Dutch ban on zero-rating struck down – major blow to net neutrality
20 April 2017 was a bad day for net neutrality in the Netherlands, and possibly also in the rest of Europe. The court of Rotterdam struck down the general ban on price discrimination, including zero-rating, as enacted in the Dutch Telecommunications Act. The court held that the categorical ban on price discrimination is “evidently” in violation of the European net neutrality Regulation.
How did we get here?
In its net neutrality guidelines, the Body of European Regulators of Electronic Communications (BEREC) left some room for interpretation as regards the issue of zero-rating. However, in May 2016, the Dutch legislator made it crystal clear that under the net neutrality Regulation price discrimination is prohibited. This was in accordance with the country’s history of upholding a strong net neutrality law, including the ban on zero-rating.
Shortly after the Dutch legislator passed this law, mobile operator T-Mobile launched a new service that enabled subscribers to use certain music streaming services without having to tap into their monthly data package. This zero-rating policy violates an important principle of net neutrality. Providers shouldn’t act as gatekeepers: all traffic should be treated equally, without discrimination, and every service should be accessible online under the same terms. When T-Mobile allows its customers free access to some services but not to others, they create a strong incentive to use one service over another, even if the alternative might be “better”. For instance, T-Mobile users currently don’t pay for the use of music streaming services Spotify and Tidal, but do pay for the use of similar services offered by Apple and Google. If you have a hard time feeling sorry for Apple and Google, consider this: in the future it is highly likely that large companies that have enough leverage and are able to meet telecoms providers’ terms and conditions will end up on the list of services offered free of cost under zero-rating, while users will still be obliged to pay for using new, smaller, perhaps more innovative or foreign services.
EDRi member Bits of Freedom urged the Dutch telecoms regulator ACM to protect the freedom of end users and enforce the net neutrality rules against T-Mobile. Fortunately, ACM did just that, and decided that T-Mobile’s offering was indeed in violation of net neutrality rules. T-Mobile subsequently appealed this decision and went to the court of Rotterdam.
What did the court say?
The court ruled that the net neutrality Regulation does not categorically prohibit price discrimination, but requires a case by case analysis. The court found that the prohibition on discrimination of Article 3(3) applies only to the technical treatment of traffic, but not to the pricing of the internet access service. The categorical ban on price discrimination enacted in the Dutch Telecommunications Act is therefore “evidently” in violation of the Regulation. Although this is a matter of interpretation of European law, the court did not see any reason to refer the case to the Court of Justice of the European Union (CJEU) for a preliminary ruling. The court further remarked that the Dutch legislator did not have the competence to enact any rules determining the scope of the non-discrimination rule of the Regulation, given the direct effect of the Regulation.
Because ACM’s decision against T-Mobile relied solely on its finding that T-Mobile violated the categorical ban on price discrimination, the court limited its ruling to whether such a ban exists under the Regulation or not; the court did not assess whether T-Mobile’s offering violates the net neutrality Regulation irrespective of whether such a ban exists or not.
Next step: The regulator must regulate
If this ruling is not appealed, the strong net neutrality laws we have grown accustomed to in the Netherlands since 2012 will be a thing of the past. This would also set a bad precedent for net neutrality in the rest of Europe. On 11 May, Bits of Freedom therefore sent a letter to ACM urging it to appeal the court ruling, and requesting it to take enforcement measures against T-Mobile based on the fact that their offering still violates the applicable net neutrality rules.
You can also read this article in German at https://netzpolitik.org/2017/niederlaendisches-zero-rating-verbot-wurde-gekippt-frontalangriff-gegen-die-netzneutralitaet/.
Press release: Dutch government prohibits price discrimination for internet access (17.05.2016)
Translation of Dutch net neutrality provisions (25.05.2016)
Net neutrality wins in Europe! (29.08.2016)
ACM should enforce net neutrality vigorously (only in Dutch, 16.05.2017)
(Contribution by David Korteweg, EDRi member Bits of Freedom, The Netherlands; translation by Tom Rijndorp)