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EU says zero rated deals can violate net neutrality

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The highest court in the European Union (EU) has ruled that zero-rating practices that block or throttle other applications violate the principles of net neutrality.

The EU adopted net neutrality legislation in 2015, forbidding service providers from prioritising certain applications beyond standard traffic management measures and from charging content providers for additional fees for the preferential treatment.

It was feared such practices would threaten the development of an open Internet and make it more difficult for startups and innovative applications to compete with larger players.

Zero rated tariffs

However, many operators, including those in the UK, offer tariffs and add-ons that exclude certain applications from data allowances. For some smaller networks, these offers form a core part of their appeal.

While such practices are beneficial to users of these applications, it is argued that it can distort the playing field by encouraging customers to favour one service over another.

The Court of Justice of the EU (CJEU)’s ruling followed a case in Hungary about a mobile tariff that included zero-rated access to certain applications but just 1GB for all other activities. Crucially, the package allowed customers unrestricted access to the selected services but blocked or slowed down anything else.

“Once that volume of data has been used up, those customers may continue to use those specific applications and services without restriction, while measures blocking or slowing down data traffic are applied to the other available applications and services,” said the CJEU.

It found that such practices did infringe the principles of net neutrality because they favoured one or more services over another.

“Such packages are liable to increase the use of the favoured applications and services and, accordingly, 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,” added the court. “Furthermore, the greater the number of customers concluding such agreements, 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 those rights.”

While the UK is in the process of leaving the EU, regulator Ofcom has adopted net neutrality legislation and launched probes into possible breaches by Vodafone and Three back in 2018 before dropping its investigations.

In general, British operators have worked to ensure any zero-rated offers do not contravene net neutrality legislation. The predominant mechanism of compliance is a requirement that customers must have some data allowance remaining in order to access zero-rated services. If a customer exceeds their data allowance then then all applications are inaccessible or slowed down, meaning no service has been favoured over another.

Zero rating has other uses too. Since the start of the Coronavirus pandemic, many operators have allowed users to access NHS Online services without charge.

It is not thought these tariffs contravene the CJEU’s ruling, and in a statement, an Ofcom spokesperson said, “We welcome the clarity the CJEU ruling brings. We’ve reviewed a number of providers’ ‘zero-rating’ offers in recent years. And while none of them have featured the type of traffic differentiation seen in this case, we would maintain that such a practice would likely constitute a breach of the Open Internet Regulations."