Ofcom consults on net neutrality while the CJEU toughens its position on zero-rating

A number of factors prompted Ofcom to consult on the framework, including: the increased capacity and quality of service expectations by end users, which has been heightened during the Covid-19 pandemic; technological developments since the rules were introduced in the UK (including increased use of cloud services, IoT services and the deployment of 5G); and the feedback from key industry players in the UK about the effect of the current rules on innovation.

The consultation considers a number of key issues, including:

• whether further guidance is needed on the types of services, including specialised services, which fall under the criteria of the net neutrality rules;
• the merits of the current approach to zero-rated services (i.e. assessing zero-rated services on a case-by-case basis), whether this approach remains appropriate and the potential of such services to harm competition, consumer choice and innovation;
• the impact of effective traffic management in relation to network reliability, efficiency and quality of experience (e.g., whether there should be exemptions for specific types of services such as public safety or emergency communications);
• the impact of the current rules on end users’ rights in relation to being able to use the terminal equipment of their choice via their internet access service. and
• what regulatory models may be appropriate including whether any rules should be incorporated into Ofcom’s General Conditions and/or whether industry codes of practice may be viable.

It should be noted that Ofcom does not have the power to introduce any legislative changes to the current net neutrality rules; any such legislative changes would be done by the UK Government and Parliament. Ofcom can however update its guidance in relation to the existing net neutrality rules and the results of this consultation would likely inform any decision by Ofcom to make any such updates to its guidance.

The consultation closes on 2 November 2021 and Ofcom is likely to publish its findings in Spring 2022.

Recent CJEU cases toughen the position on zero-rating

On 2 September, the Court of Justice of the European Union (CJEU) published its judgment in Vodafone and Telekom Deutschland (C-854/19, C-5/20 and C-34/20), three co-joined cases referred from the German courts – please see here for the CJEU’s press release which contains links to all three cases.

The cases referred to the CJEU concerned a number of “zero-tariff” options, which generally refer to the commercial practice whereby a provider applies a price of zero to the data traffic associated with a particular application or type of application (e.g. streaming or social media). The customer can access data without that data contributing towards their data consumption as part of the customer’s overall data package. Common examples include all-you-can watch video products.

In this case, the CJEU held that Vodafone’s “Vodafone Pass” and Telekom Deutschland’s “Stream On” zero-tariff packages were incompatible with the EU Open Internet Regulation, in particular Article 3(3) which requires internet access providers to treat all traffic equally. The CJEU confirmed that while providers may implement reasonable traffic management measures, such measures should not be based on commercial considerations (i.e. considerations which are not based on objective, technical quality of service requirements).

Where such zero-tariff packages are based on commercial considerations, this would not be compatible with EU law. The CJEU’s findings in Vodafone and Telekom Deutschland appear to go further than the CJEU’s other most recent case on zero-tariffs, the Telenor case (joined cases C-807/18 and C-39/19) in which it was held that data bundle packages which applied a zero rate for the use of certain applications by customers (without restriction after the customer’s data volume had been consumed) was incompatible with the net neutrality rules where such data packages with a zero rate were based on the provider’s commercial considerations. In the most recent cases, the CJEU has stated that zero rating tariffs may be incompatible with the net neutrality rules irrespective of whether or not it is possible to freely access the content after the basic package has been used up.

Given these developments, BEREC has issued a short consultation asking for views on the impact of the recent CJEU judgments on net neutrality which may inform BERECs guidelines. The consultation is open until 20 October 2021. Call for stakeholder input to feed into the incorporation of the ECJ judgments on the Open Internet Regulation in the BEREC Guidelines (europa.eu)

Please contact the authors if you have any questions about the CJEU’s recent cases above or if you would like further information or assistance in responding to Ofcom’s and/or BEREC’s consultations.