it compromises their freedom of choice. It’s the very purpose of net neutrality that consumers can access everything the internet has to offer.”

However, some say the CJEU’s decision is less relevant now than it might have been a few years ago.

Changing dynamics

“The industry dynamics have changed,” said Antonios Drossos, a Finland-based telecoms consultant whose firm Rewheel has analyzed EU zero-rating offers over recent years.

Drossos pointed out that operators are increasingly offering unlimited data to their customers, meaning there is no point in zero-rating specific services. Even when data is not unlimited, he said, operators such as those in France often provide as much as 100 gigabytes of usage for just €10-€15 ($11.89-$17.83).

“For the overwhelming majority of smartphone users, that’s more than enough to watch all the video you want—as long as you’re not using your smartphone as a modem to provide primary broadband at home,” he said.

Zero-rating is not just a European issue, by any means. In 2016, Facebook’s zero-rated “Free Basics” service was shuttered by India’s telecoms regulator, for breaking net neutrality.

And in the U.S., the Federal Communications Commission was preparing to crack down on the practice until the newly-installed Trump administration killed probes into AT&T and Verizon’s zero-rating of their own mobile video services, before gutting net neutrality more generally.

This article was updated to clarify that operators often zero-rate their own streaming services, to specify what sort of offending packages Telenor Hungary was offering, and to note that a form of zero rating might still be allowed as long as there is equality of throttling once the data cap is reached. Telenor Hungary’s statement was also added upon receipt.