EU Court Ruling Challenges Mobile Operators Zero Rating Plans UPDATE

A new ruling by Court of Justice of the European Union (CJEU) has today, for the first time, interpreted the EU regulation enshrining “internet neutrality” (this was also adopted in the UK), which appears to restrict mobile and broadband operators when offering zero rating plans (i.e. unlimited data on certain services).

The original EU regulation was designed to protect the open internet from abuse (here), which essentially means that fixed broadband ISPs and Mobile operators cannot impose excessive restrictions against internet traffic. Naturally there are some exceptions to this, such as for general Traffic Management and security reasons etc.

In the United Kingdom these rules are applied via a soft self-regulatory approach (i.e. it may be better to think of them more as guidelines), which is governed by the Broadband Stakeholder Group and their 2016 Open Internet Code. This code commits signatory ISPs to neutrality and transparency in traffic management on their networks (details).

The Open Internet Code’s 3 Principles:

* Users should be able to access all legal content.

* There should be no discrimination against content providers on the basis of commercial rivalry.

* Traffic management policies should be clear and transparent.

Until now Ofcom has taken a fairly flexible approach to mobile plans that adopt a zero rating plan, such as those that give you unlimited data (mobile broadband) but only to certain specific video streaming services and not others (e.g. VOXI’s latest Endless Video plans and similar plans from EE, Vodafone etc.).

However, the latest CJEU ruling “precludes an internet access provider from favouring 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.”

CJEU Ruling in Telenor Case

“The Court found that the conclusion of agreements, by which given customers subscribe to a package combining a ‘zero tariff’ and measures blocking or slowing down the traffic linked to the use of ‘non-zero tariff’ services and applications, is liable to limit the exercise of end users’ rights, within the meaning of Article 3(2) of Regulation 2015/2120, on a significant part of the market.

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.

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.

In the second place, as regards the interpretation of Article 3(3) of Regulation 2015/2120, the Court found that, in order to make a finding of incompatibility with that provision, no assessment of the effect of measures blocking or slowing down traffic on the exercise of end users’ rights is required. Article 3(3) does not lay down such a requirement in order to assess whether the general obligation of equal and non-discriminatory treatment of traffic in that provision has been complied with.

In addition, the Court held that, where measures blocking or slowing down traffic are based not on objectively different technical quality of service requirements for specific categories of traffic, but on commercial considerations, those measures must in themselves be regarded as incompatible with Article 3(3).

At the time of writing we have yet to see the detail of the judgement and that could be key, although at first glance it does seem to make it more difficult for operators to offer a zero rating style plan, particularly since “no assessment of the effect of measures blocking or slowing down traffic on the exercise of end users’ rights is required” in order to find such plans as being incompatible with the law.

Quite how this will impact the UK is currently unclear, particularly since we’ll have fully left the EU by the end of 2020 and the current self-regulatory approach gives Ofcom plenty of freedom to continue their existing approach. We have asked the regulator to comment and will report back.

UPDATE 16th Sept 2020

A spokesperson for Ofcom told ISPreview.co.uk: “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.”